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Understanding the B2B buying process: the key factors and stages that affect B2B decisions

Understanding the B2B buying process: the key factors and stages that affect B2B decisions
Contents

Differences between B2C and B2B purchase decisions

The B2B decision-making unit

The B2B decision-making process

Information sources during the purchasing decision

B2B decision-making criteria

The different types of B2B purchase

Differences between B2C and B2B purchase decisions

B2B purchases are, on average, higher value than B2C purchases. B2B products can also be more customized or complex than B2C products.

And once a B2B product or service is purchased, customers often have limited ability to change supplier, either because of a lack of alternatives or because the change would be time-consuming or expensive.

As a result, B2B purchasing decisions can be more business-critical and involve more risk than B2C purchases.

To minimize the risk of making the wrong decision, organizations take a slightly different approach to buying products and services than consumers. As a result, B2B purchases typically involve several stakeholders and several stages.

The B2B decision-making unit

The B2B decision-making unit often has multiple levels of seniority. A junior or mid-level individual/team may undertake most of the decision-making process, but someone senior oversees the process and approves the final decision.

And, as Google discovered in 2015, the ‘approver’ isn’t always in the C-suite.

The decision-making unit may also include multiple functions or departments:

  • Many departments may be impacted by a purchase and may need to provide their input to the decisions. For example, a CRM might be used by both Sales and Marketing. Both departments are likely to have an opinion about what they need. Also, Operations and IT teams will have to integrate the CRM into their systems and may have thoughts about which product would or wouldn’t work
  • In specific organizations, Finance or Procurement teams can influence decisions, making sure that the organization is getting good value

Each stakeholder is likely to have a defined role. In the example above, the IT team will influence the process but not be responsible for the final decision. Sales and Marketing departments will likely lead the process as they will be the primary users of the product.

As a result, each department’s influence varies according to the product or service being purchased. Research by LinkedIn has found that IT and Finance departments are most influential across all buying decisions. That is presumably because so many purchases impact them directly or indirectly.

Because of the different levels of seniority and the various departments involved in decisions, the average B2B purchasing decision in 2017 involved 6.8 stakeholders.

And this number is trending upwards. In 2015, the equivalent number was 5.4.

The B2B decision-making process

B2B purchasing decisions tend not to be impulsive, often involving multiple stages over time. Indeed, certain purchases can take a year or more.

There is evidence that the time taken to make B2B decisions has increased. In 2019, 68% of buyers indicated that their B2B purchases were taking more time than they had previously.

Each organization’s decision-making process is different. To make it easier to evaluate and compare these processes, analysts have developed a variety of decision-making models. These models typically standardize the B2B buying process into 5-7 stages. For example:

  • Recognizing there is a problem or need
  • Evaluating and comparing available solutions
  • Defining the requirements for the product or service
  • Selecting a supplier
  • Justifying the decision

While these models are useful, they have significant limitations:

  • They can make it seem that a decision was a lot more formal than it was in reality. Let’s take the example of a small business purchasing paper for its printer. A team member may have spotted that the printer was running low, checked which type of paper was required, and shopped around online to find the lowest price. The buyer may have, in theory, undertaken most of the stages listed above, but saying that they used a multi-stage buying process hides the fact that the purchase was informal
  • They make it seem that decisions are more linear than they are in reality. It is assumed that buyers follow each of the above stages sequentially. In reality, the decision-making process is non-sequential. Buyers may revisit the same ‘stage’ multiple times, often simultaneously

According to Gartner, it is best to view the decision-making stages as discrete tasks that buyers need to complete as part of the purchase. They may revisit each task multiple times throughout the purchase process.

buying tasks

Each task has specific requirements.

1. Recognizing there is a problem or need. The buying process begins when a business recognizes a problem. The trigger for this moment may be a specific pain point. Alternatively, the business may notice that another company is doing something differently or better.

We often recommend re-framing the ‘problem’ in terms of a ‘job’ that the company is trying to achieve. This alternative perspective can help businesses to think about product development differently, unlocking innovation. For more on the ‘jobs to be done’ framework, click here.

