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April 22, 2009
Beyond the B2B Buying Funnel: Exciting New Research about How Companies Make Complex Purchases
Posted by Jon Miller
There are entire industries devoted to researching consumer buying behavior, but until now there has been relatively little research into B2B buying behaviors. Marketo recently worked with Enquiro Research (as well as Google, Business.com, Covario, and Demandbase) to perform new qualitative and quantitative research into the (often irrational) ways that businesses make complex purchases.
The Myth of Rationality in B2B Buying
Most marketers accept that consumers are not entirely rational in their purchasing behavior, yet many of us still cling to the idea that business buying is completely rational. This couldn’t be further from the truth.
As I wrote in one of my most popular posts, Why Branding Matters in B2B Marketing, B2B buyers use heuristics in their decision making. Heuristics guide which options and information get considered and which get rejected, and they help us simplify complex decisions to their relevant core. That can be a good thing if you find yourself in Africa threatened by a lion — and it can be a good thing when the complexity of a B2B purchase would be otherwise overwhelming. As Enquiro writes, “All this is good, in fact, essential. It’s just not rational.” Enquiro goes on to point out that the B2B world has the added complexity of not just one irrational decision maker, but many — making understanding the buying process even harder.
It’s All About Risk
Emotions impact how decisions are framed and are heavily involved in the creation of heuristics. Emotions also impact decision making because we take the anticipation of emotions into our decision making. In other words, we balance the pleasure of the prospective possession with the pain of acquiring it. In consumer marketing, marketers can capitalize on the anticipation of positive emotion by appealing to aspirational feelings such as desire, but in B2B marketing, there is an asymmetry between the upside and downside of B2B purchases: the buyer does not experience the full benefit of the solution directly and may or not be rewarded for making a good purchase, but a bad purchase can destroy the buyer’s reputation and damage job security.
The Enquiro research shows that B2B buying decisions are usually driven by one emotion: fear. As a result, B2B buying is all about minimizing fear by minimizing risk. There is organizational risk, which can often be dealt with rationally, and personal risk, which is usually unstated and hidden from the rational process. Yet personal risk is a huge factor in B2B buying. For example, say that there is a board meeting where a potential purchase is discussed; if a board member mentions anything negative about a potential vendor, the personal risk of making that decision goes way up, and alternately, if he or she mentions something positive about a vendor not under consideration, that can “pre-wire” that vendor for success.
Managing Risk
Enquiro presents four strategies for managing risk:
- Approved vendor list. We’re more comfortable with companies we know. If someone has pre-approved a vendor, the risk goes way down — even if it’s not the best solution.
- Word of mouth (co-workers and friends). According to MarketingSherpa, user communities are the #1 source of information for researching B2B purchases. A referral or a recommendation from a trusted source goes a long way to minimizing risk. Of course, it’s easiest to build trust in person, but new social networks can help as well.
- Word of mouth (existing vendors). A good sales rep build significant credibility with their customers, and is therefore a trusted source for referrals.
- Credibility and position of vendors. We trust the wisdomof crowds, so if the ‘market’ says a vendor is good, then that reduces risk. This is the source of “nobody ever got fired for buying IBM”. But smaller companies can also establish thought leadership in their industry niche, creating trust in their brand that way.
Goodbye Funnel
The net-net of Enquiro’s research: As marketers, we like the traditional model of a simple, linear buying funnel since it’s easy to understand — but it doesn’t reflect the irrationality of actual buyer behavior, especially related to how we deal with risk. Buyers may very well still go through the phases of Need, Awareness, Consideration, and Purchase — but they don’t necessarily do it in a logical, rational, or linear fashion.
So, what can you as a B2B marketing professional do about it? Register for the B2B expert series of webinars to find out!
Vaibhav Domkundwar - ReadyContacts.com said on April 23, 2009 at 11:40 am
Awesome post Jon, and well very articulated. I just read Mac’s post on whether social media truly helps B2B lead generation and some of the points you mention about awareness and word of mouth are precisely the ones that drive users to “feel comfortable” about a product or a vendor and social media is a great asset for such vendors.
Having said that, I think just board recommendations or those from the offline word of mouth are limited and we need a Amazon reviews-like wider source of review data on B2B vendors and products as well that will help make decision making be driven by a wider data set. Yelp for B2B products is what I think would be great for vendors as well as buyers.
David Locke said on April 26, 2009 at 1:40 pm
Geoffrey Moore recognized risk as the primary organizer of B2B markets long ago in “Crossing the Chasam.” Despite this, risk and the reality of risk segmented markets has been ignored by the strategists.
The sales funnel has never gone away, and won’t do so. That risk segmentation just provides you with a sequence of sales funnels. That risk segmentation goes further to specify very different organizations facing each risk segment. The products differ as well.
Risk segmentation runs counter the myths of linearity and generic management practice.
The sales funnel is actually the marketing funnel, which momentarily dips into sales. There is a pre-sale fulfillment chain leading to sales, and a customer support-based fulfillment chain leading away from the initial sales and towards subsequent sales. Still, this continuity is broken by the changes in the customer base when you move from one risk segment to another. This change in customer base predicates a change in content across these fulfillment chains.
B2B2C: Are We Not All Marketing to People? | Marketing ROI or DIE! said on May 4, 2010 at 12:20 pm
[...] 6Marketo: Beyond the B2B Buying Funnel: Exciting New Research about How Companies Make Complex Purchases [...]
Brian Carroll said on April 23, 2009 at 9:14 am
Good post Jon. In the complex sale, we need to continually remind ourselves that companies don’t buy – people do. People often buy on emotion and back fill with logic. BTW – Bob Bly has a great discussion on, “Do People Buy Based on Emotion or Logic?” So why is this important?
In every buyers mind, there is fear, uncertainty, and doubt. Customers are weary of pitches, hype, pushy sales people and manipulative marketing. Here are some of the RISK questions your potential customers may be asking right now:
Is the company credible and solid?
Is there another company that is better?
Will your solution really work for them?
Budget: Can I afford it?
Vision: Will buying from you make a difference?
Is it going to be successful? Is this worth doing?
Can I trust you and your company?
Lead nurturing is about sharing content that helps people find the answers to these questions and reminds them of the benefits of working with you. People want to work with trusted advisors. People who truly “get them.”
By combining content with lead nurturing, your potential customer’s inner dialog should eventually say the following: “You and I have been talking for quite a while. You understand me, my company and my industry. You have given me useful and relevant ideas around this issue. You have helped me sell this idea to my colleagues and they understand and accept this idea. I realize this is going to be a challenging project but I think you can do it. Okay, let’s get going.”