The B2B Buying Process: What You Need to Know
April 21, 2022 Edwin Kooistra
When it comes to B2B buying, the process can seem a bit daunting. There are so many moving parts and stakeholders involved that it can be difficult to keep track of everything. However, by understanding the basics of the B2B buying process, you can make sure that your company is well-positioned to succeed.
The B2B buying process is all about identifying the needs of your customers. This can be done through B2B market research, customer feedback, or simply observing trends in the industry. Once the need has been identified, the next step is to define the requirements of the product or service that will address that need. These requirements will be used to create a request for proposal (RFP) which will be sent to potential vendors.
Conducting transactions in the B2B industry is not just slightly but significantly different from how sales and purchases are made in the B2C sector. The buying process, especially for tech products in the B2B sphere is complex.
This article explores the main differences between B2C and B2B buying processes and looks at the various steps and criteria for making a purchase decision in the B2B realm.
What Is the Difference Between B2C and B2B Buying Process?
B2B and B2C buying processes differ in a few key ways. For one, B2B transactions generally involve more decision-makers than B2C transactions. B2B buyers are also more likely to be influenced by factors such as reputation and relationships. Additionally, B2B transactions often involve higher dollar amounts than B2C transactions.
Here are a few other key differences to keep in mind:
- B2B buyers are usually looking for a solution to a problem, while B2C buyers are typically more motivated by factors such as price and convenience.
- B2B buying decisions are usually based on logic and reasoning, while B2C buying decisions are often more emotional.
- B2B buyers typically have a longer decision-making process than B2C buyers.
Keep these key differences in mind as you consider your marketing and sales strategies. Understanding the B2B buying process can help you better target your audience and close more deals.
The business-to-business buying process is usually an ongoing strategic step within any organization’s business environment.
The buying process for both B2B and B2C clients begins with identifying requirements. However, B2B customers are more likely to communicate their critical needs when seeking solutions.
Moreover, post-sales support is essential to B2B clients. All clients demand exceptional service, which includes support long after the transaction has been completed. B2B customers want continuous, high-quality service before, during, and after the transaction. Being quickly available to handle any difficulties they’re having (whether linked to their acquisition or a new problem) is critical for any B2B client.
Providing amazing customer service to B2B clients can increase retention rates, increasing the likelihood that they will reconsider future deals and purchases.
B2B Decision Making Process
When it comes to B2B decision making, there is no one-size-fits-all solution. Depending on the company, the industry, and the specific B2B product or service being purchased, the decision-making process can vary widely. However, there are some general steps that are typically involved in most B2B decision-making processes.
Most B2B purchases include five steps: detecting an issue or need, analyzing and comparing possible solutions, specifying the product’s specifications, selecting a provider, and explaining the choice.
B2B buyers require in-depth information about the products or providers they’re dealing with during the B2B decision-making process. Buyers may leverage online or offline sources to gather information. Buyers research company websites and speak with salespeople to learn about product specifications and prices. They also request product demos and trials. The B2B buying process tends to be more formal than B2C buying process.
B2B Decision Making Criteria
Now that we have reflected on the dynamics of the B2B decision-making process, we shall explore how different criteria fall into place when this process is underway.
When B2B buyers are considering making a purchase, they go through a process of evaluating their options and making a decision. This process can be broken down into four key steps:
1. Recognizing a Need or Problem
The first step in the B2B purchase process is recognizing that there is a need or problem that needs to be addressed. This could be something as simple as needing more office supplies or as complex as needing a new software solution.
2. Researching Potential Solutions
Once a need or problem has been identified, the next step is to research potential solutions. B2B buyers will often consult with colleagues, search online, and read industry publications to learn about different options.
3. Evaluating Potential Solutions
After researching potential solutions, B2B buyers will then evaluate the options and narrow down their choices. They will often compare products based on factors such as price, quality, and features.
4. Making a Decision
The final step in the B2B buying process is making a decision. B2B buyers will choose the product or service that they feel best meets their needs. Once a decision has been made, the purchase will be made and the cycle will start all over again.
Types of B2B Purchase
When we’re talking about B2B purchases, not all of them are the same and they can be categorized into different types based on different characteristics. Let us now look at the different types of B2B purchases that form the overall sphere of the B2B buying process.
Purchases Made by Producers
Producers are basically manufacturers or can be service providers as well. They basically buy raw materials or intermediate products to convert them into final product or service. If you look around, you’ll find ample examples of such B2B purchases. For example, your local fast food giant chain or even Apple inc. for a fact does B2B buying to source raw material.
