How B2B Buyers Make Purchase Decisions
I’m a great fan of Jeff Shore. Recently, he wrote a post, The Buying Formula: Here’s How Your Customers Make Purchase Decisions. It’s brilliant in it’s simplicity and is a great starting point to look at the challenges of B2B Decision-making.
Jeff, makes several critical points.
He poses the question, Why does anyone buy anything? Then answering it, “It all comes down to one simple motivating factor: The desire to improve one’s life.”
It’s easy to understand this in the context of individual or personal purchases, but too often overlooked in B2B sales. We’re trained to look at the business justification for our solutions. It’s critical that we do this, but ultimately, the business justification is the combination of all individual motivations of the extended decision-making group.
Individually, each of us has goals and objectives in our jobs. The goals may be related to expected performance. In sales, we each have quota, revenue, margin, expense and other objectives important to our role in the organization. We have other individual objectives like getting a bonus, getting a promotion, keep our managers off our backs, making our work lives easier, getting home at a reasonable hour, or keeping our jobs.
Each of these is related to the desire to improve one’s [work] life. Each of these things impact the buying formula Jeff establishes: CD x CF > C + F (If you want to know what it means, read Jeff’s article).
Now here’s where it starts to become complicated–from a B2B perspective. The first complication is: This equation is different for each person involved in making or influencing a decision.
What drives the CFO to want to buy a new financial management system is different from what drives the controller, treasurer, A/R manager, A/P manager, and everyone else in the financial function that will be impacted by the system.
But it doesn’t stop there, IT is involved in implementing, migration, and ongoing support of the system (whether it is cloud based or premises). So what drives the CIO in making the decision is different than those in the finance function. Likewise, the Apps Development Manager, the IT ops manager, the manager of Data Security, and so forth.
Then the financial system doesn’t exist in isolation, but other systems supporting other functions both feed it and expect information from that. So the interests of each person impacted by the decision are different. There may be some commonalities, but there will be huge differences in how people assess the purchase and it’s impact on improving their work lives.
Leveraging Jeff’s formula, we have the following challenge:
For the CFO: CDCFO x FPCFO > CCFO + FCFO
For the Controller: CDCTLR x FPCTLR > CCTLR + FCTLR
For the Treasurer: CDTR x FPTR > CTR + FTR
For the CIO: CDCIO x FPCIO > CCIO + FCIO
For the Apps Dev Manager: CDAPPDEV x FPAPPDEV > CAPPDEV + FAPPDEV
For the Security Manager: CDSM x FPSM > CSM + FSM
For Procurement/Contracting: CDPROC x FPPROC > CPROC + FPROC
But the complexity doesn’t stop here. There are actually two other things that happen as B2B buyers make decisions.
First, these equations changes over time–through the buying cycle. Rather than a static equation, in reality it’s a dynamic situation. As the customers learn more through their buying cycle, each element of the equation changes. What they look for in improving their work lives changes. Their individual perceptions of current dissatisfaction, future promise, costs and fear shift. We have to respond and manage these shifts with each person involved in the decision-making process.
Second, when these people get together as a decision-making group, the dynamic of their interaction changes not only their individual perspective, but their group perspective. We have an added equation we have to solve for:
For the Group: CDGROUP x FPGROUP > CGROUP + FGROUP
Readers who are engineers, mathematicians, or scientists, might say the solution to this equation is the sum of the individual equations, but research actually shows it’s very different.* While each perspective contributes to the group decision, the dynamic of the group changes the outcome.
Getting the decision-making group to make a decision is no longer simply an issue of winning over each individual (solving their equations), but in understanding the dynamic of the group interaction and helping the group reach a decision on the collective issues of “Improving their work lives.”
What’s this mean to us as sellers? I don’t want you to get frustrated, throw up your hands and say “F**k It!”
While it’s complex, it’s not as complex as it seems.
First, Jeff’s advice of understanding what “improving the work lives” of individuals is critical. We have to understand the key players, we have to develop the equation with each of them–maturing the views over time.
But that’s insufficient to win, most importantly, we have to work with the group, recognizing the group has it’s own dynamic and equation, that’s not the sum of individual equations. We have to help them align their individual interests, fears, priorities, and agendas. We have to teach, facilitate, and collaborate with the group, helping them reach a decision, ideally one that includes us!
* As usual, the CEB folks are bringing compelling research and provocative perspectives in their follow on to the Challenger Sale. Their new book, The Challenger Customer, addresses these issues and provides interesting perspectives on the dynamics of B2B decision-making and engaging today’s buyers. It’s a fascinating book, I’m still reviewing an early release. Not sure that I agree with everything–but that will provoke some great blog posts and discussions. The launch of the book, The Challenger Customer, by Messrs. Adamson, Dixon, Spenner, Toman will be in September, 2015.
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