A B2B decision-making process is notoriously complex, especially when multiple decision-makers and customized products are involved. In comparison to B2C purchases, these products have a much higher value.
In addition, most B2B decision makers take a long-term view and are hesitant to change vendors or products as it would result in additional expenses.
Business decision-making involves multiple stakeholders and includes multiple stages, so it is crucial for them to consider all these factors and make the right decision for the organization as a whole.
Who Are Business Decision-Makers?
The multi-departmental impact is generally associated with any new B2B product or service.
For this reason, businesses generally include representatives from every department and function that will interact with the new product or service. The inclusion of people with various levels of seniority is another practice among companies when setting up a B2B decision-making unit to bring in perspectives from different levels.
A senior-level member typically oversees and monitors the discussion, even if most engagements are carried out by mid-level or junior-level executives. For business-to-business decision-making, finance and procurement teams are also often considered since this typically involves a significant financial impact.
Stages of the Business Decision-Making Process
A B2B product or service decision-making process generally has five stages:
1. Identifying and acknowledging a need
Identifying the need is the first step in B2B decision-making, whether it is to streamline an existing problem statement, gain a strategic advantage over the competition, or simply follow the industry norm.
2. Getting an overview of the solutions available
At this stage of the B2B decision-making process, the business determines how it will solve its problem statement in the future. During this stage, the business generally analyzes the pros and cons of the various solutions available in the market. For example, deciding whether to develop the solution in-house or use a third-party product or simply ignore the problem, for now, are certain decisions.
3. Defining the budget and the product specifications
Generally, at this stage, the company determines if the solution is a product or a service based on its understanding of the various solutions available.
Among others, they specify what they want from the product or service and how much they are prepared to spend on it.
4. Identifying the vendor
Following the product or solution, identifying potential vendors, and comparing their offerings is the next step. According to their requirements and convenience, B2B organizations may follow a formal or informal decision-making process.
5. The final shortlist and approvals
As part of this process, the business determines whether the product or service is worth the investment and, if necessary, asks for references and checks up on the vendor through contacts. It is also at this stage that the senior management could approve the purchase.
During the decision-making process, businesses can visit any of the 5 stages at any time and any number of times.
The 4 Factors That Influence the Decision-Making Process
Many factors can influence the decision-making process, but they can generally be divided into four categories:
1. The Product’s performance
It is important to consider all of the features and benefits of the product when evaluating its performance. B2B decision-making is primarily influenced by this factor. The longevity of the product or service is another critical aspect to consider when evaluating it. Additionally, the product or service must be considered for how long it will remain relevant as well as how long it will perform optimally.
2. Vendor’s capability
The expertise of the vendor in the domain that the business is looking for is another factor considered during the B2B decision-making process. Based on background checks and testimonials from similar-sized companies, businesses evaluate the vendor’s ability to deliver timely and services offered. Some businesses even look into the previous projects the vendor has undertaken and the services they provide to other clients.
It is also important to evaluate the vendor’s ability to provide excellent customer service during and after the sale.
3. Value for money
Pricing is one of the most crucial factors in any B2B decision-making process. In terms of pricing, it’s not just the product’s actual price that could be a deal breaker. The value the product or service brings to the company is what matters. Furthermore, a great deal of importance is also placed on the overall savings the development would bring to the organization through process streamlining and automation. When setting the value of the product, some companies also consider its psychological benefits.
Besides the discounted rates, businesses may also emphasize the credits and allowances being offered by the vendor. A company is more likely to work with a vendor who offers the best price and has no hidden fees in most cases.
4. Post-sales service
Businesses consider post-sale service during their decision-making process as one of the most important elements. In general, the more complex the product or service is, the more post-sales services the business would expect and evaluate. Not just during the warranty period, but also afterward.
Since B2B decision-makers consider various aspects during the decision-making phase, the B2B decision-making process can be extremely taxing and lengthy. As you approach these decision makers for your B2B sales, keep these elements in mind to address their concerns faster and speed up the process.
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