B2B Company Dilemma - How to Get Customers to Buy Your Products
It is crucial for any B2B company to understand the decision landscape that affects their customers. Those who do a better job of understanding the decision landscape end up as market leaders, and those who fail eventually end up out of business. That's the harsh reality!
But before talking about how the business-to-business decision landscape is changing, let's first define the decision landscape.
When we as humans make a decision, especially a purchase decision, a whole slew of "things" are going on in our heads at the same time. These are both generated from external and internal factors alike. This mix of different "things" all affect how we make our purchase decisions. This is what is known as the decision landscape. And we automatically process a massive amount of data in a blink of an eye. The decision landscape is that mix of factors - the decision to purchase or not, the decisions on what to buy, the decision on what is good value for money, and what is not such a good value.
Examining what goes into the behavioral landscape and how it affects how we make our decisions is an academic field called Behavioral Economics. This field of academic research has a foundation developed by three Noble Prize winners.
Herbert Simon (1916–2001, Nobel Prize in 1978)
Daniel Kahneman (b. 1934, Nobel Prize in 2002)
Richard Thaler (b. 1945, Nobel Prize in 2017).
Added to this is Dan Ariely (b. 1967), who is a Professor in Behavioral Economics at Duke University and, in my humble opinion, also should receive a Nobel Prize for his stellar work in this field.
So now that we know that our decisions are made from a large number of inputs and there is well respected academic research to back it up, let's get into the details of why the decision landscape is both changing and how you can affect your customers' decision landscape.
The B2B Customer’s Decision Landscape Explained
All our decisions are made in context, with references. These references are both external and internal to the decision-maker. The process consists of first deciding what references to use and then using those references to make our decision. The decision of what references to use is somewhat arbitrary. We don’t always use the correct references and the references we use may change every time we decide. That said, our usage of sub-optimal references for the decision also makes the decision sub-optimal. We are happy with "good enough" even if the decision could be better, more optimal references were used. But in the end, we are all humans, not robots.
What External References Influence a B2B Buying Decision?
Here are the external references we use when making our buying decision:
1) Marketing strategies and how they influence buying decisions.
Whether we like it or not, whether we acknowledge it or not, we are influenced by the messages we are constantly exposed to. Therefore, the seller with a marketing message that appeals to us the most will influence our decision-making the most. When I say "marketing message," I mean this in the broadest possible context, from the B2B company brand name, logo, product or service name, product packaging, service definition, how the product or service is delivered, how is it presented to us, warranties, and, of course, the price of the product or service. From all of this, we create an internal emotion. Then we do the same for the seller's competition and other alternatives on the market.
2) The effect of experience on buying decisions.
Experiences also influence us like other peoples’ experiences with the various product or services and how they communicate that to us. This is why there are "influencers" and "influencer marketing.” Influences are significant when it comes to our decisions. It is why the realtor selling a house mainly talks to the wife, while the husband is the more likely breadwinner. Likewise, in complex business-to-business sales, there are often individuals that have the power to prevent a purchase but do not have the authority to make the purchase. They can say "no" but cannot say "yes." Thus, these influencers need to be just as convinced as the actual decision-maker that the organization makes the right decision. Selling only to the decision-maker is likely to fail.
Internal References Used in B2B Business Decisions
Then there are also internal references used for the decisions we make, such as:
1) The impact of Heuristics.
These internal references are called Heuristics and are a concoction of different things. It includes our experience, experiences with alternatives, experience with multiple sales methods, and experience with various marketing methods. Do not think this behavior applies only to consumer goods; behavioral economic theories were initially established and consequently confirmed for business-to-business goods. Familiarity with a product or service category or even familiarity with a brand, a company name, a product, or a service name affects our decision-making process when considering making a purchase. We are more likely to purchase something we were just reminded of than something we were not recently reminded of. In the consumer goods market, this is why the practice of relentlessly repeating a brand, a logo, or just a company name works in driving higher sales volume.
