B2B Decision Making Process: How To Address Your Customers’ Needs

unitsBusiness-to-business (B2B) markets are different compared to consumer markets in two ways. First, B2B decision making process and units are more complex. While a consumer purchase decision is made by one or two individuals, B2B decisions are made by several employees, each specializing in a different field.

Second, B2B decision makers are accountable for their judgments and therefore have more complex needs compared to consumer buyers. Consumers have emotional and rational needs at a personal level, while B2B buyers have these two kinds of needs at both a company as well as personal level. This article aims to help marketers by advising them on the B2B decision making process, which decision makers to target, and what needs to fulfill to sell successfully.

How B2B Buyers Make Their Decisions

Your product offering is important to the consumer in two ways: the percentage of budget spent on the product, and the strategic importance level placed upon it.

Spend: If less than 5% of the annual budget is spent on the offer, the classification is ‘low’. If the spend is more than 5%, the classification is ‘high’.

Strategic importance: If the product is important to the consumer’s operations and not immediately replaceable by another, classify the offering as ‘high strategic importance’. If the product does not meet the above conditions, the classification is ‘low strategic importance’.

Low-spend, low strategic importance – for example: stationery
Your offering is of low importance to the customer and the purchasing decision is made usually by a single employee. The consumer may not pay attention to the product’s price, which can give you a high margin. You can differentiate your offering from the competition by making it easy to order the product, and by delivering it quickly. You can also bundle your offering with similar services and products. If you disappoint the customer, they will take their patronage elsewhere.

Low-spend, high strategic importance – for example: safety certification

Your offering is not that expensive, but is important for the customer’s business operations. This makes them extremely loyal and ultra-cautious. The customer’s decision making team will include several employees including one or more technical specialists. You need to partner these technical specialists and discuss the fine details of your product with them. You can differentiate your product from the competition by offering superior partnership, proactivity, reliability, knowledge, and expertise.

Low strategic importance, high-spend – for example: utilities in a service firm

Your offering is not critical to the client’s operations, but they are concerned with its price. The customer will bargain to reduce the expenses involved. The decision-making team will include several employees, including a purchasing specialist and one from the C-suite. The customer will focus more on the cost rather than the offering’s value. You can differentiate by making it easy for the consumer to make a deal, simplifying the purchase procedure, and performing good administration.

High strategic importance, high spend – for example: plant equipment

Your product is both high value as well as important to the client’s operations. The client is likely to need customized requirements and considers you as a strategic partner who is critical to their business. The decision-making team consists of at least five employees, including specialists and people from the C-suite. You can differentiate by offering better product, service, and relationship.

Customer Needs You Should Fulfill

As mentioned earlier, B2B purchasing decisions involve both company as well as individual needs. Decision makers typically balance rational and emotional motivations, and individual and company needs while making make up their mind. Read on to learn effective tips on how to address these factors to sell successfully.

Rational Vs Emotional

Rational motivations – company needs

These needs are clearly recognized by both the customer and supplier. The supplier needs to mandatorily meet these needs to be considered. These factors most influence offerings that are high spend/low strategic importance, where price is important.

Rational motivations – individual needs

Individual needs play an important part in B2B decisions. B2B buyers wish to perform their job effectively and avoid risks. They seek personal satisfaction in the workplace and try to avoid risks that affect their personal needs and performance.

Emotional motivations – individual needs

Employees take their strengths, weaknesses, and idiosyncrasies to their workplace. They will try to avoid risks that make them look bad before their boss and other employees. Employees are more likely to favor B2B suppliers who satisfy their emotional motivations.

This is a difficult factor for B2B marketers because each employee has his own emotional tendencies and personal needs. They should focus on making B2B buyers feel good and raise their image in the eyes of others.

Emotional motivations – company needs

Modern companies realize their brands are their biggest assets, and focus on enhancing brand image and value. They wish to deal with other companies that have similar brands and ethos. Thus, ‘brand fit’ has become a major company need in today’s business environment.

James Anthony

By James Anthony

A senior FinancesOnline writer on SaaS and B2B topics, James Anthony passion is keeping abreast of the industry’s cutting-edge practices (other than writing personal blog posts on why Firefly needs to be renewed). He has written extensively on these two subjects, being a firm believer in SaaS to PaaS migration and how this inevitable transition would impact economies of scale. With reviews and analyses spanning a breadth of topics from software to learning models, James is one of FinancesOnline’s most creative resources on and off the office.

Lizzie M. says:

Many B2B purchases still revolve around the emotions that are not necessarily rational. It reminds of Malcolm McLean’s story, the unheralded harbinger of global shipping.that changed our world. He devised the intermodal container system in the fifties to speed up the loading/unloading of goods in ports by integrated trucking, shipping, and port operations and using containers, cranes, and large ships to haul the goods at record speed. Where before it took 3 days to complete a loading process, McLean’s idea took 8 hours, drastically lowering rates and making it possible to put up a factory in another country and ushering the global supply chain. Guess what? It took him years to convince shippers and forwarders that his idea was the future all because they fear the change. In short, their emotions took over their decisions at that time even in the face of obvious rational advantages.

