Why demonstrating B2B business value doesn’t work anymore?

Business to Business (B2B) buying typically is a pretty logical process, right.

Buyers want to just assess the facts and figures to show they have a great deal- they want to identify those businesses with the best “business value” to them and then do a deal.

Following on from this, the research is clear, Buyers who see a supplier’s business value to their own business are four times more likely to consider that brand in the future. In fact, demonstrating your business value to your customers has become essential for buyers to consider your business. Most buyers who don’t believe your business and your brand will deliver better business value to them simply won’t even consider purchasing from that brand at all.

Unfortunately, B2B brands’ skill at demonstrating “business value” does have limitations.

Although you can claim impressive business outcomes for your customers, so too can your competitors.

In fact, customers perceptions of the actual beneficial business value on offer hardly vary at all between B2B brands, either within an industry or even across industries. The reality is, after being the prime focus of B2B advertising and promotion for over a decade, buyers perceive little difference between the business value claims of their suppliers. Adding value to suppliers business is now ubiquitous in the B2B environment.

Actually, its worse than that.

“One of Three” problem.

B2B brands pure focus on a logical “we increase your business value” approach to clients is now no longer a differentiator. It merely gets you into a buyer’s consideration group and doesn’t enable you to stand out amongst your competitors as buyers believe all good B2B suppliers are pretty much the same. (Only 14% of buyers perceive enough meaningful difference between brands’ business value to be willing to pay extra for that difference). What now happens is  what I call the “one of three problem.” As customers do their own research, they conclude that the top three suppliers in an industry all deliver equivalent business value and are acceptable options to buy. Their company policy dictates they must have three quotes to offer the business. Then this leads to the inevitable price comparison and competition, where customers ultimately select the one supplier of the three short-listed who is willing to offer the lowest price.

One explanation for the limited effect of business value messages lies in the nature of decision making itself. Although B2B buying is often treated as a rational activity, all human decisions are driven by a complex mix of gut, emotion, post-rationalisation, and reason.  Today’s B2B marketing environment is increasingly crowded, noisy, and commoditised. The best response for B2B marketers is to focus on better branding beyond demonstrating business value to win preference, purchase, and premium pricing.

Thus the question arises, does logic/reason or emotion have the greater impact on B2B commercial outcomes?

Lets look at the business environment facing B2B buyers.

benefits brands offer

Going back to my Kellogg Business School Professor- Philip Kotler– in an increasingly complex world for B2B buyers;  greater commoditization of business offers, increasing globalization of businesses and technologies, increasingly complex solutions to business problems, both hyper competition and greater consolidation of businesses and increasing price and margin and profit pressure.  IN this challenging business environment, B2B brand need to demonstrate an ability to do three things- reduce risk for the buyer and his business, increase the efficiency of decision making through providing better easier information and provide reputational value to the buyer.  This all reminds me of the old IBM adage “no one ever got fired for buying an IBM”.

To explore this issue in the current world, B2B research company CEB partnered with Google and Motista to test the impact of over 70 brand benefits on a broad range of B2B commercial deals. The brand benefits tested two broad categories of B2B brand attributes:

1. Business value—Includes appeals to logic/reason in areas such as functional benefits (e.g., high performance, structure/order) and business outcomes (e.g., achieving business goals)

2. Personal value—Includes emotional appeals in areas such as professional benefits (e.g., being a better leader, simplifying my life), social benefits (e.g., fitting in with colleagues, admiration from others), emotional benefits (e.g., confidence, excitement, happiness), and self-image benefits (e.g., doing good for society, feeling of accomplishment).

The results were quite clear and initially surprising: a greater proportion of B2B customers have greater emotional attachment to the B2B brand they purchased compared to B2C consumers relationship with B2C brands. Why can that be so?

B2B purchases entail great personal risks and investments in both time and money.

Of these, risk avoidance is the most potent influencer. B2B purchase stakeholders fear:

  • Losing time and effort if a purchase decision goes poorly,
  • Losing credibility if they make a recommendation for an unsuccessful purchase,
  • Losing their job if they are responsible for a failed purchase.

Screen Shot 2017-01-24 at 10.16.44 AM

 

Moreover, the more personal risks a purchase entails, the more emotional attachment with purchases buyers feel—and the more they attach to brands that can eliminate perceived risks

As perceived risks increase, Brand influenced choice increases
As perceived risks increase, Brand influenced choice increases

OK, so far we’ve demonstrated that buyers who perceive a B2B brand as reducing the risks of decision making are more likely to buy. But what about customers who’ve not bought your brand?

Non-customers obviously view your brand differently than buyers who have experienced it. Fewer than one-third of non-customers believe a B2B brand will provide them with beneficial personal value. And when they don’t see that personal value, they will not buy and they definitely won’t pay a premium. So, most B2B brands are successful in meeting existing customers’ personal needs—with well-designed products, service delivery, and experiences— but they fail to convey those benefits to non-customers who have not had the opportunity to experience these benefits.  So, B2B marketing’s role is to convince non-customers of the personal value of their offer.

Additionally to emotional connection, to have a better B2B brand you must differentiate yourself using logic/value thereby de-commoditising your buyers perception of our business value. How are you able to do that?

I believe the best way to build both a logical and an emotional connection with potential buyers is to bring together two insights- buyer insight and business value insight in a commercial insight.

So far, in establishing that buyers need to perceive a personal value from your brand, we need to create an insight on this.  What do we need to offer to a buyer personally, to get him to buy- simply put will our offer reduce his risk of being fired or increase the potential of being promoted?

Additionally, by looking at what special business value our brand can offer we can create a “Commercial Insight” which challenges a customers’ thinking about their own business problems and shows them that the status quo is no longer acceptable.  Through a compelling commercial insight we can clearly demonstrate a logical benefit worth paying more for.

Through having a compelling Commercial Insight, customers learn something new about their business and thus appreciate the unique value in the supplier’s offer.  Currently, most attempts at creating a commercial insight are focused new ways to save the business money for the organization. While this is useful its not really differentiating for your business.  A real commercial insight tries to reframe the buyers business problems, or reframe the industry they are in trying to give them a new insight on their business to provide greater opportunities to grow, not just ways to save.

Bringing together the personal insight and the commercial insight provides a powerful communication tool to build stronger B2B brands.

A number of leading B2Bs are already highlighting the personal implications of their Commercial Insights to achieve both emotional and rational differentiation. Xerox, for example, has created YouTube videos that bring to life the personal benefits of its Commercial Insight. Xerox’s simple insight teaches customers that colour printing can boost students’ ability to learn and that Xerox’s printers offer the most vibrant colour to help with this. As shown in the Xerox’s “Hue-Phoria” video, this insight not only drives positive educational outcomes for schools through improved test scores (commercial insight) but also benefits teachers who feel fulfilled and relieved (personal insight).

Xerox positioning- intersection of Iinsights
Xerox positioning- intersection of Insights

And so we see to clearly differentiate your B2B brand you need to present both logic- demonstrating a unique business value – but also emotionally through addressing the personal value concerns of the buyers.  Next week, we’ll cover more on commercial insights to clearly differentiate your B2B brand in a commoditised world enabling your to beat the One-in-Three problems we all face today.