4 Changes in Buyer Behavior Driving 4 New Challenges for Sellers
Think about how you would have purchased a car 20 years ago. You would walk onto a dealer’s car lot, kick a few tires, and then be swarmed by sharks pushing you to take a test drive. You might have been armed with a copy of Consumer Reports, Car and Driver or Auto Trader, but those publications only went so deep. For example, if you wanted a review on a dealership’s service department, there was no Yelp available. Now think about how you would buy a car today. As a consumer, would you want to turn the clock back to the 1980’s? Probably not!
Well guess what, no buyer today – consumer or business – would want to buy the way they did 20 years ago. Research from our friends at the Corporate Executive Board suggests buyers are 60% through their buying process before they contact a sales rep. As your buyers change, your approach to selling too must change.
Confronting Changes in Buyer Behavior
Business-to-business buyer behavior has changed significantly in many ways.
- Business buyers are influenced by their behavior as consumers. Access to the web has provided every consumer with the ability to tap into an undying storage facility of information. In the era of big data, consumers are now hyper-connected to all sorts of online resources. The market research firm BuyerSphere (http://www.baseone.co.uk/beyond/Buyersphere%20report%202012.pdf) conducted research on B2B buyer behavior and found that the web is the number one source of information for executive level buyers. The second most common source of information is word of mouth, followed by Online Community and LinkedIn. Notice that three out of the top four ways to find solutions to problems faced by buyers are online. Clearly business-to-business buyers are turning to the web for research into issues and solutions.
- Executives have become much more risk averse. Operating in a challenging economy for the past several years has conditioned executives to avoid making costly mistakes. This is driving C-level executives to do much of their own research on significant initiatives. In fact, according to a study by Forbes Research and Google (http://images.forbes.com/forbesinsights/StudyPDFs/DigitalCsuite.pdf), many executives prefer doing their own research. With powerful search technology and a wealth of content at their disposal, C-level executives are taking full advantage, placing research duties on their very own to-do lists.
- Organizations continue to involve many people in the buying process. According to a study by CSO Insights (http://www.csoinsights.com/Publications/Shop/Sales-Performance-Optimization), in 2013, over 46% of B2B purchases involved more than four individuals in the final purchasing decision. More buying influences mean more buying complexity. It challenges sellers to first identify and then target each buying influence with a selling approach that resonates with each of their concerns or interests. This requires more skill and more time to execute.
- Procurement departments have become much more involved and sophisticated. Sales and marketing have transformed over the past 10 years, and so has the procurement function and process. This has been driven by regulatory compliance, innovation in procurement technology, and adoption of new methods such as category management and auctions.
For a snapshot of what’s happening in procurement, check out this report by Source One Management Services and Aberdeen Group (http://www.sourceoneinc.com/strategic_sourcing_report.html )
New Challenges for Sellers
The trends mentioned above present significant new challenges for sellers.
- Online Perception Bias: Many buyers are forming their perception of a supplier and its abilities from what they find online. If a company’s online presence or search engine optimization program is weak, then their sales reps are at a significant disadvantage.
- Reputation Bias: Although the Internet has a lot of good information, this information is not always accurate. Truth in advertising doesn’t always apply on the Internet, and the traditional separation of editorial content from advertorial content is murky at best. Buyers may find a seemingly credible source that endorses a supplier over another, or a critique of a supplier based on an isolated incident. In such cases, the seller is forced into a defensive position while another might have an unearned advantage.
- Solution Bias: Buyers come to their own conclusions about what they believe is the right solution for their needs. This type of self-diagnosis frequently leads to suboptimal solutions – addressing symptoms rather than root causes. In turn, self-diagnosis can result in Requests for Proposals (RFPs) that insist on very specific criteria for a solution that won’t deliver the results they expect.
- Procurement Process Bias: Compounding the issue is that procurement rules can be so rigid, that it creates a real dilemma for sellers. Do they quote on the solution described in the RFP and risk commoditization and a poor result, or do they propose something different and risk being cut for not following the rules. Research from the medical field shows a compelling analogy. The Journal of Participatory Medicine (http://www.jopm.org/evidence/research/2010/09/15/self-diagnosis-a-discursive-systematic-review-of-the-medical-literature/) found only 32% found self-diagnosis to be reliable and desirable. Medical diagnoses are different from purchasing decisions in many ways, but they are affected by the same shortcomings of online research.
In our next blog article, we’ll share some ideas to overcome these challenges by approaching informed buyers with insight.
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