B2B selling is about more than competing on price and functionality; meeting your clients’ subjective needs drives sales and customer loyalty.
A buyer comparing competing tenders to supply company vehicles is looking for more than just wheels for employees. As well as considering value for money, after-sales service and warranties, she’s also looking for a brand that matches her company’s ethos, and for cars execs – particularly senior ones – will enjoy driving.
Writing for Harvard Business Review, Eric Almquist, Jamie Cleghorn and Lori Sherer argue that, for even the most ubiquitous of products, buying decisions are predicated on a hierarchy of practical and subjective considerations. “Meeting specifications at an acceptable price in compliance with regulations while abiding by ethical standards” count as mere “table stakes”, they say. What really drives sales is how well you meet your customers’ higher psychological needs.
HIERARCHY OF NEEDS
In truth, there’s not much difference between corporate and personal buying decisions – both are based on a complex mix of practical and psychological considerations. The authors identify 40 “elements” (listed in brackets) which inform buyers’ decision-making processes. These are grouped into five tiers to form a structure reminiscent of Maslow’s hierarchy of needs:
1) Inspirational values – factors that enhance a firm’s reputation, contribute to the company’s overall vision, and which give buyers the sense that their purchasing decisions are helping to future proof the company (vision, hope, social responsibility).
2) Individual value – steps you take to reduce buyers’ anxiety, to appeal to their aesthetic values, and to show how their decisions reflect well on them (network expansion, marketability, reputational assurance, design and aesthetics, growth and development, reduced anxiety, fun and perks).
3) Ease of doing business – elements which enhance your relationships with customers; for example, factors that make your product a good cultural fit for the buyer, and which show your commitment to the buyer’s organisation (time savings, reduced effort, availability, responsiveness, expertise, decreased hassles, information, transparency, variety, commitment, stability, cultural fit, organisation, simplification, connection, integration, configurability, risk reduction, reach, flexibility, component quality).
4) Functional value – most often the focus of B2B companies: product performance, cost savings and scalability (improved top line, cost reduction,product quality, scalability, innovation).
5) Table stakes. Being able to show that the product does what it’s supposed to do and complies with regulations, at a reasonable price (meeting specifications, acceptable price, regulatory compliance, ethical standards).
THE BUYER’S PARADOX
The authors surveyed 2,300 “decision makers” from the IT infrastructure and commercial-insurance industries to try to figure out what makes buyers tick. What they discovered was a paradox at the heart of the decision-making process.
When asked which elements inform their purchasing decisions, buyers talked in terms of table stakes and functional values – particularly cost reduction. But when they were asked which elements of the hierarchy impact on their likelihood of making a repeat purchase, the same respondents came to a very different conclusion: out of the 40 elements, buyers rated product quality, expertise, and responsiveness most highly – cost came 27th on the list of priorities.
There’s a nearly one-to-one correlation between satisfying your customers’ highest-rated needs, and the likelihood they’ll make a repeat purchase. To work out what customers really want, you need to survey them, asking them to rate the elements based on both their impact on the initial purchasing decision and their impact on customer loyalty, and cross reference their answers.
WHAT TO DO
1) Benchmark. Survey your existing customers to see how you compare to your rivals, using the 36 elements that rank above “table stakes”.
2) Talk to customers. Analyse your customers’ networks of decision makers, and ask them about their purchasing priorities and what values inform their choices. Look at buyers from across the full range of businesses you supply. Target fresh opinions rather than existing customer panels and user groups, and if possible, use a third party to do the survey.
3) Increase value. Armed with new data about your customers’ needs, hold brainstorming days that include representatives from customer-service personnel through to product planners. The aim is to add value right across the product offering and throughout its life cycle. Ask people to come prepared to share their ideas.
4) Refine, test, learn. Choose the best ideas, test them and tweak them before roll-out so that what you do has the maximum chance of matching your customers’ value hierarchies.
5) Reevaluate. Rerun your original research to determine whether the changes you’ve made have had a positive impact on your customers’ experience.
Your customers are after more than the basics – there’s a hierarchy of psychological needs people are looking to satisfy when they buy, and the more of those needs you satisfy at all levels, the better your sales will be and the more loyal your customers. The trick is to remember that while your customers may tell you they prioritise low-level elements, this is not the whole story. Work out what your customers really want, meet their needs and thrive.