Customer Buying Decisions
5 Things Every Entrepreneur Should Know about B2B Customers Decisions to Buy
Here are five things to understand about any B2B customer’s decision to buy.
1. B2B customers make buying decisions that are in their own best interest, based on some rationale.
This does not imply that customers are selfish, self-serving, or out for themselves. Nor does it suggest that decision makers ignore the good of the whole. In fact, in well-managed companies “best interest” will be defined through a 360 lens, taking a broad view that considers all participants.
What it does mean is that to achieve any B2B sale, entrepreneurs need to dive deep to understand potential customer’s true decision criteria. You can’t figure out ways to influence or change the customers’ rationale until you thoroughly understand what it is.
Even though it might feel otherwise B2B buying decisions are never random.
2. Timing matters.
Timing may not be everything, but it can be a huge part of getting a B2B customer to buy.
In B2B purchasing decisions, timing is often determined by budgets. Budget cuts can postpone or cancel purchasing decisions. Budget surpluses, especially at the end of a quarter or a year can accelerate decisions to buy.
The lesson is to understand the customer’s budgeting process—and to be in the know when budgets go up or down.
3. In every B2B transaction, there are multiple humans who influence every decision to buy.
Some influencers are visible and obvious on the organizational chart—executives and senior functional managers who believe that your solution will increase their divisions’ revenue or reduce costs; CIOs who believe (or don’t believe) in your technology.
Other influencers may be more behind the scenes–people who work in the warehouse or on the production line, office workers and administrative assistants, accountants and analysts—people who are likely to use your solution to do their daily jobs.
There are many more people who have informal and influential input into B2B decisions than just the executives who own the P&Ls.
4. Value will trump price almost every time. Almost.
Startups don’t succeed by selling commodity solutions. Angels don’t invest in firms unless the company has a convincing value proposition for itscustomers.
In most companies, functional managers and executives make decisions based on justification models that tie solution costs to anticipated benefits.
The mission of most purchasing departments is just the opposite—find ways to lower total costs and to deal with fewer vendors.
This is a difficult scenario for any supplier, but especially a startup company. If a purchasing department is setting the rules of the game, think long and hard before you sign up to play.
5. Sometimes “non- decision” is more formidable than the real world alternatives from your competitors.
If your customer doesn’t believe that there is a real cost to a non-decision or a delay, the process of deciding to buy hasn’t even started yet.
Some would say customers don’t buy because of product deficiencies or price points that are too high. Others might blame it on external factors—regulations, competition, or the economy.
While any one of these might be true, in most situations where a startup is unsuccessful in closing a B2B sale (and in every situation where the startup is surprised that this turns out to be the case), the entrepreneur doesn’t completely understand the way the potential customer makes decisions to buy.