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TriComB2B




The Considered Purchase Decision

What Matters, What Doesn’t
And What It Means
For B2B Marketing and Sales




Research report compiled by TriComB2B in partnership with
the University of Dayton School of Business Administration
What do actual
B2B buyers think?



                                                                                                       Is there a difference
Over the last decade, the amount of information available to help guide B2B marketing                  between influencers
decisions has exploded. Reputable information sources such as MarketingSherpa,                         and decision makers?
MarketingProfs, GlobalSpec and others provide us with valuable insights as to what
other B2B marketers are doing and why. But in all the research we’ve seen, one key
ingredient seems to be missing.

What does the actual B2B decision maker or influencer think? Does anyone really
understand the issues influencing their considered purchase decisions?

    Is total cost of ownership as powerful a message as we think it is?
    How do price, quality and delivery rank as considered purchase criteria?
    Does being a “preferred supplier” really mean your product or service is preferred?                What messages
    Does it make sense to rely on a distributor as a key information source for customers?             will a B2B buyer
    What safety, health and environmental factors matter most in the considered                        respond to?
    purchase process?


We wanted the real answers to these questions – not from marketing peers, but from
the actual purchasing influencers. After all, they’re the audience. So we met with our
friends at the University of Dayton’s School of Business Administration and a research
partnership was born. Led by UD’s Business Research Group, a comprehensive survey
covering different aspects of the considered purchase process was developed. The
survey was conducted using MarketTools’ robust online market research tool and
garnered 448 responses from a variety of industries.
                                                                                                       How much of my
The respondents were either influencers or decision makers (Table 1). We also gathered                  marketing mix
information about each respondent’s industry classification, company size, job title or                 should be online?
role, budget authority and the global reach of their company as described below.


Table 1

Decision role
Percent of respondents



 35%                                36%                            17%            12%

 Primary                           Influencer                       Member of a    Member of
 decision                                                          small team     a large team
 maker                                                             with equal     with varying
                                                                   influence in    amounts of
                                                                   the decision   influence
                                                                   process



2                                                                                  © 2011 TriComB2B and University of Dayton. All rights reserved.
Do we need a blog?
The industries represented in the respondent pool included:
  Energy-related
  Construction
  Information technology
  Medical devices and pharmaceuticals
  Industrial manufacturing
  Process industries
  Other

See “About this Report” on Page 21 for a more detailed breakdown of
industry classifications.
                                                                                                   Do we need our
The respondent pool represented various roles (Table 2).                                           distributor network?

Table 2

Role in firm
Percent of Respondents



 16%                     38%                                     11%          17%          18%

 Senior                  Engineer                                Operations   Purchasing   Other
 Executive/
 Owner




The survey was broken into three different subject areas, which created a unique                   Should we pursue
opportunity for research regarding B2B end users’ purchasing behavior:                             preferred supplier
                                                                                                   status?
   Product considerations and message relevancy
   Information consumption and online habits
   Purchasing process

This summary report includes some of the key findings from these areas, and touches
on the potential implications for B2B marketers involved with industrial and technical
businesses where the considered purchase is paramount. Industry-specific reports
and more detailed demographic cross tabulations are available by request.

NOTE: Table details may not sum to totals because of rounding.




© 2011 TriComB2B and University of Dayton.All rights reserved.                                                            3
PART I
Product Considerations and
Message Relevancy


                                                                                                            How relevant is price
The intent of our research in this area was to evaluate the impact of different product                     to the B2B buyer?
and service attributes and the relevancy of common marketing messages as
viewed by those involved in the considered purchase process. How important is price
in the decision process? To what extent does total cost of ownership really matter?
                                                                                                            How does price
What about the emergence of “green” messaging?
                                                                                                            set the stage for
                                                                                                            market strategy?

                                         Decision
                                            or
                                      Recommendation

                “Do we offer unique                                “I need references
                benefits versus the                                  that can quantify
                   competition?”                                       the savings.”


     “What economic                                           How many
       value do we                                          man-hours can
        offer in the                                        this save me?”
      marketplace?”



         “Do we offer the
       correct safety and                                            “Can you
     environmental benefits?”                                        provide an
                                                                  ROI calculation?”



         “Does our market
        positioning resonate                                             What’s the
          with our target                                             life cycle cost
            audiences?”                                               over 20 years?”




4                                                                                       © 2011 TriComB2B and University of Dayton. All rights reserved.
1. Purchase price dominates.
                                                                                           In B2B, price
                                                                                           really does matter.




                                                                                           Implication: Good news
About two-thirds of survey respondents indicated that 60% or more of their purchase        for price leaders. However,
decisions were dominated by the immediate purchase price. On average, price                is it bad news for those
dominated in 64% of the purchases (Table 3).                                               with a more expensive
                                                                                           offering? If you are avoid-
There was no significant difference in response by decision role, industry type, age        ing discussions about
group or role in the firm.                                                                  price in your sales and
                                                                                           marketing approach, this
                                                                                           research indicates you
Table 3                                                                                    may find yourself on the
Percent of purchases where immediate purchase price                                        outside looking in. When
of the equipment dominated the decision                                                    positioned as a higher-
                                                                                           priced supplier, putting
Percent of cases where immediate purchase price dominated                                  in place a strategy that
 0%          20%          40%          60%          80%          100%                      clarifies the components
                                                                        30%                of your price may be
                                                     29%
                                                                                           necessary to allow a
                                        27%
                                                                        25%                fair comparison to lower
                                                                                           priced and potentially less
                                                                        20%   Percent of
                                                                                           feature-rich offerings.
                                                                              sample

               17%
                                                                        15%
                            14%

                                                                        10%


                                                                  8%
                                                                        5%

   4%

                                                                        0%




© 2011 TriComB2B and University of Dayton.All rights reserved.                                                      5
2. Total cost of ownership:
   It’s important to the owner.




                                                                                                       Implication: Phew! This
More than half the survey respondents (56%) indicated that at least 60% of the time,                   is good news. It’s hard to
the total cost of ownership (TCO) had been calculated in considered purchase                           find a B2B marketing
decisions in which they were involved (Table 4). Senior executives and business                        program that doesn’t
owners evaluate TCO to a greater extent than any other role. Older respondents,                        incorporate some flavor
namely those greater than 60 years in age, were much more likely to evaluate the                       of TCO or life cycle costs
total cost of ownership for all considered purchases (33% of 60+ respondents vs.                       (LCC). More often than
10% to 14% for all other age groups). Machinery and equipment-intensive indus-                         not, the decision makers
tries (e.g., energy-related and process industries) were the most likely to calculate                  and influencers think this
TCO in the considered purchase process.                                                                is an important consider-
                                                                                                       ation. So a credible TCO
Table 4                                                                                                story should be part of
Percent of time total cost of ownership is calculated in a                                             a sound marketing and
considered purchase decision by position in firm                                                       sales approach. If you’re
                                                                                                       talking to company lead-
                                                     Position in firm                                   ership, this is certainly an
     Percent of cases
       where total                                                                                     area of emphasis.
                          Senior
    cost of ownership
                        Executive/   Engineer   Operations    Purchasing   Other     Total
        calculated
                         Owner

          0%               7%         14%         18%             5%       7%       11%

          20%             16%         21%         16%            21%       23%      20%

          40%             10%         11%         14%            21%       12%      13%

          60%             16%         18%         18%            15%       20%      18%

          80%             33%         21%         20%            23%       23%      24%

          100%            18%         13%         14%            15%       15%      15%




6                                                                                  © 2011 TriComB2B and University of Dayton. All rights reserved.
3. What else matters in the
                                                                                                                   In B2B, one message
   considered purchase decision?                                                                                   does not fit all.




