April 24th, 2013

4 Changes in Buyer Behavior Driving 4 New Challenges for Sellers

buyer-behavior

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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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About The Author: Dario Priolo

As Chief Strategy Officer, Dario Priolo is responsible for driving Richardson’s market, product, and corporate strategy and planning — sharing critical insights with clients to help them win in today’s changing market place. Dario gathers intelligence and market and customer knowledge to: drive Richardson’s innovation; ensure that Richardson offers the best and most relevant solutions for clients that exceed client satisfaction; and raise awareness of Richardson’s extensive capabilities with sales and business leaders.

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4 Responses to “4 Changes in Buyer Behavior Driving 4 New Challenges for Sellers”

  1. April 24, 2013 at 5:19 pm, Michael Boykin said:

    Business buyers shopping with a consumer mentality—definitely needed to be #1 on this list. Consumers educate themselves before buying today, and there’s no reason for those same people not to employ the same behavior when shopping for their business. Whether you’re a B2B or B2C company, you are selling to a consumer.

    [REPLY]

  2. April 24, 2013 at 7:53 pm, Ian Brodie said:

    One of the best analyses I’ve seen for years. Looking forward to the follow-up

    Ian

    [REPLY]

  3. April 27, 2013 at 9:36 am, Terry Stidham said:

    Yes, the buyer’s journey is definitely different from the past for both B2B and B2C businesses. The buyer’s decision to buy is often over 50% made before ever engaging with a sales rep.

    Companies have to understand how their customers are getting information and forming opinions about their produce/service. Then they have to align their messaging, marketing and sales efforts to the way the customer wants to buy today.

    Terry Stidham

    [REPLY]

  4. May 02, 2013 at 4:20 pm, US real estate agent directory said:

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    [REPLY]

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