In the case of Apple, it conducts B2B buying of parts and services across the globe for the assembly and manufacturing of their tech gadgets. Similarly, there are other examples in both the tech sector as well as the product and service industry that you can look at to further understand the kind of B2B purchases that are made by producers or manufacturers alike.
Purchases Made by Resellers
When we talk about resellers, we’re basically referring to firms and businesses that buy products produced by other firms and deal in their retailing without changing the product. These resellers sometimes actually sell the product below profit margin as well to attract customers to their venues which of course ends up damaging the brand image and value of the original product producer.
But nonetheless the reseller market is a huge industry within itself when it comes to B2B purchases. Giants like Target, Walmart and TJ Maxx have earned billions in profits due to this business model.
Purchases Made by Institutions
When we talk about institutions, we’re basically referring to the institutional markets which are nonprofits, private clubs, recreational facilities, and other such organizations. Institutions due to their sheer size and magnitude of operations constantly indulge themselves in B2B purchases.
For example, in the case of a private club chain, the institution plans to buy different types of handsets based on categories for their different rooms and offices. Therefore, they will indulge in bulk B2B buying.
The factor that they’ll probably consider the most important during this process would of course be the price effect because institutional buying is focused on how well you can operate by keeping the costs low so that you can serve the maximum number of people.
Purchases Made by Governments
When we talk about one of the largest realms of B2B buying, it is actually the purchases made by governments. Most of the country’s government spending forms a major chunk of the GDP. The governments of any state indulge in massive B2B buying whether it is in the form of arms and ammunition, health care machinery, construction material, edible items, etc.
The process for this of course is highly vetted and extensive which involves several steps and includes high scrutiny by relevant departments as well. This category of B2B buying is actually very sensitive as well because the purchasing patterns of a government can predict a lot about its economic state as well as future.
Stages in the B2B Buying Process
Now that we have developed an understanding of the different factors that go into the B2B buying process, we should now look at the various steps and stages involved in the buying process when talking about B2B transactions. The main phases are listed below:
- Recognizing the Problem or Need
- Assessing and Comparing Available Solutions
- Specifying What They’re Looking for
- Choosing a Supplier
- Justifying the Decision
Let’s explore this process in detail by looking at all these stages.
1. Recognizing the Problem or Need
The first stage of the B2B buying process is the recognition of the actual problem or need that gives rise to such a purchase. This need can be a newly formed pain point that a company wants to address or could be a market move in response to what the competitors are doing.
Once a business has recognized the problem that it needs to address, then it can move on to the further stages where it will not only look at the possible options but of course the cost and pricing factor as well.
2. Assessing and Comparing Available Solutions
Now that the problem or relevant need has been identified, it is time to look at all the available options and solutions to cater to that problem.
Solutions can be sought in two ways. Either you can look around in the industry and make a B2B purchase from a third party or you can also envision building the solution in-house. But for the sake of the B2B buying process, we will look at how solutions are sourced from other businesses and compare them to select the most optimal one.
3. Specifying What They’re Looking for
Now that a business has compared all the available options and solutions to them and chosen the one that they find most optimal for their business problem, they will move on to the next step. This step involves identifying and clearly specifying what exactly you want to be delivered from this solution.
As a business, you need to highlight the exact specifications, modes, characteristics, and deliverables that you need from a particular solution and how you envision that it will solve your issue and keep it maintained in the long run as well.
4. Choosing a Supplier
Now in this step, you need to choose a supplier or vendor. A supplier or vendor is the business that you would be getting into a purchase agreement. Depending on the nature of the product and the size of your business, the steps for choosing a vendor can be a long process or maybe a short one.
Some organizations are bound to go by longer vetting processes that involve bidding and scrutiny committees. Whereas sometimes, when the decision is made has a small financial impact or the business itself has a smaller existence, a supplier is chosen at the earliest, just by a limited number of decision-makers.
5. Justifying the Decision
The last step of the B2B buying process involves you defending your purchase decision in front of relevant stakeholders. These relevant stakeholders can range anywhere from your direct line manager to maybe the board of directors for the company. It all depends on the size of the organization as well as the magnitude of the purchase that is being made.
Reasons as to Why the B2B Buying Process Is Changing
As the world is transforming at a rapid pace, so is the corporate environment and B2B industry. The current B2B buying process is not what it was five years ago. It has transformed over the years, and alongside it has also incorporated some significant changes.
These changes can be attributed to several reasons along with their impact on the overall business cycle. Let’s look at some of these reasons and how they have changed the B2B decision-making for purchases.
A Well Informed Buyer
In the early years the source of information for a B2B buyer was usually the sales agent. The B2B buyer had to solely rely on the sales agent to learn more about the product or service and trust the individual with what he or she would say.