                                                                                                                   Implication: Further vali-
Of course, the B2B considered purchase decision process does not just involve price                                dation that the concept
and the total cost of ownership. We evaluated the role of five additional considerations                            of total cost of ownership
to gain an understanding of their importance to decision makers and influencers. Of                                 strikes a chord? Absolutely.
these choices, the potential for process improvement resonated the most, with 78% of
respondents stating it played a significant role in at least 60% of purchases. This was                             Operating costs are right
well ahead of operating costs (67%) and impact on customer service (66%). Other                                    up there with two-thirds of
considerations, such as availability of contracted maintenance support and financing                                respondents, indicating
flexibility, were far less important.                                                                               it’s a key consideration
                                                                                                                   the majority of the time.
Based on roles within an organization, different criteria produced varying degrees                                 But it’s also interesting to
of impact. For example, the category “potential improvements in overall processes”                                 see that the potentially
was found to be more of a trigger for Senior Executives, Operations and Engineering.                               complex and harder-to-
Purchasing responded more favorably to operating costs and the impact on customer                                  explain concept of overall
service (Table 5).                                                                                                 process improvement has
                                                                                                                   the most impact on these
Table 5                                                                                                            purchase considerations.
Respondents stating product or service consideration played significant role                                       If a marketer can clearly
in purchase decision 80% or more of the time                                                                       indicate where their product
                                                                                                                   or service impacts a
                                                                               Position in firm                     customer’s operational
   Product or service feature                                                                                      efficiency – in real terms
                                                              Senior
   of significance                                          Executive/   Engineering     Operations   Purchasing   (e.g., greater production
                                                             Owner                                                 availability) – decision
                                                                                                                   makers and influencers
   Operating costs                                               60%        38%             50%         55%
                                                                                                                   will pay attention. This is
   Impact on customer service                                    57%        48%             48%         56%        especially true with Senior
   Potential improvements in                                                                                       Executives and Owners –
                                                                 74%        52%             62%         44%
   overall process                                                                                                 74% of whom consider
                                                                                                                   this factor 80% of the time.
   Contracted maintenance support                                21%        21%             20%         20%

   Flexibility in financing                                       20%        15%             18%         21%        However, as the data
                                                                                                                   suggests, don’t lean on
                                                                                                                   this story with purchasing.




© 2011 TriComB2B and University of Dayton.All rights reserved.                                                                               7
4. Go green or go lean?
                                                                                                   If the choice is between
                                                                                                   go green or go lean,
                                                                                                   survey says go lean.




                                                                                                   Implication: Go green?
With more and more emphasis put on safety and environmental factors in the B2B                     Probably not. While
considered purchase decision, our research set out to establish the relative impor-                energy efficiency cannot
tance of three key components of this category: safety features, energy efficiency and              be overlooked because
green supply chain.                                                                                of its close relationship
                                                                                                   to operating costs, the
Safety features were an important differentiator between two choices in at least 60% of            research indicates that
the purchases for 57% of the respondents. For almost half of the respondents (48%),                the less tangible benefit
energy efficiency of the product was an important differentiator in at least 60% of their           of buying a product with a
purchases. The existence of a green supply chain for the product was an important                  “green” supply chain is a
differentiator (between two choices) to only a minority of respondents (Table 6).                  significantly less important
                                                                                                   factor for the considered
Table 6
                                                                                                   purchase product.
Percent of purchases where certain aspects were an
important differentiator between two choices
                                                                                                   Go lean? That might make
                                                                                                   more sense. The tangible
                            0%           20%           40%         60%   80%    100%               economic benefits that
                                                                                                   come from improved
 Safety features           16%           13%           14%         18%   22%     17%
                                                                                                   operational efficiencies and
 Energy efficiency
                           15%           19%           17%         19%   22%      7%               lower operating costs (see
 of product
                                                                                                   Table 5) have much more
 “Green” supply chain                                                                              impact. Express your
                           29%           27%           17%         15%   8%       4%
 for product                                                                                       benefit in terms of economic
                                                                                                   value before emphasizing
                        Significantly lower numbers for “green.”                                   the environmental friendli-
                                                                                                   ness of your story.
Safety features consistently outweighed the other two factors as a differentiator,
especially in energy-related and process industries. The information technology
sector assigns little significance to any of these factors, with only a small minority
indicating strong consideration in at least 60% of purchase decisions (safety – 23%;
energy efficiency – 29%; green supply chain – 16%).




8                                                                              © 2011 TriComB2B and University of Dayton. All rights reserved.
Part I Conclusion:
What should the message be?
Depends on who you talk to.




The B2B buyer appears to be motivated to consider a product or service first based        2 out of 3
on price, but other features are also important. Total cost of ownership continues to    B2B buyers say
be a phrase that B2B buyers respond to positively, especially at the higher levels       purchase price
of decision making, such as Senior Executives and Owners. Operational efficiency          dominates their
also catches the attention of those involved in the considered purchase process.         purchase decision 60%
A compelling story around the safety benefits of a product or service, at least in        or more of the time
certain markets, may help tip the scales in your favor if other considerations appear
to be a wash.

Clearly, the role of the decision maker or influencer has a huge effect on the messages   67%
that resonate most during the purchase process. One size does not fit all. Engineering    of Senior Execs/Owners
and Purchasing may have completely different concerns than the Senior Executive or       in B2B say TCO is
Owner. Tailor your message to your audience by stressing the right benefits based on      an important message
whom you are targeting at a given point in the purchase process.

Do you often think about the age of your audience? You should. In our research, we
found some substantial variations in responses by age. For example:                      73%
                                                                                         of B2B buyers DON’T
  A far greater percentage of our respondents age 60 and older found total cost of
                                                                                         consider “green”
  ownership messages to be an important factor compared to any other age category.
                                                                                         features an important
                                                                                         product consideration
  The same group of respondents age 60 and older also felt that impact on customer
  service was significant in the decision-making process to a far greater extent than
  other age groups.

  Respondents over age 50, on average, indicated safety features were an important
  differentiator 58% of the time, well above those under 50 (49%).

  As you’ll see in Section II, respondents 30 to 39 years of age were more likely than
  respondents older than 60 to indicate online trade publication articles as
  important sources for considered purchase decisions (32% vs. 19%).




© 2011 TriComB2B and University of Dayton.All rights reserved.                                                   9
PART II
Information Consumption and
Online Habits


The B2B buying cycle is often broken into six distinct phases: problem identification,
criteria creation, search, evaluation, test and selection, and procurement.

Little research exists to determine which information resources are most valuable to
a B2B influencer or decision maker during each of these various phases, or if online
resources are as heavily referenced by this B2B audience as we might assume.

In this section of the survey, we attempted to discover the effectiveness of
various tactics and how relevant social media is to this group of industrial
and technical buyers.
                                              TION
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                                                                  T
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                                            EVA




                                                                EN
                    ER IO




                                                             EM
                      IA N




                                                            R
                                                           U
                                                         C
                                                        O
                                                      PR




      PRO                                                                  D
          B
     IDEN LEM                                                         T AN
         TIFIC                                                    TES CTION
                                                                       E
               ATIO
                      N                                            SEL




10                                                                             © 2011 TriComB2B and University of Dayton. All rights reserved.
1. Useful information.
                                                                                                            B2B buyers–
                                                                                                            just give them facts.




                                                                                                            Implication: The
There was substantial variation in the importance of particular written materials                           revelation that online
as information sources (Table 7). Technical data sheets, whether online or in print,                        media needs to be the
topped the list in importance followed by informal contacts in your own industry and                        most prominent part of
website. Other online resources (product catalogs and trade publications) were                              the B2B marketing mix
more important in each case than their in-print counterparts (37% vs. 22% and                               is hardly a new insight.
27% vs. 23%, respectively).                                                                                 Confirmation that online
                                                                                                            versions of technical
Table 7                                                                                                     data sheets, catalogs
                                                                                                            and advertisements
Importance as information sources for
considered purchase decisions                                                                               are preferred over their
                                                                                                            printed counterparts is
                                                                                                            a welcome affirmation
                                                 Not
                                                                                     Very       Percent
       On a scale of 1 to 5 where               at all
                                                                                   important   “4” or “5”
                                                                                                            for marketing managers
     1 is “Not at all important” and          important
          5 is “Very important”
                                                                                                            making the case to shift
                                                   1              2     3     4       5                     budgets to online media.

