Sunday, November 13, 2022

Why You Need More Than One Go-To-Market Strategy

The stereotypical view we have of B2B commerce is that it involves expensive and/or complex products or services, large buying groups and long buying cycles. But in reality, most B2B companies earn substantial revenue and profit from other types of sales. So, unless your company is an outlier, you need more than one go-to-market strategy in order to maximize revenue growth.

For nearly two decades, most of the research and other published content about B2B marketing has focused on "high consideration" purchases that involve multiple decision makers, complex decision-making processes and lengthy buying cycles.

For example, in the 2022 B2B Buyer Behavior Survey by Demand Gen Report:

  • Fifty-nine percent of the respondents said their average buying group consists of four or more people, and 23% said it consists of seven or more people.
  • More than half (55%) of the respondents said the length of their buying cycle has increased somewhat or increased significantly compared to the previous year.
In an earlier survey of sellers by Forrester, 94% of the respondents said they sell to buying groups of three or more people, and 38% said they sell to groups of ten or more people.
The reality is, high consideration purchases with large buying groups and long buying cycles don't represent all (or even most) B2B commerce. Many B2B purchases are routine, with buying decisions being made fairly quickly. In a 2021 survey of "industrial buyers" by Thomas, more than half (53%) of the respondents said they typically make buying decisions in less than a month.
While we don't have much current data about the distribution of B2B purchases across various types of buying scenarios, it's likely that substantial dollars are associated with scenarios that don't fit the high consideration stereotype.
The important point here is that many B2B 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 strategies to produce maximum success. Therefore, identifying the buying scenarios that are relevant for your company should be an integral part of your go-to-market planning.
The Buying Context Dictates the Buying Process
The characteristics of a B2B buying process are largely determined by the context in which a potential purchase is considered, and the dominant factor in the buying decision context is usually how much risk the potential buyers perceive is associated with the prospective purchase. The following diagram illustrates this relationship.

The top box in the diagram contains several factors that define the context in which a potential purchase will be evaluated. The common denominator across all these factors is that they will capture the level of risk the buyers associate with the prospective purchase.
For example, buyers will perceive a higher level of risk if they aren't familiar with a product or service, or if the acquisition and implementation of the product or service will require major internal changes.
The bottom box in the diagram describes the major attributes of the buying process. These include the size and composition of the buying group, the length of the buying cycle, the volume and nature of the activities performed in the buying process, and the use of formal procurement processes.
As the perceived risk associated with a purchase increases, buyers will take steps to mitigate that risk, and those steps largely dictate the attributes of the buying process that's used. As a result, the buying process used for an expensive and/or complex product or service, or for a purchase that will require major internal changes will usually involve several decision makers, include substantial research activities, and require a significant amount of time to finish.
In contrast, when a potential purchase has a low level of perceived risk, buyers will typically use a decision-making process that involves fewer people and less research, and they will make the buying decision faster.
Buying Scenarios That Don't Fit the Stereotype Now Matter More
The importance of buying scenarios that don't fit the high consideration stereotype can be seen in the expanding role of B2B e-commerce and, more specifically, in the rapid growth of online B2B marketplaces.
Online B2B marketplaces have become the fastest growing segment of a rapidly growing B2B e-commerce market. In 2021, B2B marketplace sales grew 7.3 times faster than overall B2B e-commerce sales.
Research has also shown that marketplaces and other e-commerce channels are no longer just for low-ticket purchases. In a 2021 survey by McKinsey, over three-fourths (77%) of business buyers said they are willing to spend $50,000 or more on a single purchase made via an e-commerce channel or other remote interactions, and over one-third (35%) are willing to spend $500,000 or more.
The bottom line is, you need a go-to-market strategy for all of the buying scenarios that can potentially produce significant revenue for your company.

Top image courtesy of Willi Heidelbach via Flickr (CC).

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