The 21st Century Reality
A fundamental shift we see in Business-to-Business (B2B) is that prospecting and sales results are becoming more difficult, time-consuming, and expensive to produce. Lead conversion rates are lower, sales cycles are longer, and closing ratios are not what they used to be.
The success of acquiring and retaining customers relies on delivering exactly what customers want and in the manner they want it. For modern B2B companies, this means developing highly personalized and specific products and messaging to address individual business needs. The idea of marketing and selling the way customers want to buy is not something that most B2B companies truly get, let alone do well. Most tend to have a standardized method that fits their internal needs, which they try to force on their buyers—who consequently shut them out.
The realities of B2B sales and marketing have changed, and we have outlined two of these changes below.
In coming articles, we discuss other changes and recommendations for better aligning with Buyers to increase the number of quality leads that close faster and at a higher rate.
Reality 1: The Millennial as the New Buyer
A 2016 American Marketing Association survey discovered that 73% of all millennial workers are in some way involved in the purchasing decisions of their companies. Furthermore, the number of Millennials in charge of B2B purchasing power increases every year. In 2016, 34% of sole buying power was in the hands of employees under age 35.
With millennial control comes the digitization of the buying process. As consumers, Millennials conduct 80% or more of their transactions online—preferably on mobile devices. They do not see why they can’t do the same at work. Millennial buyers are also more likely to research and review companies and their products, rather than wait for sellers to approach them. This process allows them to feel more confident in finding sellers whose services and products fit their specific needs.
In addition, Millennials incorporate social media into their businesses and use them as purchasing resources. The collaborative aspect of social media helps companies form teams that review and analyze potential products before making a purchase decision. Perhaps as long as ten years ago, B2B sales transpired in a linear fashion from sellers to buyers. Today, sales often begin with buyers checking out the reviews and advice of their companies’ network before considering a purchase. Purchasing is now strongly influenced by buyers operating in a web-like system.
Reality 2: Strategic Procurement is Not Purchasing
The terms “procurement” and “purchasing” are often wrongly used interchangeably. Procurement is the process of selecting vendors, which involves vetting, establishing purchasing terms, and negotiating contracts on behalf of prospective clients. ItProcurement refers to the broad range of processes that lead up to the purchase of goods and services.
Procurement is a strategic procedure, while purchasing is transactional. When developing strategic procurement, businesses integrate and align the purchasing needs of their various lines of businesses and departments with their overall company-wide objectives. Doing soThis not only controls costs, but also controls the quality and reliability of input products and services needed. Through strategic procurement procedures, B2B companies can continuously improve and re-evaluate their purchasing actions to optimize their resources and generate efficiency.
B2B sellers that fully appreciate this difference and align their marketing and selling strategies with the procurement strategies of their buyers will find more success.
Read about how the globalization of competition and digital transformations of B2C companies are changing the landscape for B2B companies in “The New Realities of B2B Sales (Part 2)”.