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TheFutureisHere says:

The rational decisions don’t always apply in many Asian companies, where relationships and connections are valued as much as efficiency and productivity. I’ve had to deal with Chinese companies that despite explaining our clear advantages (lower prices, faster turnaround by one day in domestic warehousing) over the competition, we still lost in the bidding. A week after I learned that one of the board members of the winning bidder was a friend of an uncle of the company’s treasurer. Yeah, that’s how far drawn out Chinese kinship can be.

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Grace says:

Well, in the face of market pressures and Western way of doing business, rational decisions almost always win. A company rooted in nepotism cannot survive. It has to make rational decisions at one point or else fold up. Foxconn was forced to clean up its ranks to improve employment welfare or face Apple sanctions. Korean Airlines booted out one of the family heirs because she made a fool out of the airline when she ordered the plane to taxi back because she wanted to kick out an erring stewardess. With the ever tightening competition in the industry, airlines cannot appear authoritarian. Nepotism takes a backseat when the company’s future is at stake.

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Billchap says:

To add to the last point, about 20% of a B2B purchaser’s buying decision is based on “brand fit,” according to McKinsey. Many industry giants want to deal with companies that share their values because the relationship magnifies the values even more. It is difficult for a “green” company to work with a supplier that’s perceived to pollute the earth or promote unhealthy lifestyle. On another note, take Apple, it has to take action to ensure Foxconn sticks to fair workers’ compensation because Apple wants to project transparency. Foxconn didn’t get this brand fit at first, but it learned its lesson. Had Foxconn refused to change its policies, you bet Apple would have been using another supplier sooner than later.

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TheMarketer says:

The article shows the right approach to B2B clients, a balance between the rational and emotional. Relationship is even more critical in B2B marketing because you’re talking about a small and highly competitive market size compared to consumer markets. All things being equal, the vendor with a closer relationship with the client wins. This is why you don’t stop nurturing the relationship even after completing your deliverables. You can get a repeat business or a referral. Just a caution though when building relationships; don’t focus on the individual alone (go ahead give him that Patek Philippe this holiday), but make sure your services and terms are aligned with the client’s goals. Again, building B2B relationship is an advantage only when the competition is offering almost the same terms as yours. But your initial focus should be how to offer a superior product/service, always.

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b2bguru says:

One area where you can use emotional motivation in B2B customers is to target the surplus budget of marketers near the end of fiscal year, when they are emptying their treasury box to justify a bigger budget in the following year. The use of this surplus is often decided by the marketing manager, without the need to present it to the big bosses or go through the auditing process. Cater to his or her whims and you might get some of these crumbs. We’re talking about minimal budget here, but if you have a struggling small business like mine, these low-volume budgets when put together can see your business through for the next half a year. Small local events, short online campaigns, complementary publicity runs, short-term sponsorships… these can fall under “miscellaneous” in the marketers end-of-year fiscal report.

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bernard says:

If I may add, the DMU has many variations depending on the business type and size, but generally they consist of the frontliner, the gatekeeper and the decision maker. The frontliner can be the secretary, the gatekeeper is the manager and the decision maker is the executive. In most cases, you the sales rep will be dealing mostly and building relationship more often with the manager. In some accounts, the “manager” can be split into further individuals--the department head, the project manager, the technical guy, etc., in which case, you should identify who is the designated in-charge guy for your offer. You have to influence the gatekeeper because, often, the busy decision-maker will rely on his manager for inputs. But don’t forget the frontliner because she can help you follow up on your offer. Nice reference article by the way.

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ClairMattheus says:

Great stuff on the strategic importance classifications. My product then is low-spend, low-importance since we’re delivering office supplies. I only deal with the purchasing head and it’s pretty straightforward--how low my price and how long my credit. But any tips on how to deal with each of the DMU individuals if you’re pitching a highly strategic service? Will the same hard sell tactics apply to the CEO (I doubt)? Who should you spend relationship building with more, the strategic decision maker (CEO) or his lieutenant (department head)? I read that the rational decision is made by the top-level executive, like the product’s ROI or cost-benefit analysis, while the emotional decision is made by the department head--will the supplier help to run the business more efficiently and, thus, positively reflect on my department?

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Trini says:

You’re spot on. Dealing with a DMU means you should be able to dish out the right message to the right individual member even if you’re saying the same thing. In our case, we always prepare two pitch materials as a general guide to our reps. One is informational, all the stuff and tech specs about the product, and the other, what we refer to in pun, infomercial. Yes, because it appeals to the emotion. It has the key benefits of the product and what it means to the client’s business and the “what’s more” pitch. We tone it down to sound professional, but the key elements are there: what’s in it for the department head or project manager in our case. But never give the emotional appeal to the CEO or when he’s present in the meeting, they hate it. Hope this helps.

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