Part of Heuristics is how we experience our current situation or circumstance. These two may or may not be precisely the same. In my presentations, I use the extreme example of how our urgency to buy a commodity like gas when the tank is getting empty is different if you are on the way to the hospital with a sick or injured child, compared to if you are on the way to the in-laws. In the former case, the nearest and quickest gas station would do; in the latter, you may want to find the brand you are familiar with or the brand where you are part of their loyalty program, or just the lowest price. This gas example is an extreme circumstance, but we can think of many everyday cases that affect the decision-making process.
2) Emotions and how they affect buying decisions.
Most of us like to see ourselves as rational beings. We examine the factors and circumstances around our purchase decisions and make our decision from the data we gather. Unfortunately, science has proven this is not correct.
Just behind the eyebrow ridge is a part of the brain called the ventromedial prefrontal cortex (shortened to vmPFC). While the full functions of the vmPFC are not yet completely defined, it has been proven it is a crucial area of the brain that deals with our emotions, especially related to decision-making and self-control. We know this mainly from individuals who suffered damage in the area, as they are emotionally disturbed and unable to make decisions. In fact, this area is so vital for our ability to make decisions that individuals with damage in this area are often unable to participate in society.
Once we made our emotional buying decision, to buy or not to buy, we put rationale around our decision to justify it for ourselves and for anyone who wants to know.
3) Changes in the environment and their effect on business decisions.
So now, we have established our decision-making process:
is a slew of external and internal references.
is emotional
is imperfect.
happens in the blink of an eye.
The most significant change that has happened to most people lately is, of course, the effect of the COVID-19 pandemic. Many of us have had to change the way we work, the way we interact with friends and family, and the way we travel. It gives us all a convenient but extreme example of the change in the decision landscape and purchase priorities. Extreme because it changed so much at the same time. I'm sure we all know companies who understood the changes in the decision landscape imposed by the pandemic and adopted their way to do business, their product or service, their marketing messages, and prices to be relevant to the change of circumstances affecting them. Because of that, they prosper. I'm also sure we all know companies who did not change, did not react to the changes in the decision landscape or were late to change, and for that reason, failed.
Here are a couple of examples where I have the inside story:
Across the street from me lives a restaurant owner who owns a small chain of pizzerias. As restrictions on in-door eating were imposed, they quickly flipped to delivery and pick up only. They were retraining their waiting staff to deliver to a home, not a table on the premises. Thus, they retained most of their staff. "Business is better than ever," the owner said. In contrast, I also know a restaurant owner who was slow to adopt and did not make the necessary business changes according to the new decision landscape and then closed the restaurant, hoping for a sudden end to the pandemic to re-open. When the owner finally decided to offer delivery service, six months into the pandemic, it was too late. With more agile competitors grabbing the market share, the restaurant closed for good. It was very sad to witness.
I know a few well-known keynote speakers. People who are mainly brought into corporate events to inspire and, in a way, provide mentorship to the corporate staff. With no large gatherings being allowed, there were no more in-person keynote speeches. Two of my friends quickly adopted changes to how they work. One restructured a room in their house into a video studio, and the other adapted his garage to be a studio. Corporations still do their events, just differently, and my two friends still have flourishing businesses. In contrast, I have a third keynote speaker friend who eventually did the same but was slow to change his business and is still trying to catch up.
Knowing when and how to adopt changes to the changing factors related to the decision landscape is vital for your business's success—as you can see from the above examples of those who adopted changes and those who didn't.
Imagine yourself being in that restaurant space - are your website messages (text and images) about the "cozy interior" or "personal service" or about "fast, accurate online ordering and delivery?”
If you imagine yourself as a keynote speaker, would you market yourself with images and videos of speeches in front of hundreds of people in a theater or in front of a Zoom call? Which would be more relevant in the current situation?
Every market is constantly changing. Your customers' circumstance is forever evolving. New competitors are emerging while others fall behind. Technologies and use-cases change. Your customers' Heuristics are continuously evolving based on their experience and who and what they are influenced by. The entire decision landscape is changing—constantly.
Thus, the B2B company that understands those changes the best and can best influence its customers to buy their product is the B2B company that will come out on top. Good business practice is to understand how each aspect of the decision landscape affects sales volume and revenue at different prices. So, you can market your product or service in such a way that sales and income will be optimized, and growth and profits will be higher than the competition. But that is a topic for another article.