Now with the technological change, the buyer in this scenario has become very well informed. Websites, blogs, publications etc. all provide a source of relevant and legit information to the buyer.
Therefore, the buyer is not only more inquisitive, but it’s also on the stage to ask more in depth questions from the B2B seller agent itself. This change has transformed the B2B buying process.
Less Opportunities to Influence
As product knowledge and information are now widely accessible online, B2B buyers can explore, compare, and acquire data on B2B sellers independently. They only spend around 5% to 6% of their time speaking with sales personnel while considering several vendors. As a result, salespeople have less opportunity to influence their prospects’ purchase decisions.
Therefore, the B2B buying process has become more cutthroat for the seller and their agents as they have less and less opportunities to impact the decision of the buyer.
Due to technological advances and different software being introduced into the market, the communication gap between the seller and the buyer has increased. This is because the buyer is now able to compare different vendors and third party solution providers with the click of a button and therefore the face to face human interaction between both the parties has reduced. This no doubt has made the process easier for the buyer. but of course, with the elimination or reduction of the human factor, the process has become slightly mechanical as well.
As barriers to business have dropped in these years, more and more firms are entering the market, and the world is also transformed into a global village. Therefore, with a higher number of competitors in the market and an increased number of options to choose from, the buying process has taken on a new form and is becoming more and more difficult each day.
Now buyers have a plethora of options to choose from with competitive pricing as well, which of course translates very positively for the buying end of the B2B purchase decision and adds more pressure on the B2B sellers.
Volatility of the Buying Cycle
The buying process itself has been impacted deeply in recent years. It has become unpredictable and more volatile due the introduction of longer buying cycles. This can be attributed to the fact that now decision making units in any business consists of multiple stakeholders. Therefore, it takes a longer period of time to conclude a purchase decision.
This not only requires extensive investment in terms of time but of course requires patience and financial injection as well because you need to keep yourself on your toes as a B2B seller to pursue a certain buyer.
How Can the B2B Buying Process Be Improved?
The B2B purchase decision cycle, even though it has seen a lot of improvements and transitions over the years, it still can be improved and refined in specific ways. Let us look at the different steps you as a business owner can take to enhance the buying process from a buyer or a seller’s approach.
- 1. Make it easier for potential customers to find your company and learn about your products or services.
- Develop a plan for the buying process and ensure that you know at which stage of the funnel you and your company are standing.
- Not relying on technology solely and balancing different tools and the human factor in the process.
- Adopting a proactive approach in data collection and getting to know more about the product or service you need.
- From the sellers’ perspective, always remember to offer good customer service and, from a buyer’s perspective, always focus on developing a good relationship with the vendor on mutually beneficial grounds.
Frequently Asked Questions
How Do B2B Buyers Buy?
B2B buyers are looking for solutions to their problems. They want products and services that will help them be more successful in their businesses. They are not interested in products that are not relevant to their business or that will not help them solve their problems.
When B2B buyers are looking for solutions, they will often start by doing research online. They will read articles, blog posts, and reviews to learn about different products and services. They will also talk to their friends and colleagues to get recommendations.
Once B2B buyers have a good understanding of the options available to them, they will start to compare products and services. They will look at price, features, and quality to find the best solution for their needs.
Who Participates in The B2B Buying Process?
The B2B buying process steps have multiple stakeholders, including the vendors, the businesses involved, the decision-making units on both sides, and the final decision-makers in senior management.
Who Makes Buying Decisions in a Company?
Buying decisions in a company are usually group decisions that go through certain stages. Initial scrutiny is done by managers and product owners, and as the process gets more complex, the final decision is made by senior management.
As a tech business owner, B2B buying and selling is undoubtedly an essential component of your business model and B2B sales strategy. The B2B buying process has seen transformation and transition in recent years. The introduction of technology and increased competition has made this process complex yet more accessible at the same time.
Therefore, it is recommended that you focus on this decision-making process with the utmost attention to detail and effort.
Selling is not just a phone contact followed by a sales pitch and a signed contract. It’s evolved into a very planned procedure aimed at maintaining long-term partnerships after the contract is signed. But establishing these long term relationships is not easy considering the sheer number of competing businesses in the B2B landscape.
This is where we can help. Chasm assists firms make data-driven decisions rather than depending on gut emotion as a sales consulting service. To analyze performance versus your goals, our sales effectiveness experts mine your internal data, procedures, reporting, KPIs, results, and tech stacks.
The findings shed light on sales issues, underperforming items, and sales efforts. All of these factors contribute to the optimization of your sales process and the understanding of why clients behave the way they do.