  Technical data sheets
                                                 3%              9%    23%   41%    24%         65%         Keep your online content
  (online)
                                                                                                            current, detailed and
  Informal contacts in
  your own industry
                                                 6%              12%   29%   35%    19%         54%         relevant to your audience.
                                                                                                            Buyers in these areas
  Website                                        5%              16%   27%   36%    16%         52%         of B2B are looking for
  Technical data sheets                                                                                     technical data, drawings,
                                                 8%              16%   24%   32%    20%         52%
  (in print)                                                                                                specifications and other
                                                                                                            up-to-date materials
  Product catalogs                              13%              20%   29%   26%    11%         37%
  (online)                                                                                                  to help them make
                                                                                                            considered purchase
  Case studies that include
                                                16%              19%   29%   26%    10%         36%         decisions, and the ease
  3rd-party resources
                                                                                                            of online access makes
  Trade publication
  articles (online)
                                                14%              27%   32%   23%     4%         27%         electronic materials
                                                                                                            preferable to print.
  White papers                                  17%              24%   34%   19%     6%         25%

  Trade publication
                                                19%              25%   33%   20%     3%         23%
  articles (in print)

  Product catalogs                              21%              29%   28%   18%     4%         22%
  (in print)




© 2011 TriComB2B and University of Dayton.All rights reserved.                                                                      11
2. Networks rule.
                                                                                                     Can we do lunch?




                                                                                                     Implication: Have a few
When evaluating a range of human information sources, survey respondents formed                      sales people that seem
a hierarchy of importance. While all of these roles have some importance to decision                 to burn bridges? Is your
makers and influencers, informal contacts within the industry rated more important                    customer service less
to a higher percent of respondents (55%) than OEM sales reps (44%) or manufac-                       than desirable? You’d
turing trade representatives (39%) – (Table 8).                                                      better get that fixed.
                                                                                                     Across all industries and
Table 8                                                                                              across every demographic,
                                                                                                     the most important human
Importance as sources for gathering information
                                                                                                     interaction source for
                                                                                                     information is the informal
                                          Not
                                                                       Very        Percent
       On a scale of 1 to 5 where        at all
                                                                     important    “4” or “5”
                                                                                                     contact within one’s
     1 is “Not at all important” and   important
          5 is “Very important”
                                                                                                     industry.
                                          1         2     3     4       5

  Informal contacts in your
                                         4%        12%   29%   36%    18%          55%
  own industry

  OEM sales representatives              7%        19%   31%   33%    10%          44%

  Distributors                          12%        18%   36%   26%     8%          34%

  Manufacturing trade
                                        11%        17%   33%   31%     8%          39%
  representatives

  Trade shows                           17%        31%   29%   19%     3%          22%


There were no significant demographic differences in the percentage of respondents
who indicated informal contacts were important sources for gathering information
for considered purchase decisions.




12                                                                               © 2011 TriComB2B and University of Dayton. All rights reserved.
3. Be ready when the
   B2B buyer finds you.




                                                                                                                        Implication: While there
As expected, respondents indicated most sources of information are important in the                                     is a lot of talk about mar-
search and evaluation stages of the decision process (Table 9). OEM sales reps and                                      keting and sales playing
distributors reach their highest percent at the procurement stage. It is of interest that                               a role in helping custom-
most respondents do not regard these information sources as having high importance                                      ers identify their problems
in the problem identification or criteria creation stages.                                                               and defining criteria, our
                                                                                                                        research indicates the
Table 9                                                                                                                 customer is likely to be
Stage in purchase decision at which source is most important                                                            working independently
(among those ranking it a 4 or 5 on the importance scale)                                                               at this stage. Logically,
                                                                                                                        the importance of different
                                               Problem       Criteria                         Test and                  outside influences picks
                                                                        Search   Evaluation               Procurement
                                             identification   creation                         selection                 up dramatically as the
   Informal contacts in your                                                                                            search for supplier
                                                  10%            14%     31%       33%           8%           4%
   own industry                                                                                                         alternatives begins.
   OEM sales representatives                      9%             14%     26%       30%          11%           9%
                                                                                                                        As a B2B marketer, focus
   Distributors                                   4%             12%     22%       16%          14%          31%        your energy on allowing
   Manufacturing trade
                                                                                                                        prospective buyers to
                                                  11%            11%     32%       26%          13%           7%        quickly evaluate you as an
   representatives
                                                                                                                        alternative. Understand
   Trade shows                                    8%             15%     55%       13%           6%           3%
                                                                                                                        their language and the
                                                                                                                        problems they’re likely
    Stage where greatest percentage indicated source was most important                                                 to encounter, but don’t
                                                                                                                        confuse them by trying to
                                                                                                                        create scenarios and is-
                                                                                                                        sues that may not exist.




© 2011 TriComB2B and University of Dayton.All rights reserved.                                                                                  13
4. Use of online resources:
                                                                                                     75% of respondents
   How’s your blog?                                                                                  that are in a user
                                                                                                     group find it helpful
                                                                                                     in making capital
                                                                                                     purchase decisions.




                                                                                                     Implication: Considering
A research study isn’t needed to tell us that industrial and technical B2B buyers are                B2B buyers’ preference
going online to gather information about a purchase. However, to what extent do they                 for online material,
use other devices and information sources? The majority of respondents use a smart                   the next logical step
phone to access email and the Web, and nearly half are regularly following discussion                is to make your online
forums linked to their industry. In both cases, the majority of these users are doing so             libraries as mobile-
to gather purchase information (Table 10).                                                           friendly as possible.
                                                                                                     With the emergence and
Approximately one-third of our respondents regularly follow industry-related blogs with              increasing popularity of
a majority of them doing so to gather purchase information. While 35% of respondents                 smart phones and tablets,
use LinkedIn, only one-third of those users do so to gather purchase information.                    more materials are being
Podcasts and Facebook had the lowest level of adoption, with a very small percentage                 accessed on-the-go.
using either as a resource for a purchasing decision.

Table 10
                                                                                                     Additionally, elevation of
                                                                                                     your users’ roles in formal
Use of online resources and help in gathering purchase information
                                                                                                     user groups can reap
                                                                                                     major benefits, including
                                                                       Percent using                 long-term customer
                                                                                                     retention.
   Smart phone to access email and the Web                                 59%

   Regularly follow discussion forums linked to your industry              46%

   Regularly follow blogs linked to your industry                          31%

   LinkedIn                                                                35%

   Podcasts                                                                24%

   Facebook                                                                13%


Other online behaviors uncovered as part of this research study included:

   Nearly half of the respondents (49%) have clicked on an online ad to gather infor-
   mation. Of those who clicked, 34% sought it out and 66% just noticed it in passing.

   Slightly more than half (51%) of respondents have clicked on an online video to
   gather information. Of those who clicked, 44% sought it out and 56% just noticed
   it in passing.

   Approximately one-third (35%) of respondents belong to a user group. Of those
   who do, 75% found information from that user group helpful in making capital
   purchase decisions.


14                                                                               © 2011 TriComB2B and University of Dayton. All rights reserved.
Part II Conclusion:
Think about your tactical mix.




To no one’s surprise, this research confirms the importance of various online              1 out of 3
and digital media as an information source for those involved in the considered            Number of
purchase process.                                                                          respondents
                                                                                           that follow an
  Online resources in the form of technical data sheets, product catalogs and              industry blog
  trade publication articles all outweighed their print counterparts when evaluated
  for their importance.

  Mobile websites, discussion forums and blogs are important information sources
  for purchasing decisions.                                                                50%
                                                                                           of respondents
  The utility of online ads and videos is clear, with half or more of respondents
  indicating experience with both for gathering purchase information.
                                                                                           have clicked on
                                                                                           an online video.
Before re-allocating our marketing budgets to all things digital, however, let’s not
forget the most important resource: informal contacts within the industry. In all cases,
industry peers rank this resource as a highly important part of the information and
supplier evaluation process.                                                               In B2B, it is
                                                                                           all about
                                                                                           content and
                                                                                           contacts.




