B2B buying risk is a hot topic these days (a Google search on that phrase returns over a million results) and I’ve done a lot of reading on the subject. There are lots of charts and matrices and breakdowns of the interplay between institutional risk and personal risk. But my favorite to-the-point summary of the issue states simply: “99% of B2B buying is covering your butt.” Here at MLC, we agree. How buyers perceive risk and how marketers do and should confront it are among the central issues in MLC’s B2B work this year.
First, a brief summary of how we got here: During the recession, risk aversion among B2B buyers stormed to the forefront as the consequences of a bad decision became more serious. Supply chain risk (i.e. that the selected supplier might go out of business) was very real as were the chances that the buyers themselves might be the victims of downsizing. Many companies instituted a freeze on purchasing anything that wasn’t 100% necessary. Things aren’t totally back to normal, but we have heard from most B2Bs that customers are buying again. But a strong risk aversion remains.
By now, most have faith that suppliers who made it through the recession are here to stay and layoffs are no longer imminent in most industries, but there is still a lingering fear about the consequences of a wrong decision. To cope, buyers are doing more research on B2B purchases, delaying contact with Sales (to prevent bias from sneaking in), and involving larger groups of decision-makers in the process (including professional purchasers such as third-party consultants and Procurement). As a result, deal velocity is slowed and solutions are often unbundled into their component parts.
What are buyers really worried about? We think it breaks down into two major categories with some sub-categories under those. At the highest level, the two biggest risks for buyers are:
1. That a given supplier’s solution will meet their needs; and,
2. That that supplier will be a good company to do business with.
Under that first category is where most of the action lies. We think it breaks out into the following three sub-risks:
a. That the solution satisfies the buyer’s basic requirements and specs;
b. That the solution is the best choice among the alternatives; and
c. That the solution will work inside the buyer’s unique environment.
Part C – that the solution will work inside the buyer’s unique environment – seems to us to be a particularly difficult worry to soothe because it requires a certain ability to predict the future. Not only does the supplier’s offered customization have to be adequate and perform as advertised, but the solution has to meet or surpass adoption projections and not be negatively impacted by some unforeseen environmental factors. Very little of this can be known for a new purchase and/or new supplier. Minus a crystal ball, B2B buyers are sometimes left to cross their fingers that things will work out and marketers to hope they are convincing enough to overcome the fear. But, as my old business school professor used to say (back before “hope” was co-opted by the Obama campaign); “Hope is not a strategy.”
B2B marketers – What do you think are the most critical risks B2B customers are worried about? Answer this quick two question poll. I’ll update you on the results in a future post.
MLC members: Want to learn more about how B2B customer risk perceptions are impacting your job as a marketer? Register for our B2B Annual Executive Retreat here. First one is June 30 in Chicago.
Related posts:
Commenting Guidelines
We hope conversations will be energetic, constructive, and provocative. All posts will be reviewed by our editors and may be edited for clarity, length, and relevance.
We ask that you adhere to the following guidelines.
1. No selling of products or services.
2. No ad hominem attacks. These are conversations in which we debate ideas. Criticize ideas, not the people behind them.