2. Evaluating and comparing available solutions. Once a business recognizes its problem, it has to consider how to solve it.

One option is to do nothing, especially if the available solutions are too expensive or time-consuming.

If the company commits to fixing the problem, they need to decide whether to purchase the solution from a third-party or to build it in-house.

They then need to define their preferred type of solution. For example, if the company is purchasing from a third-party, they may need to consider different product categories.

As part of this process, buyers must weigh the benefits and drawbacks of each potential route, including the likely cost.

This task is a critical part of the entire journey because it defines the products or services that may be in or out of scope.

3. Defining the requirements for the product or service. The decision-making unit needs to specify what the company is looking for, including:

  • What the product or service should do
  • How much it should cost
  • Any company-specific requirements (e.g., adherence to specific QC/QA criteria)

For more formal purchasing decisions, a purchasing manager or senior decision-maker will have to approve the final product specification.

4. Selecting the supplier. Each organization takes a slightly different approach to choosing a supplier.

Some have lengthy formal processes involving committees, RFPs, longlists, and shortlists. Others use a more informal process in which potential suppliers are evaluated and compared in a less structured way, often by a smaller team.

Regardless of the approach, this task is all about gathering information on potential vendors and solutions so that they can be compared against specific criteria (see subsequent sections for details on which criteria and information sources they use).

5. Justifying the decision. Once the core decision-making unit has made its decision, the choice needs to be justified to themselves and senior decision-makers. That can entail asking the vendor for references, as well as delivering a presentation to senior management to get their support.

Information sources during the purchasing decision

Throughout the B2B decision-making process, buyers require a lot of information about the solutions or vendors that they are considering.

Buyers tend to be agnostic about whether this information is gathered online or offline (e.g., word-of-mouth), but online is playing an increasing role.

Vendors often have little involvement in the early stages of information-gathering. The accepted wisdom is that buyers conduct many buying ‘jobs’ on their own:

Specifically, buyers tend to rely on the following external information sources early in the buying journey:

However, the accepted wisdom is not always correct. Vendors can, occasionally, make a significant impact early in the buying process. Vendors can, through conversations and marketing, persuade buyers who are evaluating potential options to think of their problems in a way that will favor the vendor’s category or solution later in the buying journey.

Vendors can also be a key source of information late in the buying journey. Buyers review company websites and talk with company representatives to understand product specs and pricing information. They may also ask for product demonstrations and proofs of concept.

Regardless of which information source that buyers use, they are interested in a mix of content formats, e.g., written documents and video.

B2B decision-making criteria

B2B buyers factor in their own needs, as well as the needs of their company, when purchasing products or services:

  • On an individual level, they need the product or service to help them do their job and to make them look good to their colleagues
  • On a company level, they need the product or service to meet specific functional needs, as well as to grow or maintain their company’s reputation (e.g., by being reliable)

These individual-level and company-level needs are driven by both rational and emotional motivations.

There are three drivers of rational motivations:

  • B2B decision-makers have to factor in business realities and justify themselves to colleagues. They may have a strong relationship with a specific sales representative, but if that rep’s quote is too expensive, they would not be able to explain selecting that quote
  • The more structured nature of B2B buying decisions embeds rationality into the decision. Buyers consider more decision-making criteria. If an RFP has been used, vendors may be ‘scored’ for their performance against specific criteria. Both of these traits make it harder to produce an entirely emotional decision
  • B2B buyers are encouraged to look at ‘the big picture’ more than consumers. For example, B2B buyers are more likely to consider ‘lifetime value’ in their decisions

There are also several drivers of emotional motivations:

  • The stakes are higher – if a buyer makes the wrong decision, they can lose their job
  • Status quo bias – change is perceived to be risky, so there needs to be a compelling reason to act
  • Loss aversion – buyers are more likely to take action to prevent losses than to drive gains
  • Decision paralysis – the more stakeholders that are involved in a decision, the less likely that consensus will be achieved, and the more likely that they will decide to ‘do nothing’

b2b buying criteria model

Based on these different levels and motivations, buyers will consider many decision-making criteria, including (but not limited to) the following:

  • The total cost of ownership
  • Value for money
  • Up-front price
  • Pricing model (e.g., subscription or one-off payment)
  • Likely efficiency or productivity gains from using the product
  • Company reputation (based off reviews and general brand perceptions)
  • Quality of relationship with company representatives
  • Representative’s responsiveness to requests and queries
  • Product quality or reliability
  • Extent to which product meets required specifications
  • Level of product functionality
  • Ease of product use once purchased
  • Ease of installing or setting up the product once purchased
  • Quality of customer service
  • Level of integrity
  • The extent to which representative’s listened to our needs
  • The extent to which representative understands our business or industry
  • The extent to which the solution solves our problem (e.g., helps us to differentiate better)
  • Level of compliance with regulations
  • Level of innovation (e.g., whether they have a long-term vision for the category)

The different types of B2B purchase

Of course, not all B2B purchases are the same. For example, an SMB purchasing paper is going to behave more like a consumer than a large enterprise buying a firewall.

In our experience, four factors impact the nature of the B2B buying journey:

  • The amount that will be spent on the product or service. The more a product or service costs, the more stakeholders will typically be involved in the buying journey. These stakeholders won’t necessarily be senior – that is driven by strategic importance (see below). Organizations also have higher expectations around levels of service and customization when buying high-priced products or services. For low-price products, there are fewer opportunities to differentiate. Vendors tend to differentiate through relationships, or by making the purchase as easy as possible for the buyer
  • The amount of differentiation between products, and the levels of product complexity. The greater the differentiation or complexity of a product, the more time an organization needs to dedicate to researching or comparing the different options on the market. More complexity also means that more specialists will be involved in the decision-making process. These specialists can be external to the buying organization, as the individuals within the organization cannot be expected to become experts in the more complex products
  • The strategic importance of the product or service to the buyer. For more strategically important purchases, organizations will involve more senior decision-makers and specialists in the buying journey. Consistency, reliability, and quality also factor into decisions far more
  • Whether the product is a first purchase or a re-purchase. If an organization is repeating a purchase and is likely to stay with the existing vendor, fewer people will be involved, and less time will be required

Adience is an expert in B2B buying process research. To learn more, click here.

 

Summary

Differences between B2C and B2B purchase decisions

B2B purchasing decisions can be more business-critical and involve more risk than B2C purchases.

To minimize the risk of making the wrong decision, organizations take a slightly different approach to buying products and services than consumers. As a result, B2B purchases typically involve several stakeholders and several stages.

The B2B decision-making unit

The B2B decision-making unit tends to include multiple levels of seniority, as well as multiple departments. As a result, the average B2B purchasing decision in 2017 involved 6.8 stakeholders.

The B2B decision-making process

Most B2B purchases include 5 discrete tasks: recognizing there is a problem or need; evaluating and comparing available solutions; defining the requirements for the product; selecting a supplier; justifying the decision.

However, these tasks are not necessarily performed sequentially. Buyers may revisit the same ‘stage’ multiple times, often simultaneously.

Information sources during the purchasing decision

Throughout the B2B decision-making process, buyers require a lot of information about the solutions or vendors that they are considering.

Buyers tend to be agnostic about whether this information is gathered online or offline, and rely on the following information sources: search engines; online review sites; peer reviews; industry-specific content; social media; subject matter experts; company websites; company representatives.

B2B decision-making criteria

B2B buyers factor in their own needs, as well as the needs of their company, when purchasing products or services.

These individual-level and company-level needs are driven by both rational and emotional motivations.

The different types of B2B purchase

Not all B2B purchases are the same. Four factors impact the nature of the B2B buying journey: the amount that will be spent on the product or service; the amount of differentiation between products, and the levels of product complexity; the strategic importance of the product or service to the buyer; whether the product is a first purchase or a re-purchase.

Chris Wells
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