© 2011 TriComB2B and University of Dayton.All rights reserved.                                                15
PART III
The Purchasing Process:
Preferred Suppliers and Critical Attributes


The intent of this research area was to uncover how a company gains consideration
as a preferred supplier. With the existence of online bidding systems and the proliferation
of online information about potential supplier options, we set out to understand how
these factors affect the ability of a company to become a preferred supplier. We also
questioned whether preferred supplier status truly leads to increased sales.




                                             Preferred
                                          Supplier Status
                                             has been
                                            awarded to
                   “I wonder if they       COMPANY X.
                  regularly measure                              “Should we
                customer satisfaction?”                     include Purchasing
                                                              in this meeting?”

       “Can we obtain
        some product
                                                                           In what format will
      samples and have
                                                                            they want to see
      Quality Assurance
                                                                               our on-time
         test them?”
                                                                            delivery metrics?

         Sourcing
     Company/Customer                                                        Preferred
                                                                          Supplier Candidate




16                                                                                               © 2011 TriComB2B and University of Dayton. All rights reserved.
1. Preferred suppliers get the business.




                                                                                                     Implication: Becoming
Our research showed that 83% of considered purchases were from a preferred                           a preferred supplier can
supplier a majority of the time.                                                                     sometimes be a complex
                                                                                                     process, but it is worth the
Table 11
                                                                                                     effort. For a considered
Percent of purchases from preferred suppliers                                                        purchase product or
Percent of cases where purchase was made from preferred supplier                                     service, the development
 0%           20%          40%          60%           80%        100%                                of a mutually beneficial
                                                                        50%
                                                       53%                                           business relationship is
                                                                        40%
                                                                                                     of importance and should
                                                                                                     be part of the overall B2B
                                                                        30%   Percent of             sales strategy.
                                                                              sample

                                                                        20%

                                          19%
                                                                        10%
                                                                 11%
                             8%
   3%           5%
                                                                        0%


With respect to variations by age or role, no significant areas of difference were found.

When asked to classify the types of purchases for which preferred supplier lists were
most commonly used, respondents provided a broad range of responses. Capital
equipment (22%) garnered the most mentions with raw materials (15%) and technical
services (14%) rounding out the top three. Thirteen percent of respondents indicated
they used a preferred supplier list for all purchases (Table 12).

Table 12


In what purchase areas are preferred supplier lists commonly used?

                                                                                           Percent

 Capital equipment                                                                          22%
 Raw materials                                                                              15%
 Technical services including IT                                                            14%
 All                                                                                        13%
 Computer hardware                                                                          6%
 Computer software                                                                          6%
 Business supplies                                                                          5%
 Construction/building materials/furniture                                                  5%

© 2011 TriComB2B and University of Dayton.All rights reserved.                                                                17
2. Quality and price matter,
                                                                                                      Can you show evidence
   but what else?                                                                                     of satisfied customers?




                                                                                                      Implication: If the old
In almost all cases, respondents indicated product quality and price were used to                     adage, “Price, quality and
select preferred suppliers. More than half of respondents indicated that customer                     delivery – you can have
satisfaction, service considerations, on-time delivery, product availability and proof                two out of three,” is true,
of financial stability were used in the selection process (Table 13).                                  then we now know which
                                                                                                      two are most important.
Table 13
                                                                                                      Price and quality dominate
Factors in selecting preferred supplier                                                               the landscape for preferred
                                                                                                      supplier selection, where
                                                                               Percent                on-time delivery ranked
                                                                                                      significantly less important.
   Product quality                                                              90%

   Price                                                                        87%                   Evidence of customer
                                                                                                      satisfaction ranked as
   Evidence of customer satisfaction                                            64%
                                                                                                      the third most important
   Service considerations with the equipment                                                          criteria. This reinforces
                                                                                63%
   (service level agreements, aftermarket support)
                                                                                                      the notion that formally
   Evidence of successful prior contract compliance in: On-time delivery        60%                   nurturing a strong group
                                                                                                      of satisfied referral
   Evidence of successful prior contract compliance in: Product availability    58%
                                                                                                      customers may be one
   Proof of financial stability                                                  52%                   of the most important
                                                                                                      investments you can
                                                                                                      make (see Section II).
There are some additional findings of interest related to the selection of
preferred suppliers:

   Those in Purchasing were more likely than respondents in general to consider all
   aspects of the purchase criteria in selecting preferred suppliers.

   Younger respondents, specifically those between age 30 and 39, appear to be
   more disposed to risk-taking when evaluating suppliers, with half or less indicating
   evidence of customer satisfaction, on-time delivery compliance, financial stability
   and proof of production capacity as important criteria.

   Respondents in the information technology industry indicated the lowest percentage
   of purchases from a preferred supplier list (57%) with those from energy-related and
   process industries indicating the largest percentage (74%).




18                                                                                © 2011 TriComB2B and University of Dayton. All rights reserved.
Part III Conclusion:
Being a preferred supplier
is worth the effort.




With respondents indicating that 70% of purchases come from a preferred supplier       83%
list, this may be an important area of emphasis in a B2B sales strategy. If you do     of respondents stated
move into the preferred supplier arena, be prepared to demonstrate the following and   that considered
defend these aspects of your product or service:                                       purchases came from
                                                                                       preferred suppliers
  Product quality                                                                      most of the time.
  Price
  Evidence of customer satisfaction
  Service considerations (service level agreements and aftermarket support)
                                                                                       How well do you
  Evidence of successful on-time delivery                                              track service level
  Evidence of successful product availability                                          agreements?
  Proof of financial stability


                                                                                       Purchasing depart-
                                                                                       ments are more likely
                                                                                       than other respondents
                                                                                       to consider all product
                                                                                       aspects in selecting
                                                                                       preferred suppliers.




© 2011 TriComB2B and University of Dayton.All rights reserved.                                               19
Report Conclusion




                                                                                                While B2B buyers
To build on the B2B marketing data available from trusted resources such as                     respond to different
MarketingProfs, MarketingSherpa, BtoBOnline and GlobalSpec, TriComB2B teamed                    messages depending
with the University of Dayton’s School of Business Administration to conduct primary            on their role within
research into B2B marketing industry trends. In early 2011, a customized survey of
                                                                                                the organization,
448 individuals provided important insights regarding how they react to marketing
                                                                                                everyone responds
messages, the information sources they consider most important and how they view the
                                                                                                to price.
role of preferred suppliers. Some summary observations are provided on the next page.




                                                                                                In B2B, differences
                                                                                                exist between
                                                                                                influencers and
                                                                                                decision makers, but
                                                                                                the role or function
                                                                                                that one has within
                                                                                                an organization is
                                                                                                more important.




                                                                                                B2B buyers are
                                                                                                looking for strong
                                                                                                technical content,
                                                                                                and they will
                                                                                                go online first.




20                                                                          © 2011 TriComB2B and University of Dayton. All rights reserved.
Social media is being
Consider the message and the audience                                                       adopted at a rapid
The B2B buyer is motivated to consider a product or service first based on price, but        pace within B2B,
other features are also important. Total cost of ownership continues to be a phrase         including LinkedIn,
that B2B buyers respond to, especially at the higher levels of decision making.
                                                                                            blogs and discussion
Determine which feature to stress over another based on the role of the individual
                                                                                            forums.
who is making the purchase decision.

With the increased activity of green marketing, especially in the consumer world,
“going green” is not as important a differentiator in the purchase decision when
compared to safety features and energy efficiency.

Regardless of role, information from informal industry contacts was second only             Distributor networks
to online technical data sheets in importance to the decision-making process.               play a critical role in
Make sure those contacts are sharing positive feedback.                                     the B2B marketplace at
                                                                                            the time of procurement.
Consider how information consumption and online habits are changing
It is clear from the research that the B2B buyer ranks technical information as very
important in the purchase decision process. Technical information should be focused
on supporting the search, evaluation or procurement stages of that process. By the
time most B2B buyers search for a supplier, they have already passed through the
problem identification and purchase criteria phases.