You Can Influence Your B2B Customers' Buying Decision Landscape
Because the way we make purchase decisions is imperfect, you can change the buyer's decision landscape as a seller.
Before we continue, let's just remember that the buying decision landscape consists of the following components:
Heuristics: A slew of experiences and perceptions any buyer calls up from memory when deciding to make a potential purchase.
External factors: Things that influence the buyer to make a buying decision.
Circumstances: Events surrounding the purchaser at the time of a purchase decision.
A selling organization can directly affect two of the three components of the decision landscape, some external factors and some buying decision circumstances. And indirectly, the Heuristics. Now, this might sound entirely theoretical, but the way I think about this is in the form of the 4 Ps of Marketing. But it becomes more complex as each of these 4 Ps of Marketing affects each other and the buyers' decision landscape. So why then can the seller only affect the subset and not all the components of the decision landscape? Well, because as a seller, you cannot always affect all of the buyer's circumstances, nor can you directly affect the buyer's Heuristics. However, the 4 Ps of Marketing you definitely can affect.
1) How to influence buying decisions with the 4 Ps of marketing.
If you are not familiar with the 4 Ps of Marketing, they consist of the following:
Product: The product or service you sell. (features, functions, and benefits.)
Place: How and to whom do you sell to. (buyer profile, sales channels, sales methods.)
Promotion: How potential buyers will become aware of your product or service. (marketing channels, marketing messages, brand, product presentation, messages, website, etc.)
Price: The price of the product or service. (pricing strategy, structure, and levels.)
The reason this gets complex is that each of these 4 Ps of Marketing affects the others. So if you change one, the others need to change too. This is important to remember!
Consider this:
The better your product or service fits the specific needs of the customers you target, the more inclined they will be to make a purchase. Sound easy enough? It is not. Any product or service has certain features, functions, and benefits. Those will better match the needs of the place, a specific buyer profile, than another buyer profile. And with that match comes the promotion that needs to appeal to the buyers' profiles that are more likely to buy at the price that generates the highest sales volume, revenue, or profits.
So, in short, the product or service needs to fit the most desirable buyers' needs with the proper promotion and the right price. If it does, these 4 Ps of Marketing becomes like the tide that raises all the boats in the harbor. It's very tough to get all this right all at the same time. Let's try to break this down into manageable steps:
If the product or service is "right" for one buyer's profile, it will not be as "right" for another buyer's profile. "Right" here means that it will lead to the seller's desired outcome which could be to maximize their sales volume, revenue, or profit. To meet that goal, companies:
Need to know the feature, function, and benefit requirements of all different potential buyer profiles.
Need to know how the different buyer profiles react to various promotional activities and channels.
Need to know how sales volume at different prices is affected by other buyer profiles, features, functions, benefits, promotions, promotional channels, sales methods, and sales channels.
There are a lot of variables here. All of them affect the other variables at play. How do most companies manage this complex set of variables? Well, they typically start defining a product or service that is developed because they see a gap in the market, because they see an unmet need, or because they believe they can better meet the needs of customers than the alternatives already in the market. The data and information they typically use are from their own experience, not having talked to a lot of potential customers. Sometimes it's also from generic market research. Does it work? Sometimes it does, at other times, not at all. Many times it works so-so. Not a complete failure, but also not a real success.
2) The use of A/B testing to influence buying decisions.
I speak to a lot of entrepreneurs. Some are obviously more successful than others, but one thing comes up repeatedly – the need to do A/B testing. This is relatively easy to do when selling online. Unfortunately, harder for those who don't. But what never appears to dawn on these entrepreneurs is the size of the A/B testing task. Consider this A/B testing case:
Five different buyer profiles.
Five different product/service features or benefits are used in promotion.
Five different promotional channels.
Five different marketing messages.
Five different product/service names or brand names.
Two different sales channels.
Five different price points.
So, it is 5 x 5 x 5 x 5 x 5 x 2 x 5 = 6,250 different combinations! Mind-blowing!
