- The days of a single economic decision-maker are over
- The buying center's decisions can be emotional
- The buying center is made up of four distinct roles
Customers are among the most valuable and fiercely contested capital of any company. Their value is measured by how profitable and stable their relationships are with the company -- both now and in the future. This value continues to rise as companies retain their existing customers in the face of increasing competition for them.
To be successful in this contest, Gallup has found that business-to-business (B2B) companies must engage their customers and create customer impact by providing a meaningful change in customers' business (or business processes) that significantly improves their business performance. But who are those customers?
In a typical business-to-consumer (B2C) company, it's easy to answer the question, "Who is my customer?" Customers are the people who purchase a company's products and services. They are the passengers whose names are on the airline tickets. They are the shoppers in line to check out at the local mass merchant. They are Internet shoppers, checking account holders and travelers who stay overnight at a hotel. And in most cases, they are easy to identify.
But in B2B companies, the definition of a "customer" is more elusive. This is because several decision-makers from different functional areas in a B2B company usually jointly make decisions to purchase products or services. This decision-making body is called a buying center, and in general, the larger the company, the larger the buying center. In this article, when we talk about customers or clients, we are referring to members of a company's buying center.
"The days of a single economic decision maker are over in most companies and industries. Even some small businesses make decisions in groups," Tony Rutigliano and Brian Brim note in their book Strengths Based Selling. "And even those lone decision makers have trusted advisors they listen to who can influence their thinking."
The Buying Center's Purpose
A buying center functions to optimize an organization's procurement process by bringing together expertise and knowledge from all parts of the organization. Buying centers typically make long-term investment decisions, committing their company to a particular solution or a partner for an extended period. Making a wrong decision can result in substantial costs and can be extremely detrimental to the business.
Because of the risk involved, these decisions often have both an emotional and a rational component. Members of a buying center typically decide in favor of suppliers that make them feel that doing business with them entails the least risk and delivers the highest benefits to the company.
A recent study in Germany, for example, looked at the purchase decisions made by buying center members in mechanical engineering, electronics and automation industries. Almost eight in 10 decision-makers (77%) indicated that they disregarded emotions when making purchasing decisions, while seven in 10 (70%) claimed to rely only on objective facts. However, a majority of the respondents (54%) also said that they would let a deal fall through if they had a "bad feeling" about it, despite favorable facts.
These findings suggest that the final decision isn't a purely rational choice, even among German technical and engineering purchasers. In other words, even for the most rational of purchasers, feelings are facts.
The Four Roles in the Buying Center
No matter how large or small, a buying center is made up of individuals who play four distinct roles: decision-makers, influencers, buyers and end users. These roles have different levels of influence on the final purchase decision, but they are all important stakeholders.
- Decision-makers are members of senior management, authorized signatories or policymakers who jointly or exclusively commit funds, make choices and sign off on products and services. They make the final yes-or-no decision on purchases.
- Influencers are employees who influence the decision-making process, set standards and have an advisory role but who are not decision-makers themselves. They influence whether companies choose to do business with a supplier or continue to use and grow relationships. They serve as formal or informal advisers in the purchase process.
- Buyers are employees, such as purchasing agents or procurement specialists, who seek and assess tenders and are involved in the procurement process itself. They are usually involved in decisions that define the terms of the contract.
- End users are employees with whom account representatives interact most often or who coordinate activities with the supplier. They are also employees who ultimately use suppliers' products or services.
Depending on the product or service, a buying center can involve the procurement department, technical or professional experts, managers and employees who will use the product or service. The account team must interact with members of the buying center differently depending on their role and the amount of influence they wield in the final purchase decision.
The Account Team's Responsibilities
The B2B sales cycle is often lengthy and complex, and the success of the supplier-client relationship requires an ongoing commitment from the account team. Crucial activities for an account team include understanding their client's decision-making process, identifying the members of the buying center and the roles those individuals play within the buying center, and ensuring that account team members build strong relationships with the right people on the client side.
Each buying center member's impression of a supplier is the result of direct personal experience and information exchanged with other members of the buying center. As buying center members talk to one another about their experiences with the supplier -- through formal discussions or meetings or informal conversations in the cafeteria or elevator -- they influence perceptions of that supplier.
Suppliers that want to optimize relationships with buying center members must understand the makeup of each account's buying center and its members' needs and roles, which requires more than knowing each member by name. The first step in gaining this understanding is an exploration of the customer's decision-making process: How does the purchasing process work? Who initiates the purchasing process? Who provides input? Who makes the actual decision? Whose approval is needed?
For too many suppliers, the buying center is a blind spot. It is not enough to identify a single contact on the client side; suppliers need to know who all of the players are, what role they play in the purchase decision and how they evaluate the strength and quality of their relationship with the supplier.
Gallup's work with a B2B technology services company demonstrates how account teams can be unfamiliar with the makeup of their own clients' buying centers. Account team members at the technology services company sometimes classified buying center members as decision-makers, when they actually only influenced a decision or had no effect on it. In other cases, account teams failed to identify people with decision-making authority or those who could strongly influence a purchase decision.
Across this same company, knowledge of their clients' buying center members varied among account teams. Some teams had developed an in-depth understanding of their clients' buying center members, while other teams struggled to identify key players.
This type of variance in buying center knowledge is typical for most B2B companies. To improve customer engagement and ensure the stability of crucial customer relationships, companies must systematically measure and manage their buying center knowledge and relationships at the account team level.
Removing the Blind Spot
Too often, a lack of knowledge about a customer's buying center and the roles its members play is a significant blind spot for B2B suppliers. Ensuring that your company fully understands the composition of its buying centers will enable you to position and allocate internal resources more effectively and with better results.
Using a disciplined approach to identifying each buying center member and his or her role helps your company understand whether it has properly positioned itself with key players, such as the decision-makers. That positioning is essential if your account teams want to demonstrate how their contributions are key to their customers' success.
This approach also helps companies gauge whether they are allocating the right amount of time and resources to establishing, maintaining and optimizing crucial relationships. Armed with this knowledge, suppliers can adjust their actions in a focused and informed way.
In the next article in this series, we will outline the steps that leaders, managers and account teams can take to improve their knowledge of and relationships with their clients' buying centers.