Go mobile – or be prepared to, soon. More B2B buyers are using a smart phone regularly
and participating in industry discussion forums and networks such as LinkedIn.              Preferred supplier
                                                                                            status is critical to B2B
If a product or service lends itself well to active feedback from users, an investment in
                                                                                            sales strategy if the
a user-group format makes sense.
                                                                                            marketplace accepts
Consider the benefits of becoming a preferred supplier
                                                                                            that model of business
The global and interconnected nature of today’s B2B world has created a more                development.
complex process for those companies aspiring to preferred supplier status. With
70% of survey respondents, particularly those in Operations, indicating they use a
preferred supplier list, this should be an important part of your sales and strategy.




© 2011 TriComB2B and University of Dayton.All rights reserved.                                                      21
About this Report




This report was created and executed through a partnership between TriComB2B and
the University of Dayton’s School of Business Administration. The Business Research
Group at the University of Dayton designed the survey and analyzed the survey data.

During the first quarter of 2011, a total of 448 respondents across industry sectors
participated in the survey. In some cases, similar industry segments were combined
into larger groupings to simplify analysis and results presentation. The number of
respondents for each industry grouping is provided below, as well as the definition of
the groupings where applicable.

  Industry Group                            # of respondents

  Energy-related                                  41

  Construction                                    50

  Information technology                          31

  Medical device and pharmaceutical               58

  Industrial manufacturing                       107

  Process industries                              45

  Other                                          116


INDUSTRY GROUPING DEFINITIONS

Energy-related – petroleum refining, oil and gas, power generation, alternative energy
Construction – industry grouping not applicable
Information technology – industry grouping not applicable
Medical device and pharmaceutical – industry grouping not applicable
Industrial manufacturing – industrial equipment, power transmission, machine tool,
controls and electronics, component manufacturing, other manufacturing
Process industries – mining, food and beverage, chemical processing,
water resources, pulp and paper
Other – various industries not classified in the above categories, to include agriculture,
automotive, consulting engineering, HVAC, packaging and telecommunications

Versions of this report that are specific to the above industries can be requested at:
www.tricomb2b.com/2011Research.

22                                                                               © 2011 TriComB2B and University of Dayton. All rights reserved.
About The Business Research Group
at the University of Dayton

The Business Research Group at the University of Dayton
is part of the university’s School of Business Administration.
This organization offers comprehensive market research
offerings, including:

  Survey research
  Focus group research
  Program evaluations
  Economic forecasts

For more information, visit http://businessresearchgroup.udayton.edu/.



About TriComB2B
Solving the complex marketing challenges businesses
face today requires a balance of innovative and proven           TriComB2B
strategies. Striking that balance calls for creativity,
experience and a comprehensive set of capabilities.

Located in Dayton, Ohio, TriComB2B is a business-to-business marketing agency
that truly understands these challenges. Our commitment to addressing the com-
plexities encountered in marketing technical products and services has made
TriComB2B a trusted marketing partner for companies throughout the U.S.

TriComB2B was recognized in 2011 as a Top 150 Agency by BtoB Magazine.

For more information, visit www.tricomb2b.com.




© 2011 TriComB2B and University of Dayton.All rights reserved.                   23
© 2011 TriComB2B and the University of Dayton. All rights reserved.

You are free to copy, distribute and display and create derivative works from this paper
provided that you give TriComB2B and University of Dayton proper credit as the source.

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Considered purchase decision

