Budget Owner doesn't mean Buyer or Signer
But it could... so, how do you figure it out?
Rarely do teams have direct access to an economic buyer and still manage to close deals. This is especially true in early-stage sales but it doesn’t have to be that way. As a Founder, you should view the executive as your peer, not someone at the director or VP level. Across the spectrum from pre-seed to post-IPO, we often see sales teams of all sizes confusing the roles of The Economic Buyer, The Signer, and The Budget Owner. While these roles are distinctly different, they can sometimes be filled by the same individual. Understanding the differences and knowing how to approach each is often the key to closing your deal this quarter rather than the next—or perhaps, ever.
The most common person companies/sellers have access to is someone who can get internal approvals done to purchase your software. This is not the Buyer.
Let’s break down each key persona:
The Economic Buyer
They have veto power to push the project forward or to stop it regardless of other stakeholders position such as your Champion/Counter Champion.
Their focus is in line with the strategic objectives of the organization. You are likely to be able to read about their role or initiatives in the annual report.
They have access to discretionary funds that aren’t budgeted.
They are likely to have profit and loss responsibility.
They will sign your contract, or be a part of the approval process leading to signature. - Source: meddicc.com
As a Founder/Executive, you should have access to the person who can push the project forward. You can leverage this alignment at strategic parts of the deal rather than trying to sell to them directly throughout the sales cycles. Remember, this person will still likely ask “What does my team think?”
What I want to highlight here that’s incredibly important is “they have access to discretionary funds that aren’t budgeted.” You should never lose on budget if you have a compelling business case and alignment with a buyer.
They “will sign your contract, or be part of the approval process leading to signature” for every deal, you should know who signs the contract. It is not always the Buyer.
The Signer
To avoid confusion, when working with the primary decision maker — or even someone who says, 'The business is following my recommendation, it comes from my budget, and I want to move quickly' — ask a straightforward question: 'Okay, that’s great to hear. So, if we meet your requirements by X date, can you sign the agreement?' If the answer isn’t a direct 'yes' and they can’t walk you through the entire approval process leading to the signature, you need to identify the Signer. You can also leverage a Mutual Action Plan to make this line of questioning more specific and collaborative.
Let’s say Finance is The Signer in this case. As the Signer, they are the final team/person to authorize a purchase by reviewing your budget, need, and other internal guardrails to avoid frivolous purchases. This means you need clear justification on why a purchase is being made so the signing process is a breeze. This does not mean that Finance is the Economic Buyer. This also means you still need to know who makes the final approval on the Buyer side to ensure your software “is in line with the strategic objectives of the organization” per the definition of the Economic Buyer above.
The Budget Owner
Can a Budget Owner be the Signer? Maybe. Can a Budget Owner be the Economic Buyer? Perhaps. But it’s incredibly rare for a Budget Owner to be all three — let’s figure out how to discern. Often, there are a list of approval steps to complete before signing. Anyone who has sold software has gone through this frustrating experience: you work with someone who says, 'I’ve got this, and I promise to get it done before the end of your quarter,' but the deal doesn’t close until three weeks later.
The Budget Owner may only be able to purchase up to a certain dollar amount and may not even be able to make any purchases without approvals from:
Their Boss (may also not be a “Buyer.” Example: VP of Engineering may be able to sign up to $75k without any approval but anything above that must be approved by the CTO who also needs to get Signing authorization from Finance)
Finance (see above)
A peer they actually share a budget with because it’s “a bit of a slush fund” and most teams are actually terrible at managing their P&Ls and budgets – they split this on a quarterly basis and no one really knows how much they have. (Ever been asked if you can “reduce it down by $2k?” Ever wonder why?)
To identify the persona you are working with, use this walkthrough as a way to get comfortable asking while not putting the Budget Owner on defense but instead leverage them as a collaborative partner to help facilitate the transaction smoothly and turn them into your biggest Champion and Advocate in the process.
The above may feel a bit obvious in hindsight but as you work with any prospects going forward, ask them to walk you through their entire signing process and you’ll learn a lot about who you’re actually working with and how you can get that deal you really need to celebrate at the end of the quarter.
Good luck out there!
Great piece Dakota! It made me think about how these role dynamics also play out in software M&A.