But when it comes to B2B (business to business) purchases, buying a product or service is not as easy as picking one. The effort is messy – it requires several players, research and analysis. Whether it’s raw materials, technology or service providers, B2B buying choices can make or break your company’s productivity, profitability and future.
The blog is an in-depth how-to for the murky waters of B2B buying. Let’s go through each step of the decision process, give your insight on what to look for and how to make smart decisions based on your business.
What B2B Buying Decisions Are Harder to Make?
There are two main reasons why B2B (business to consumer) purchases are more complicated than B2C (business to consumer):
Multiple decision-makers: When purchasing for B2B there are often many different decision-makers, such as procurement teams, department heads, and C-suite executives.
More expensive: Buying B2B is usually a big investment and therefore involves more analysis, due diligence, and risk management.
Recurrence: B2B purchasing can impact an organization over years, be it in terms of efficiencies, cash flow or even future planning.
Scalability and customization: B2B platforms have to be adapted to the specific business requirements which often means a lot of negotiations and customizations.
Despite these intricacies, B2B buying should be done with a plan and methodology for the best results.
Step 1: Determine Your Purpose and Needs.
But before you start looking at any vendors or suppliers, make sure that you know exactly what your business needs and goals are. This is the first step that sets the stage for the whole buying journey and gets everyone on the same page.
Key Actions:
Analyze the needs in the internals: What are your challenges? Whether it is automating operations, improving the customer experience, or building out your product portfolio, you want to get the buyer to make the purchase.
Engage the relevant stakeholders: Gather input from every department who is going to be affected by the purchase (finance, operations, IT, etc) to ensure their input is early on.
Prioritize: Decide what’s most valuable price, scalability, customization, technical support, etc. — and prioritize them based on your business requirements.
Once you know what you want and need upfront, you can be sure that your buying journey is specific and fast.
Step 2: Identify Potential Suppliers and Partners
Once your goals are established, then you have to look up suppliers or service providers. This stage is when you make a list of vendors who might suit you, and go into more detail.
Key Actions:
Market research: Look on the internet, in the reports, or from other peers to get a set of vendors to work with.
Know the market and have good reputation: Find vendors who know their business or are known for offering solutions similar to yours.
See past projects & case studies: Case studies and testimonials can give you a better idea of the supplier’s ability and their solution for problems like yours.
Don’t forget to make a list of possible candidates so you have all your options in the rear view before whittle down your options.
Step 3: Create a Shortlist of Qualified Vendors
You’ve got some suppliers lined up, now it’s time to start narrowing down your options. This is where you begin to measure each vendor against the parameters you created in Step 1. It’s to get a shortlist of those who have the potential and fit your business.
Key Actions:
Evaluation of vendor experience: Test all the vendors on experience, certifications, technical skill sets and bankability.
Compare product/service features: Understand the pros and cons of each product/service, like scalability, customization, integration with your current systems.
Shortlist based on fit: Shortlist to a few vendors who seem best suited for your business goals.
With a carefully compiled shortlist, you can concentrate your efforts on the brightest prospects, and the review is easier.
Step 4: Get Proposals & Quotes Requested
Once you have whittled down the candidates, contact the shortlisted vendors for their proposals or quotes. It is this step that determines the cost, schedule, and the deliverables of each option.
Key Actions:
Request proposals/Quotes: Query each vendor and request for proposals (RFPs) or quotes specifying exactly what you want, need, and expect.
Compare prices: Make sure you know how each vendor sets up their prices. Are there hidden costs? Can the pricing scale with your business?
Compare Customization & Flexibility: There are vendors who might have less rigid terms or tailor-made solutions depending on your specific needs.
It’s the step where you get an idea of the price and value each vendor provides so you can choose wisely.
Step 5: Evaluate the Offers and Compromise.
Once you have your shortlisted vendors’ proposals, let’s do the legwork. This is where you need to check for any holes or inconsistencies between what is provided and if all your needs are being catered for.
Key Actions:
Compare proposals side-by-side: Analyze bids — price, value, support, customization etc.
Check vendor reputation: Check online ratings, customer testimonials and the industry comments to verify vendor statements.
Price & Delivery negotiation: Once you’ve found a good vendor, negotiate pricing, delivery times, and other contract elements. You want to make sure everything in the contract is consistent with your business goals.
With the right planning and negotiation, you’ll be getting the most for your money and begin the path to a good relationship.
Step 6: Due Care and Assessment – Assess Risks.
The due diligence and risk assessment should be done before buying. This is to prevent any risk of impacting your business later on.
Key Actions:
Ensure financial stability: Check the vendor’s financial statements, credit rating, and business stability to make sure they are able to fulfill long-term commitments.
Assess legal and compliance risk: Ensure the vendor adheres to any industry guidelines or requirements. This is especially relevant when you have sensitive data or foreign partners.
Identify potential hidden risks: Examine contract/business terms for any red flags that could potentially cause problems down the road, like unclear SLAs or exclusionary terms.
You’ll save yourself a bunch of money from costly errors and have a smoother relationship going forward if you take the time to make a thorough risk analysis.
Step 7: Choose the Best One.
After all the research, proposals and analysis is done, it’s time to choose. At this point, everyone should be on the same page, and everybody should understand the terms and advantages of the vendor chosen.
Key Actions:
Obtain end-of-the-line consensus from everyone involved: Ensure that everyone is on the same page about the end result.
Check the contract: Make sure the final terms of the agreement are on par with your original requirements and needs, including deliverables, timelines, and expenses.
Buy it: After the choice is made and contract is executed, buy it.
This one should be a bit difficult because this is where your research and analysis all come together into an action plan.
Step 8: Monitor and Assess the Partnership.
And it doesn’t stop when you have bought the product. You need to always track how the vendor is performing and if they’re living up to the agreed upon terms and expectations.
Key Actions:
Control outcomes: Assess the execution of the vendor in relation to agreed KPIs, timelines, and deliverables.
Comment: Make sure to comment and talk to the vendor on a regular basis to give feedback, point out the issues and work things out.
Update frequently: Check in with the partnership regularly to ensure that it remains fit for your changing business. Renegotiate or look for alternative arrangements, if need be.
This process of review is what keeps your B2B purchases offering value over time and sets you up for long-term success.
Conclusion
Complex B2B purchase decisions need planning, research and thinking. When you think step-by-step, from what you need to how vendors perform, you can ensure that your purchases result in long-term relationships.
The secret to successful B2B purchase decision-making is to spend time, consult with the right stakeholders, and always keep your business objectives front and center. If you’re doing them right, these choices will not only serve you in the short term but will also put your business in a position for long-term growth and success.
If you are looking for a B2B partner who you can count on to grow your business, connect with us today. We are specialized in offering quality solutions for you, and we will support you every step of the way.