  • 1. TriComB2B The Considered Purchase Decision What Matters, What Doesn’t And What It Means For B2B Marketing and Sales Research report compiled by TriComB2B in partnership with the University of Dayton School of Business Administration
  • 2. What do actual B2B buyers think? Is there a difference Over the last decade, the amount of information available to help guide B2B marketing between influencers decisions has exploded. Reputable information sources such as MarketingSherpa, and decision makers? MarketingProfs, GlobalSpec and others provide us with valuable insights as to what other B2B marketers are doing and why. But in all the research we’ve seen, one key ingredient seems to be missing. What does the actual B2B decision maker or influencer think? Does anyone really understand the issues influencing their considered purchase decisions? Is total cost of ownership as powerful a message as we think it is? How do price, quality and delivery rank as considered purchase criteria? Does being a “preferred supplier” really mean your product or service is preferred? What messages Does it make sense to rely on a distributor as a key information source for customers? will a B2B buyer What safety, health and environmental factors matter most in the considered respond to? purchase process? We wanted the real answers to these questions – not from marketing peers, but from the actual purchasing influencers. After all, they’re the audience. So we met with our friends at the University of Dayton’s School of Business Administration and a research partnership was born. Led by UD’s Business Research Group, a comprehensive survey covering different aspects of the considered purchase process was developed. The survey was conducted using MarketTools’ robust online market research tool and garnered 448 responses from a variety of industries. How much of my The respondents were either influencers or decision makers (Table 1). We also gathered marketing mix information about each respondent’s industry classification, company size, job title or should be online? role, budget authority and the global reach of their company as described below. Table 1 Decision role Percent of respondents 35% 36% 17% 12% Primary Influencer Member of a Member of decision small team a large team maker with equal with varying influence in amounts of the decision influence process 2 © 2011 TriComB2B and University of Dayton. All rights reserved.
  • 3. Do we need a blog? The industries represented in the respondent pool included: Energy-related Construction Information technology Medical devices and pharmaceuticals Industrial manufacturing Process industries Other See “About this Report” on Page 21 for a more detailed breakdown of industry classifications. Do we need our The respondent pool represented various roles (Table 2). distributor network? Table 2 Role in firm Percent of Respondents 16% 38% 11% 17% 18% Senior Engineer Operations Purchasing Other Executive/ Owner The survey was broken into three different subject areas, which created a unique Should we pursue opportunity for research regarding B2B end users’ purchasing behavior: preferred supplier status? Product considerations and message relevancy Information consumption and online habits Purchasing process This summary report includes some of the key findings from these areas, and touches on the potential implications for B2B marketers involved with industrial and technical businesses where the considered purchase is paramount. Industry-specific reports and more detailed demographic cross tabulations are available by request. NOTE: Table details may not sum to totals because of rounding. © 2011 TriComB2B and University of Dayton.All rights reserved. 3
  • 4. PART I Product Considerations and Message Relevancy How relevant is price The intent of our research in this area was to evaluate the impact of different product to the B2B buyer? and service attributes and the relevancy of common marketing messages as viewed by those involved in the considered purchase process. How important is price in the decision process? To what extent does total cost of ownership really matter? How does price What about the emergence of “green” messaging? set the stage for market strategy? Decision or Recommendation “Do we offer unique “I need references benefits versus the that can quantify competition?” the savings.” “What economic How many value do we man-hours can offer in the this save me?” marketplace?” “Do we offer the correct safety and “Can you environmental benefits?” provide an ROI calculation?” “Does our market positioning resonate What’s the with our target life cycle cost audiences?” over 20 years?” 4 © 2011 TriComB2B and University of Dayton. All rights reserved.
  • 5. 1. Purchase price dominates. In B2B, price really does matter. Implication: Good news About two-thirds of survey respondents indicated that 60% or more of their purchase for price leaders. However, decisions were dominated by the immediate purchase price. On average, price is it bad news for those dominated in 64% of the purchases (Table 3). with a more expensive offering? If you are avoid- There was no significant difference in response by decision role, industry type, age ing discussions about group or role in the firm. price in your sales and marketing approach, this research indicates you Table 3 may find yourself on the Percent of purchases where immediate purchase price outside looking in. When of the equipment dominated the decision positioned as a higher- priced supplier, putting Percent of cases where immediate purchase price dominated in place a strategy that 0% 20% 40% 60% 80% 100% clarifies the components 30% of your price may be 29% necessary to allow a 27% 25% fair comparison to lower priced and potentially less 20% Percent of feature-rich offerings. sample 17% 15% 14% 10% 8% 5% 4% 0% © 2011 TriComB2B and University of Dayton.All rights reserved. 5
  • 6. 2. Total cost of ownership: It’s important to the owner. Implication: Phew! This More than half the survey respondents (56%) indicated that at least 60% of the time, is good news. It’s hard to the total cost of ownership (TCO) had been calculated in considered purchase find a B2B marketing decisions in which they were involved (Table 4). Senior executives and business program that doesn’t owners evaluate TCO to a greater extent than any other role. Older respondents, incorporate some flavor namely those greater than 60 years in age, were much more likely to evaluate the of TCO or life cycle costs total cost of ownership for all considered purchases (33% of 60+ respondents vs. (LCC). More often than 10% to 14% for all other age groups). Machinery and equipment-intensive indus- not, the decision makers tries (e.g., energy-related and process industries) were the most likely to calculate and influencers think this TCO in the considered purchase process. is an important consider- ation. So a credible TCO Table 4 story should be part of Percent of time total cost of ownership is calculated in a a sound marketing and considered purchase decision by position in firm sales approach. If you’re talking to company lead- Position in firm ership, this is certainly an Percent of cases where total area of emphasis. Senior cost of ownership Executive/ Engineer Operations Purchasing Other Total calculated Owner 0% 7% 14% 18% 5% 7% 11% 20% 16% 21% 16% 21% 23% 20% 40% 10% 11% 14% 21% 12% 13% 60% 16% 18% 18% 15% 20% 18% 80% 33% 21% 20% 23% 23% 24% 100% 18% 13% 14% 15% 15% 15% 6 © 2011 TriComB2B and University of Dayton. All rights reserved.
  • 7. 3. What else matters in the In B2B, one message considered purchase decision? does not fit all. Implication: Further vali- Of course, the B2B considered purchase decision process does not just involve price dation that the concept and the total cost of ownership. We evaluated the role of five additional considerations of total cost of ownership to gain an understanding of their importance to decision makers and influencers. Of strikes a chord? Absolutely. these choices, the potential for process improvement resonated the most, with 78% of respondents stating it played a significant role in at least 60% of purchases. This was Operating costs are right well ahead of operating costs (67%) and impact on customer service (66%). Other up there with two-thirds of considerations, such as availability of contracted maintenance support and financing respondents, indicating flexibility, were far less important. it’s a key consideration the majority of the time. Based on roles within an organization, different criteria produced varying degrees But it’s also interesting to of impact. For example, the category “potential improvements in overall processes” see that the potentially was found to be more of a trigger for Senior Executives, Operations and Engineering. complex and harder-to- Purchasing responded more favorably to operating costs and the impact on customer explain concept of overall service (Table 5). process improvement has the most impact on these Table 5 purchase considerations. Respondents stating product or service consideration played significant role If a marketer can clearly in purchase decision 80% or more of the time indicate where their product or service impacts a Position in firm customer’s operational Product or service feature efficiency – in real terms Senior of significance Executive/ Engineering Operations Purchasing (e.g., greater production Owner availability) – decision makers and influencers Operating costs 60% 38% 50% 55% will pay attention. This is Impact on customer service 57% 48% 48% 56% especially true with Senior Potential improvements in Executives and Owners – 74% 52% 62% 44% overall process 74% of whom consider this factor 80% of the time. Contracted maintenance support 21% 21% 20% 20% Flexibility in financing 20% 15% 18% 21% However, as the data suggests, don’t lean on this story with purchasing. © 2011 TriComB2B and University of Dayton.All rights reserved. 7
  • 8. 4. Go green or go lean? If the choice is between go green or go lean, survey says go lean. Implication: Go green? With more and more emphasis put on safety and environmental factors in the B2B Probably not. While considered purchase decision, our research set out to establish the relative impor- energy efficiency cannot tance of three key components of this category: safety features, energy efficiency and be overlooked because green supply chain. of its close relationship to operating costs, the Safety features were an important differentiator between two choices in at least 60% of research indicates that the purchases for 57% of the respondents. For almost half of the respondents (48%), the less tangible benefit energy efficiency of the product was an important differentiator in at least 60% of their of buying a product with a purchases. The existence of a green supply chain for the product was an important “green” supply chain is a differentiator (between two choices) to only a minority of respondents (Table 6). significantly less important factor for the considered Table 6 purchase product. Percent of purchases where certain aspects were an important differentiator between two choices Go lean? That might make more sense. The tangible 0% 20% 40% 60% 80% 100% economic benefits that come from improved Safety features 16% 13% 14% 18% 22% 17% operational efficiencies and Energy efficiency 15% 19% 17% 19% 22% 7% lower operating costs (see of product Table 5) have much more “Green” supply chain impact. Express your 29% 27% 17% 15% 8% 4% for product benefit in terms of economic value before emphasizing Significantly lower numbers for “green.” the environmental friendli- ness of your story. Safety features consistently outweighed the other two factors as a differentiator, especially in energy-related and process industries. The information technology sector assigns little significance to any of these factors, with only a small minority indicating strong consideration in at least 60% of purchase decisions (safety – 23%; energy efficiency – 29%; green supply chain – 16%). 8 © 2011 TriComB2B and University of Dayton. All rights reserved.
