How To Make Better B2B Purchasing Decisions
Retail therapy. We’ve all heard of it, and most of us have probably used retail therapy as a coping mechanism at some point. Sometimes that shiny new pair of shoes or video game is just the thing to help us feel better!
The purchasing decisions made while doing “retail therapy” are emotion-based. And frankly, a lot of our purchasing decisions are made emotionally—even in B2B purchasing. In today’s blog, we’ll cover how emotion plays into B2B purchasing and 3 strategies to help you become a smarter B2B purchaser.
Emotions & B2B Purchasing
Harvard business professor, Gerald Zaltman, in his book How Customers Think: Essential Insights into the Mind of the Market, says 95% of purchasing decisions are subconsciously based on emotion. We’d like to think that we’re all highly rational decision-makers, but Zaltman reveals that our emotions generally drive the purchasing train.
Emotion-based purchasing decisions even happen in the B2B world, though we often associate emotional, impulsive purchases with B2C settings. But it’s naïve to think that impulsive buys are the only emotional ones. While B2B purchasers often make decisions after a much longer deliberative period, you’d be mistaken to think that those choices are fueled any less by feelings.
In fact, a 2013 study from Google, Gartner, and Motista surveyed over 3,000 buyers across various industries only to reveal that B2B purchasing decisions emotion-based and they may be driven by emotion even more than consumer purchasing decisions. B2B purchasers were far more emotionally connected to their vendors and other service providers than the average consumer. Most B2C brands in the study had an emotional connection with 10%-40% of their customers. Conversely, the majority of the B2B brands studied had an emotional connection with 50% or more of their customers.
Why is Emotion Integral to B2B Purchasing?
When you get right down to it, B2B purchasers are human, just like everybody else. They care about their business, and they care about how their purchasing decisions impact that business. Even more so, they care about how their purchasing decisions impact themselves at that business.
The stakes of B2B buys are often much higher because of the high dollar amount. For example, suppose a B2B purchaser is responsible for acquiring million-dollar project management software for their business. In that case, that person risks losing their job or work reputation if the purchase ends up sour.
How to Make Smarter B2B Purchasing Decisions
The first step in any personal or professional improvement process is recognizing that there is space to grow. As scientists and researchers learn more about purchasing behaviors, we can apply this information to not only how we sell products and services but also to how we buy them.
Here are the three main considerations to account for if you’re a B2B purchaser:
1. Avoid Loss Aversion (a.k.a. FOMO).
We’ve probably all experienced FOMO (fear of missing out) in our personal lives. I’m a huge baseball fan, so if some of my friends were going to a world series game I wouldn’t want to have FOMO and miss out on the game or the quality time with my friend group. But what’s true in our personal lives also bodes in our professional ones.
Psychologists call this “loss aversion.” Loss aversion is the theory that experiencing loss is significantly more psychologically painful than experiencing the pleasure of an equivalent gain. This bias causes people to take greater risks to avoid losses. We tend to place more value on what we already own. For example, a person is less likely to invest in a risky stock, even though the potential for gain is very high.
We all know that operating a business involves some risk, especially when managing finances. But sometimes, such a fear of loss can detrimentally impact one’s ability to take appropriate risks. So then, what’s the solution?
Reframing the question or casting it in a different perspective is often a good way to start. Instead of asking, “how much is there to lose?” ask, “how much is there to gain?” Another way to add some perspective is to question, “what’s the worst that could happen if we follow this course of action?” You may be surprised at how a different perspective influences your decision-making.
2. Differentiate Between False Market Scarcity and Real Market Scarcity
Scarcity marketing is a tried and true method to increase demand for a product or service. It’s highly effective in B2C marketing—like a “low stock” alert on a clothing website—but B2B marketers harness it, too. B2B buyers must then determine which are marketing tactics and which are realities of the industry.
In this case, market research is your best friend. B2B buyers should research the supply chain issues of the market, big industry mergers or acquisitions that could impact their purchase and investigate the various vendor options. Give yourself the broadest perspective you can. The more puzzle pieces you can put in place, the easier it is to see the whole picture.
Because the B2B purchasing process tends to be a bit longer than in B2C, a B2B buyer will hopefully have time to determine the realities of the vendor’s business and supply chain. This is a matter of asking the right questions of your potential vendor. Is the company really short-staffed or are they saying that to close the deal faster? Is the price going up because the economy is struggling or because the product or service is actually worth more?
In the current economy, it’s sometimes hard to differentiate between false and manufactured market scarcity. In many cases, supplies are running low, quality workers are hard to find, and the price of everything is rising. Determining if such factors impact a potential vendor is key to discovering the realities of the market.
3. Do Your Homework—Social Proof isn’t Everything
Word of mouth is often the best form of marketing. How many of us have tried out a mechanic after hearing a good recommendation from a friend? Or maybe you’ve bought a product you saw a social media influencer talk about. I’m guilty of this one! I’ve even foregone watching several movies because of low Rotten Tomatoes scores. Even the reviews section on a product page offers tons of social proof about the quality of the product. These are all examples of social proof, a highly effective form of marketing. People want to know what another human being thinks about the product or service.
While recommendations from real people are a solid place to start and a great form of case-specific research, they aren’t everything. But don’t assume that just because someone else has tried a product, they have all the answers or the only valid opinion on the topic. This aligns with my second point. You need authentic information on the market and business to make a truly educated decision. B2B purchasers should research the details of the product or service and follow up with questions for the vendor. Then research if there are better options.
At the end of the day, all three of these concepts tie together. Manufactured market scarcity can make B2B purchasers loss averse, and so can real market scarcity. Social proof, like testimonials and reviews, can also be structured to promote false market scarcity. B2B purchasers must be aware of how these concepts stand independently and work together to manipulate the purchasing process. But overall, doing your homework and asking the right questions can help you find the information you need to make the best choice for your business and put you in the right headspace to make a well-reasoned purchase.
Check out our blog for other best practices, site enhancement ideas, and industry innovation.