B2B Buyers: It’s all about the Benjamins
The research revealed that price dominated in 64% of purchases, delivering great news for price leaders - those focusing on initial pricing advantages versus higher priced / often more feature-rich solutions.
Certainly these results present a challenge to premium providers, who based on these results, need to steal the focus from initial purchase price, to tangibly prove lower lifecycle costs (considering all the costs over the useful lifetime of the purchase vs. just the initial purchase price), lower risk and superior value (incremental benefits of your solution vs. competition).
And these pricing discussions need to be proactive. The survey reveals that even if the buyer is not discussing the financial differences between you and the competition; know that these discussions are happening behind closed doors and driving the purchase decision.
Sales and marketing a higher-priced supplier requires proactive transparency, differentiating the higher initial price versus a superior solution with lower costs over the useful lifecycle, more business value / bottom-line benefits, and / or lower risks.
The good news in the survey results was that although initial purchase price dominates, consideration was given to lifecycle ownership costs / total cost of ownership (TCO). In the survey, more than half the survey respondents (56%) indicated that at least 60% of the time, the total cost of ownership (TCO) had been calculated in considered purchase decisions in which they were involved.
Moving beyond just initial price, TCO was more important to savvy Sr. executives / owners with 67% of Senior Execs/Owners say that TCO was considered.
The survey reveals that machinery and equipment-intensive industries (e.g., energy-related and process industries) were the most likely to calculate TCO in the considered purchase process.
This confirms that for premium solutions, moving the discussion beyond initial purchase price to the consideration of TCO can have a competitive impact in fighting Frugalnomics.
One way to do this is to arm your web site and sales teams with a TCO comparison tool - one that can proactively, quickly and credibly create a personalized total cost of ownership comparison report - differentiating for this particular buyer the unique lifecycle cost, incremental value and lower risks of your proposed solution versus named competitors.
With Frugalnomics in full effect, purchase price is still dominating B2B buying decisions. Although good news for price leaders, the ability to move beyond initial purchase price is critical for so many sales and marketing engagements, where shooting-it-out on price alone is a losing proposition.
Proactively positioning against the competition with regards to initial price versus lower TCO, superior business value and lower risks is essential to connecting, engaging and selling to today’s frugal B2B buyer.
The good news is that most buyers, and particularly senior level executives/ owners are receptive to TCO and other more value-focused factors.
Unless you are always the price leader, proactively moving the discussion beyond price will be essential to win more deals and grow sales into 2012 and beyond.
Source: The Considered Purchase Decision What Matters, What Doesn’t And What It Means For B2B Marketing and Sales by TriComB2B / University of Dayton School of Business Administration http://www.cmo.com/conversion/purchase-survey-finds-price-total-cost-ownership-most-important