  • 9. Part I Conclusion: What should the message be? Depends on who you talk to. The B2B buyer appears to be motivated to consider a product or service first based 2 out of 3 on price, but other features are also important. Total cost of ownership continues to B2B buyers say be a phrase that B2B buyers respond to positively, especially at the higher levels purchase price of decision making, such as Senior Executives and Owners. Operational efficiency dominates their also catches the attention of those involved in the considered purchase process. purchase decision 60% A compelling story around the safety benefits of a product or service, at least in or more of the time certain markets, may help tip the scales in your favor if other considerations appear to be a wash. Clearly, the role of the decision maker or influencer has a huge effect on the messages 67% that resonate most during the purchase process. One size does not fit all. Engineering of Senior Execs/Owners and Purchasing may have completely different concerns than the Senior Executive or in B2B say TCO is Owner. Tailor your message to your audience by stressing the right benefits based on an important message whom you are targeting at a given point in the purchase process. Do you often think about the age of your audience? You should. In our research, we found some substantial variations in responses by age. For example: 73% of B2B buyers DON’T A far greater percentage of our respondents age 60 and older found total cost of consider “green” ownership messages to be an important factor compared to any other age category. features an important product consideration The same group of respondents age 60 and older also felt that impact on customer service was significant in the decision-making process to a far greater extent than other age groups. Respondents over age 50, on average, indicated safety features were an important differentiator 58% of the time, well above those under 50 (49%). As you’ll see in Section II, respondents 30 to 39 years of age were more likely than respondents older than 60 to indicate online trade publication articles as important sources for considered purchase decisions (32% vs. 19%). © 2011 TriComB2B and University of Dayton.All rights reserved. 9
  • 10. PART II Information Consumption and Online Habits The B2B buying cycle is often broken into six distinct phases: problem identification, criteria creation, search, evaluation, test and selection, and procurement. Little research exists to determine which information resources are most valuable to a B2B influencer or decision maker during each of these various phases, or if online resources are as heavily referenced by this B2B audience as we might assume. In this section of the survey, we attempted to discover the effectiveness of various tactics and how relevant social media is to this group of industrial and technical buyers. TION SEA RCH LUA C RE R A C T IT T EVA EN ER IO EM IA N R U C O PR PRO D B IDEN LEM T AN TIFIC TES CTION E ATIO N SEL 10 © 2011 TriComB2B and University of Dayton. All rights reserved.
  • 11. 1. Useful information. B2B buyers– just give them facts. Implication: The There was substantial variation in the importance of particular written materials revelation that online as information sources (Table 7). Technical data sheets, whether online or in print, media needs to be the topped the list in importance followed by informal contacts in your own industry and most prominent part of website. Other online resources (product catalogs and trade publications) were the B2B marketing mix more important in each case than their in-print counterparts (37% vs. 22% and is hardly a new insight. 27% vs. 23%, respectively). Confirmation that online versions of technical Table 7 data sheets, catalogs and advertisements Importance as information sources for considered purchase decisions are preferred over their printed counterparts is a welcome affirmation Not Very Percent On a scale of 1 to 5 where at all important “4” or “5” for marketing managers 1 is “Not at all important” and important 5 is “Very important” making the case to shift 1 2 3 4 5 budgets to online media. Technical data sheets 3% 9% 23% 41% 24% 65% Keep your online content (online) current, detailed and Informal contacts in your own industry 6% 12% 29% 35% 19% 54% relevant to your audience. Buyers in these areas Website 5% 16% 27% 36% 16% 52% of B2B are looking for Technical data sheets technical data, drawings, 8% 16% 24% 32% 20% 52% (in print) specifications and other up-to-date materials Product catalogs 13% 20% 29% 26% 11% 37% (online) to help them make considered purchase Case studies that include 16% 19% 29% 26% 10% 36% decisions, and the ease 3rd-party resources of online access makes Trade publication articles (online) 14% 27% 32% 23% 4% 27% electronic materials preferable to print. White papers 17% 24% 34% 19% 6% 25% Trade publication 19% 25% 33% 20% 3% 23% articles (in print) Product catalogs 21% 29% 28% 18% 4% 22% (in print) © 2011 TriComB2B and University of Dayton.All rights reserved. 11
  • 12. 2. Networks rule. Can we do lunch? Implication: Have a few When evaluating a range of human information sources, survey respondents formed sales people that seem a hierarchy of importance. While all of these roles have some importance to decision to burn bridges? Is your makers and influencers, informal contacts within the industry rated more important customer service less to a higher percent of respondents (55%) than OEM sales reps (44%) or manufac- than desirable? You’d turing trade representatives (39%) – (Table 8). better get that fixed. Across all industries and Table 8 across every demographic, the most important human Importance as sources for gathering information interaction source for information is the informal Not Very Percent On a scale of 1 to 5 where at all important “4” or “5” contact within one’s 1 is “Not at all important” and important 5 is “Very important” industry. 1 2 3 4 5 Informal contacts in your 4% 12% 29% 36% 18% 55% own industry OEM sales representatives 7% 19% 31% 33% 10% 44% Distributors 12% 18% 36% 26% 8% 34% Manufacturing trade 11% 17% 33% 31% 8% 39% representatives Trade shows 17% 31% 29% 19% 3% 22% There were no significant demographic differences in the percentage of respondents who indicated informal contacts were important sources for gathering information for considered purchase decisions. 12 © 2011 TriComB2B and University of Dayton. All rights reserved.
  • 13. 3. Be ready when the B2B buyer finds you. Implication: While there As expected, respondents indicated most sources of information are important in the is a lot of talk about mar- search and evaluation stages of the decision process (Table 9). OEM sales reps and keting and sales playing distributors reach their highest percent at the procurement stage. It is of interest that a role in helping custom- most respondents do not regard these information sources as having high importance ers identify their problems in the problem identification or criteria creation stages. and defining criteria, our research indicates the Table 9 customer is likely to be Stage in purchase decision at which source is most important working independently (among those ranking it a 4 or 5 on the importance scale) at this stage. Logically, the importance of different Problem Criteria Test and outside influences picks Search Evaluation Procurement identification creation selection up dramatically as the Informal contacts in your search for supplier 10% 14% 31% 33% 8% 4% own industry alternatives begins. OEM sales representatives 9% 14% 26% 30% 11% 9% As a B2B marketer, focus Distributors 4% 12% 22% 16% 14% 31% your energy on allowing Manufacturing trade prospective buyers to 11% 11% 32% 26% 13% 7% quickly evaluate you as an representatives alternative. Understand Trade shows 8% 15% 55% 13% 6% 3% their language and the problems they’re likely Stage where greatest percentage indicated source was most important to encounter, but don’t confuse them by trying to create scenarios and is- sues that may not exist. © 2011 TriComB2B and University of Dayton.All rights reserved. 13
  • 14. 4. Use of online resources: 75% of respondents How’s your blog? that are in a user group find it helpful in making capital purchase decisions. Implication: Considering A research study isn’t needed to tell us that industrial and technical B2B buyers are B2B buyers’ preference going online to gather information about a purchase. However, to what extent do they for online material, use other devices and information sources? The majority of respondents use a smart the next logical step phone to access email and the Web, and nearly half are regularly following discussion is to make your online forums linked to their industry. In both cases, the majority of these users are doing so libraries as mobile- to gather purchase information (Table 10). friendly as possible. With the emergence and Approximately one-third of our respondents regularly follow industry-related blogs with increasing popularity of a majority of them doing so to gather purchase information. While 35% of respondents smart phones and tablets, use LinkedIn, only one-third of those users do so to gather purchase information. more materials are being Podcasts and Facebook had the lowest level of adoption, with a very small percentage accessed on-the-go. using either as a resource for a purchasing decision. Table 10 Additionally, elevation of your users’ roles in formal Use of online resources and help in gathering purchase information user groups can reap major benefits, including Percent using long-term customer retention. Smart phone to access email and the Web 59% Regularly follow discussion forums linked to your industry 46% Regularly follow blogs linked to your industry 31% LinkedIn 35% Podcasts 24% Facebook 13% Other online behaviors uncovered as part of this research study included: Nearly half of the respondents (49%) have clicked on an online ad to gather infor- mation. Of those who clicked, 34% sought it out and 66% just noticed it in passing. Slightly more than half (51%) of respondents have clicked on an online video to gather information. Of those who clicked, 44% sought it out and 56% just noticed it in passing. Approximately one-third (35%) of respondents belong to a user group. Of those who do, 75% found information from that user group helpful in making capital purchase decisions. 14 © 2011 TriComB2B and University of Dayton. All rights reserved.
  • 15. Part II Conclusion: Think about your tactical mix. To no one’s surprise, this research confirms the importance of various online 1 out of 3 and digital media as an information source for those involved in the considered Number of purchase process. respondents that follow an Online resources in the form of technical data sheets, product catalogs and industry blog trade publication articles all outweighed their print counterparts when evaluated for their importance. Mobile websites, discussion forums and blogs are important information sources for purchasing decisions. 50% of respondents The utility of online ads and videos is clear, with half or more of respondents indicating experience with both for gathering purchase information. have clicked on an online video. Before re-allocating our marketing budgets to all things digital, however, let’s not forget the most important resource: informal contacts within the industry. In all cases, industry peers rank this resource as a highly important part of the information and supplier evaluation process. In B2B, it is all about content and contacts. © 2011 TriComB2B and University of Dayton.All rights reserved. 15
