Last Updated Oct 28, 2011 5:47 PM EDT
Traditionally, B2B buyers primarily relied upon sales reps to provide information and expertise about the products that their firm needed to purchase. As such, sales reps in a certain sense were in the transportation and delivery business.
The typical sales rep spent much of his or her time carrying product information from the company to the customer. Sales calls involved showing the latest brochure, delivering a product presentation, and explaining the benefits to the customer. This behavior was of value to the customer because the sales rep was presenting information that the customer needed in order to make a buying decision.
The Internet, however, has now made that sales methodology obsolete. Using the Internet, customers can get product information at the same time as the sales rep, not just about the sales rep's offerings, but the offerings of all of the rep's competitors.
In this environment, product brochures and elaborate product pitches are meaningless because the customer already knows what to buy and can locate multiple places to buy it. As a result, the importance of the sales rep to the customer as a deliverer of information has waned, almost to the point of non-existence.
Similarly, the Internet has vastly increased the ability of customers to set their own price. In the past, the simple mechanics of gathering data on competitive products (and comparing relative prices) was a formidable job, requiring many man-hours of work on the part of the customer.
Such work was productive only when the customer was comparing products that were nearly identical, and where the difference in price was large enough to justify the effort required to uncover that difference.
For example, a company purchasing a complicated computer system could easily justify writing an RFP, reading multiple vendor proposals, and finally selecting the right vendor because the difference in price (or, more precisely, total cost of ownership) between the two competing systems was likely to be far greater than expense of the complex buying process.
However, in cases where the delta between the price of two competing products was relatively small, customers were naturally reluctant to go through such an expensive process. Instead, they'd depend upon local sales reps to provide basic product information and trust them to provide the best price. Often these relationship were "locked down" with the purchasing department, thereby guaranteeing that certain amount of buying behavior would take place going forward.
The net effect of such relationship was to leave the power of setting prices to the selling firm and (by extension) the sales rep who represented the firm. As long as the price was not egregiously higher than what else was available, the customer would continued to buy from the "approved vendor" at the price set by that vendor.
Today, however, customers can instantaneously compare products online, both in terms of functionality and price. Suddenly, it's become relatively inexpensive for customers to search for the lowest prices for many goods and services that they might require.
This ability to easily and quickly find alternatives tend to drive prices downwards because, all other things being equal, the customer can now purchase the lower-priced product without carrying a heavy financial burden of researching alternatives.
Customers, and the processes they use to buy, have changed in other ways as well. Opportunities that were once within the purview of one, or perhaps two, decision-makers may now involve an entire committee. Complex sales that previously could have moved forward on the basis of general consensus among the buyer's management team are today often subjected to increased levels of scrutiny and formal approval.
There are two sources to these changes in buying behavior. The first source is the economy. Many companies have reacted to the current recession by tightening financial controls and adding additional roadblocks, in order to limit purchasing to essential products and services.
The second source of the change in buying behavior is the flood of technology into the infrastructure of most corporations. Because organizations are better connected, they're more inter-dependent, which means that large purchases - and the operational changes that they might involve - tend to ripple through a corporation, like a sharp tug on one strand of a gigantic web.
Today, it is not unusual to encounter opportunities where the customer's senior management, procurement group, legal group, financial group, engineering group, and even human resources possessing the right to review and approve major purchases.
As a result, it is no longer enough for a sales professional to cultivate one or two key contacts inside an account. Instead, it's now necessary to sell to all these constituencies, each of which is likely to have a different agenda and a different reason for being interested in the offering and its impact on the entire customer organization.
In addition, each element of this multitude of stakeholders has the potential to delay or block the purchase, which can create a truly Byzantine sales cycle. Large opportunities now take much longer to develop and close, and thus require sales reps to manage the process with both patience and precision.
This would be a big enough pain in the tuchus if it were merely timidity and risk avoidance on the part of the customer. In fact, the slower decision-making that results from greater levels of financial control often reflect the potential for very real disasters from the viewpoint of a selling firm and the people who represent it in a sales capacity.
For example, while large companies usually have little difficulty getting credit to make business purchase while still covering operating expenses, smaller firms are often at the mercy of a banking sector that's reluctant to lend to any but the most stable corporations. As a result, it's not always clear whether a customer who wishes to purchase, and intends to purchase, will actually have the money to purchase when it finally comes to paying.
Because of this, you are now expected to constantly re-qualify the financial viability of potential and existing customers. At the same time, you'll need to get far more creative in terms of crafting purchasing terms that may need to accommodate problems with cash-flow. All of this takes time and effort, all of which must be layered atop whatever effort you're already taking to develop and close the opportunity.
To summarize, today's business buyers:
- Often know more about a product category than the sales rep.
- Can more easily make product and price comparisons.
- Are therefore better able to demand price concessions.
- Have increasingly complicated buying processes.
- Experience frequent changes in management.
- Are experiencing more extensive financial controls.
- Require sales professionals to work harder for the sale.
I'll be writing more about this in subsequent posts.
NOTE: The above is based upon the draft of white paper that I wrote for Howard Stevens, CEO of the HR Chally Group.
RELATED POSTS:: A wealth of practical techniques for B2B selling can be found in my soon-to-be-published book How to Say It: Business to Business Selling, now available for pre-sale here.