Now, of all these combinations, most will make little difference, but a few will make a considerable difference in sales volume and revenue. If A/B testing is the only choice, the only way to determine is to test all of these combinations. This will take some considerable time. In some cases, so long that the product or service is not relevant anymore as the market has changed once a B2B company is done with the testing phase. Is there a better way? Absolutely! And this is what this article is all about.
Let me make this more concrete by providing some examples.
Buyer profile:
A personal health coaching company sold its services to wealthy males. But sales volume almost doubled at almost twice the price by focusing on affluent females instead.
A construction rental equipment company increased the closing rate by about 25% by focusing on contractors involved in constructing buildings instead of infrastructure.
Marketing message:
A manufacturer of golf clubs could increase prices by 10–15% by changing the market message away from "unique shape" to "high-tech manufacturing."
A startup SaaS vendor of software for architects saw a 50% increase in revenue when they changed their marketing message from "save time" to "minimize mistakes."
Circumstance:
Consumer buyers of flooring who claim to be knowledgeable about the product choices available generate 20% higher revenue than those who are not. It's wise to develop education/knowledge for your buyers.
Business buyers of SaaS to manage digital assets and who expect rapid growth of the number of digital assets will generate 30% higher revenue than those who already have many digital assets. In other words, you should qualify potential customers by their growth expectations.
I hope that these few examples will give you some hints on the importance of knowing the decision landscape. But first, you have to consider how this might work for your company, product/service, and your market. Once a B2B company knows how the decision landscape looks, it can then focus on the right customer, with the right product or service, using the most effective marketing channel(s) and messages, and the right sales channel(s) and methods at the right price.
L
eaving us to discuss how you, as a seller, can influence Heuristics.
3) How to influence Heuristics in buying decisions.
The most obvious influence on Heuristics is prior experience doing business with a seller, which can be summarized as customer satisfaction. The buyer will certainly remember the experience of doing business with your company. This, of course, involves the product or service, but it also all aspects of how the company interacts with customers and prospects. Let me just give some personal customer experience examples:
In my B2B company, I had a salesperson who was really good at selling our services over the phone and over screen sharing, but less so in person. I found out he had a propensity for eating garlic-rich dinners, and consequently, meeting him in person was not a good experience for the customers. With him representing the company, it reflected poorly on us. The fix was easy enough - he just changed dining habits and his closing rate on in-person meetings increased.
I have an extension to my house, for which I had a split air-conditioning unit that died and was just out of warranty. The tech checking the unit found that the issue was with the control board. So, I contacted the reseller and the manufacturer to buy a new control board. Can't be too difficult to replace that, right? They both told me they cannot sell me a new control board and that I have to buy a completely new AC unit. Did they really believe that I would spend more money on them after such a snub? Instead, I became an avid influencer, telling everyone who wants to hear to never buy anything from those particular companies.
Above I discussed how our brain's vmPFC affects our emotional decision behavior. However, it also affects our satisfaction as a customer and what we remember from a transaction. Thus, it affects how Heuristics influence our buying decision. Specifically, it has recently been discovered that these transaction memories live on a timeline, where the more recent the transaction memories are, the more influential they are. Thus, a recent positive experience is more likely to lead us to buy again, and a more recent negative experience makes it less likely to buy again from the same vendor. Some examples of this effect are:
One reason for the success of fast-food restaurants is that we have the slightly negative experience of paying for the food first, but then have the positive experience of satisfying our hunger as the final memory, which means we are more likely to come back. As opposed to a traditional restaurant where the slightly negative experience of having to pay for the meal comes last, and therefore lingers longer in our memory and is more influential in our decision to come back or not. There is a caveat here, and that is that if we pre-pay for something, we need to be assured that what we buy will meet our expectations. This emphasizes the absolute need for fast-food restaurant chains to be thoroughly consistent in their offering - so the buyer's food experience is the same from restaurant to restaurant and over time at the same restaurant.
Another effect of this is the success of credit cards. When we buy something on credit, we have the negative experience of paying for a product or service monthly and are divorced from the positive experience of satisfying a need by purchasing a product or service.
Not all companies have the ability to divorce the payment from the product or service from the delivery of said product or service. But if you can, it may be a worthwhile effort.
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