Monday, November 12, 2018
Why Buying Scenarios Should Be Part of Your Planning for 2019
The stereotypical image we have of B2B buying is that it involves expensive and/or complex products or services, large buying groups, and long buying cycles. But in reality, many B2B companies derive substantial revenue and profit from other types of sales. That's why defining relevant buying scenarios should be an integral part of your go-to-market planning.
Most of the B2B demand generation research and other literature that's been published over the past few years has focused on "high consideration" purchases that involve multiple decision makers, complex decision-making processes, and long buying cycles.
For example, in the 2018 B2B Buyers Survey by Demand Gen Report, 79% of the respondents said that between one and six people are involved in their purchase process, and another 13% said that the process involves between seven and nine people. Sixty-one percent of the respondents said that the length of their buying cycle had increased compared with a year earlier. And during the recent Gartner Sales and Marketing Conference, CEB said that the average size of the B2B buying group had increased to 6.8 people, up from 5.4 people in its earlier research.
But high consideration purchases with large buying groups and long buying cycles have never represented all B2B buying. In fact, many B2B purchases are fairly routine, where the buying decision is made quickly by a small group of people, or even by a single individual. In a 2018 survey of 114 "industrial buyers" by Thomas, 56% of the respondents said they make buying decisions in less than one month, and another 29% said their typical buying process is between one and three months.
While we don't have much recent data regarding the distribution of B2B purchases across various types of buying situations, it's likely that substantial dollars are associated with buying scenarios other than the high consideration stereotype.
In an important survey of more than 3,000 B2B buyers conducted in 2009 by Enquiro and discussed by Gord Hotchkiss in The Buyersphere Project, survey respondents estimated that 50% of their budget was spent on "Repeat" purchases. In this research, Repeat purchases were defined as low risk purchases that are made frequently and involve only minimal changes from purchase to purchase.
The important point here is that most B2B companies derive at least some revenue from multiple types of purchases, and many companies derive significant revenue from more than one buying scenario. It's equally important to recognize that different buying scenarios require different go-to-market and demand generation strategies to achieve maximum success. Therefore, defining relevant buying scenarios and mapping revenue to those scenarios should be an integral part of your go-to-market planning.
What is a Buying Scenario?
A buying scenario is a description of a buying process that includes two major components - the functional attributes of the process itself, and the factors that describe the context of the decision-making process. The diagram at the beginning of this post depicts the buying scenario model that I've been using for several years:
The functional attributes of the buying process are shown on the right side of the diagram. These attributes include the size and composition of the buying group, and the length of the buying cycle. One attribute that often receives too little attention is what I call "Relative influence of individual buying group members." It's not that uncommon to identify a buying scenario in which the "official" buying group includes three or four people, but the buying decision is actually driven by one member of the group.
The items on the left side of the diagram describe the context in which a buying process is conducted. The common denominator across all these factors is that they are designed to capture the level of risk that buyers associate with a purchase decision. As the level of perceived risk increases, most buyers take steps to mitigate the risk, and those steps largely dictate the functional attributes of the buying process that's used. So for example, the buying process used for an expensive product or service, or for a purchase that will require a significant amount of change in the buyer's organization will usually involve more decision makers, include more research activities, and take longer to finish.
Buying scenarios can vary in significant ways, and those variations call for different go-to-market strategies and different demand generation tactics. Therefore, it's important for marketing and sales leaders to identify the buying scenarios their company is encountering, and use that information to craft appropriate demand generation programs.