  • 16. PART III The Purchasing Process: Preferred Suppliers and Critical Attributes The intent of this research area was to uncover how a company gains consideration as a preferred supplier. With the existence of online bidding systems and the proliferation of online information about potential supplier options, we set out to understand how these factors affect the ability of a company to become a preferred supplier. We also questioned whether preferred supplier status truly leads to increased sales. Preferred Supplier Status has been awarded to “I wonder if they COMPANY X. regularly measure “Should we customer satisfaction?” include Purchasing in this meeting?” “Can we obtain some product In what format will samples and have they want to see Quality Assurance our on-time test them?” delivery metrics? Sourcing Company/Customer Preferred Supplier Candidate 16 © 2011 TriComB2B and University of Dayton. All rights reserved.
  • 17. 1. Preferred suppliers get the business. Implication: Becoming Our research showed that 83% of considered purchases were from a preferred a preferred supplier can supplier a majority of the time. sometimes be a complex process, but it is worth the Table 11 effort. For a considered Percent of purchases from preferred suppliers purchase product or Percent of cases where purchase was made from preferred supplier service, the development 0% 20% 40% 60% 80% 100% of a mutually beneficial 50% 53% business relationship is 40% of importance and should be part of the overall B2B 30% Percent of sales strategy. sample 20% 19% 10% 11% 8% 3% 5% 0% With respect to variations by age or role, no significant areas of difference were found. When asked to classify the types of purchases for which preferred supplier lists were most commonly used, respondents provided a broad range of responses. Capital equipment (22%) garnered the most mentions with raw materials (15%) and technical services (14%) rounding out the top three. Thirteen percent of respondents indicated they used a preferred supplier list for all purchases (Table 12). Table 12 In what purchase areas are preferred supplier lists commonly used? Percent Capital equipment 22% Raw materials 15% Technical services including IT 14% All 13% Computer hardware 6% Computer software 6% Business supplies 5% Construction/building materials/furniture 5% © 2011 TriComB2B and University of Dayton.All rights reserved. 17
  • 18. 2. Quality and price matter, Can you show evidence but what else? of satisfied customers? Implication: If the old In almost all cases, respondents indicated product quality and price were used to adage, “Price, quality and select preferred suppliers. More than half of respondents indicated that customer delivery – you can have satisfaction, service considerations, on-time delivery, product availability and proof two out of three,” is true, of financial stability were used in the selection process (Table 13). then we now know which two are most important. Table 13 Price and quality dominate Factors in selecting preferred supplier the landscape for preferred supplier selection, where Percent on-time delivery ranked significantly less important. Product quality 90% Price 87% Evidence of customer satisfaction ranked as Evidence of customer satisfaction 64% the third most important Service considerations with the equipment criteria. This reinforces 63% (service level agreements, aftermarket support) the notion that formally Evidence of successful prior contract compliance in: On-time delivery 60% nurturing a strong group of satisfied referral Evidence of successful prior contract compliance in: Product availability 58% customers may be one Proof of financial stability 52% of the most important investments you can make (see Section II). There are some additional findings of interest related to the selection of preferred suppliers: Those in Purchasing were more likely than respondents in general to consider all aspects of the purchase criteria in selecting preferred suppliers. Younger respondents, specifically those between age 30 and 39, appear to be more disposed to risk-taking when evaluating suppliers, with half or less indicating evidence of customer satisfaction, on-time delivery compliance, financial stability and proof of production capacity as important criteria. Respondents in the information technology industry indicated the lowest percentage of purchases from a preferred supplier list (57%) with those from energy-related and process industries indicating the largest percentage (74%). 18 © 2011 TriComB2B and University of Dayton. All rights reserved.
  • 19. Part III Conclusion: Being a preferred supplier is worth the effort. With respondents indicating that 70% of purchases come from a preferred supplier 83% list, this may be an important area of emphasis in a B2B sales strategy. If you do of respondents stated move into the preferred supplier arena, be prepared to demonstrate the following and that considered defend these aspects of your product or service: purchases came from preferred suppliers Product quality most of the time. Price Evidence of customer satisfaction Service considerations (service level agreements and aftermarket support) How well do you Evidence of successful on-time delivery track service level Evidence of successful product availability agreements? Proof of financial stability Purchasing depart- ments are more likely than other respondents to consider all product aspects in selecting preferred suppliers. © 2011 TriComB2B and University of Dayton.All rights reserved. 19
  • 20. Report Conclusion While B2B buyers To build on the B2B marketing data available from trusted resources such as respond to different MarketingProfs, MarketingSherpa, BtoBOnline and GlobalSpec, TriComB2B teamed messages depending with the University of Dayton’s School of Business Administration to conduct primary on their role within research into B2B marketing industry trends. In early 2011, a customized survey of the organization, 448 individuals provided important insights regarding how they react to marketing everyone responds messages, the information sources they consider most important and how they view the to price. role of preferred suppliers. Some summary observations are provided on the next page. In B2B, differences exist between influencers and decision makers, but the role or function that one has within an organization is more important. B2B buyers are looking for strong technical content, and they will go online first. 20 © 2011 TriComB2B and University of Dayton. All rights reserved.
  • 21. Social media is being Consider the message and the audience adopted at a rapid The B2B buyer is motivated to consider a product or service first based on price, but pace within B2B, other features are also important. Total cost of ownership continues to be a phrase including LinkedIn, that B2B buyers respond to, especially at the higher levels of decision making. blogs and discussion Determine which feature to stress over another based on the role of the individual forums. who is making the purchase decision. With the increased activity of green marketing, especially in the consumer world, “going green” is not as important a differentiator in the purchase decision when compared to safety features and energy efficiency. Regardless of role, information from informal industry contacts was second only Distributor networks to online technical data sheets in importance to the decision-making process. play a critical role in Make sure those contacts are sharing positive feedback. the B2B marketplace at the time of procurement. Consider how information consumption and online habits are changing It is clear from the research that the B2B buyer ranks technical information as very important in the purchase decision process. Technical information should be focused on supporting the search, evaluation or procurement stages of that process. By the time most B2B buyers search for a supplier, they have already passed through the problem identification and purchase criteria phases. Go mobile – or be prepared to, soon. More B2B buyers are using a smart phone regularly and participating in industry discussion forums and networks such as LinkedIn. Preferred supplier status is critical to B2B If a product or service lends itself well to active feedback from users, an investment in sales strategy if the a user-group format makes sense. marketplace accepts Consider the benefits of becoming a preferred supplier that model of business The global and interconnected nature of today’s B2B world has created a more development. complex process for those companies aspiring to preferred supplier status. With 70% of survey respondents, particularly those in Operations, indicating they use a preferred supplier list, this should be an important part of your sales and strategy. © 2011 TriComB2B and University of Dayton.All rights reserved. 21
  • 22. About this Report This report was created and executed through a partnership between TriComB2B and the University of Dayton’s School of Business Administration. The Business Research Group at the University of Dayton designed the survey and analyzed the survey data. During the first quarter of 2011, a total of 448 respondents across industry sectors participated in the survey. In some cases, similar industry segments were combined into larger groupings to simplify analysis and results presentation. The number of respondents for each industry grouping is provided below, as well as the definition of the groupings where applicable. Industry Group # of respondents Energy-related 41 Construction 50 Information technology 31 Medical device and pharmaceutical 58 Industrial manufacturing 107 Process industries 45 Other 116 INDUSTRY GROUPING DEFINITIONS Energy-related – petroleum refining, oil and gas, power generation, alternative energy Construction – industry grouping not applicable Information technology – industry grouping not applicable Medical device and pharmaceutical – industry grouping not applicable Industrial manufacturing – industrial equipment, power transmission, machine tool, controls and electronics, component manufacturing, other manufacturing Process industries – mining, food and beverage, chemical processing, water resources, pulp and paper Other – various industries not classified in the above categories, to include agriculture, automotive, consulting engineering, HVAC, packaging and telecommunications Versions of this report that are specific to the above industries can be requested at: www.tricomb2b.com/2011Research. 22 © 2011 TriComB2B and University of Dayton. All rights reserved.
  • 23. About The Business Research Group at the University of Dayton The Business Research Group at the University of Dayton is part of the university’s School of Business Administration. This organization offers comprehensive market research offerings, including: Survey research Focus group research Program evaluations Economic forecasts For more information, visit http://businessresearchgroup.udayton.edu/. About TriComB2B Solving the complex marketing challenges businesses face today requires a balance of innovative and proven TriComB2B strategies. Striking that balance calls for creativity, experience and a comprehensive set of capabilities. Located in Dayton, Ohio, TriComB2B is a business-to-business marketing agency that truly understands these challenges. Our commitment to addressing the com- plexities encountered in marketing technical products and services has made TriComB2B a trusted marketing partner for companies throughout the U.S. TriComB2B was recognized in 2011 as a Top 150 Agency by BtoB Magazine. For more information, visit www.tricomb2b.com. © 2011 TriComB2B and University of Dayton.All rights reserved. 23
  • 24. © 2011 TriComB2B and the University of Dayton. All rights reserved. You are free to copy, distribute and display and create derivative works from this paper provided that you give TriComB2B and University of Dayton proper credit as the source.