The value of information in B2B purchasing processes
The purchasing process for B2B (business-to-business) companies has never been simple.
Naturally, the Coronavirus pandemic (SARS-CoV-2) has made it even more complicated.
In fact, results from the “Covid-19 Business Check Up” survey, launched by Lenovys during the lockdown months, revealed that one out of three companies currently consider itself unprepared to find new ways of interacting with customers, ways that are better aligned with new needs or compatible with the “new normal.”
For companies providing products and/or services to other businesses, it is vital to understand the new dynamics and pain points affecting their clients’ purchasing processes. It is equally essential to develop new strategies to rebuild, or recover, the business performance typical of the pre-Covid-19 era.
By mapping B2B purchasing processes across various projects, changes have emerged in the dynamics of the key players during the main stages. On average, these stages can be grouped into 5 macro-categories.
The typical purchasing process of a company serving a B2B market can be broken down into the following main steps:
- Origin of the customer’s need
- Definition of the potential solution
- Supplier research and information gathering
- Supplier evaluation and selection
- Solution utilization and evaluation
Changes in the purchasing process
Compared to the past, a greater number of stakeholders are now involved throughout the purchasing process, with different information needs. This is true even though the number of key decision makers remains very small. As a result, achieving the goal of the process -purchasing industrial goods and services – has become highly strenuous.
While the process remains linear during the first two steps, the most significant pain points emerge during the research, information gathering, and supplier relationship phases. Within these stages, the variety of information sources and the different stakeholders entering the loop make company workflows unpredictable, inconsistent, and, in many cases, repetitive.
Instead of a linear and well-defined journey, it is very common to encounter a literal roller coaster of loops and re-work on tasks that were already considered complete.
The situation brought about by Covid-19 has worsened this scenario – for instance, by restricting travel and sales visits – making the flow of information much more complex.
In fact, while before the pandemic most time was dedicated to researching and processing information regarding the technical requirements of the solution (and the respective suppliers able to meet the client companies’ needs), today this dynamic is exacerbated and far more complicated to manage. This has gone so far as to severely limit the time spent meeting potential suppliers.
The watchword: simplify
Traditionally, the strategies companies attempted to implement to counter this dynamic focused entirely on “moving upstream in the purchasing process.” They sought to increase their presence right at the origin of the need, some through traditional marketing activities, others through commercial agreements that ensured the supplier was consulted during the solution definition phase.
While the validity of this approach is not up for debate, considering the “new normal,” what is missing to complete the puzzle and generate new demand for one’s products and services is a focus on making the purchasing process holistically simpler to execute.
One lever that companies can act upon is directly linked to information and how it is exchanged within the process.
In fact, the type of information and how easily the various stakeholders can access it on the purchasing journey matters almost more than a specific sales meeting or a supplier’s particular technical requirements.
Taking this concept to the extreme, it is the information itself, not the individual sales force, that makes the purchasing process easier to execute.
Based on our experience working with various companies on this topic, tackling the information workflow can be approached by making the customer-supplier information flow:
1. Shareable
All various stakeholders have instant access, with zero cost and zero friction, to all information relevant to the process.
2. Channel-indipendent
Whether the information channel is physical (through meetings) or virtual (via emails or dedicated portals), the customer must always be able to access the information whenever and wherever they prefer.
3. Tailor-made
Each stakeholder in the process has different information needs. Therefore, they must receive specific information from the vendor company tailored to what they need to execute their specific tasks within the process.
The strategic use of information
When different pieces of information are used to help clients, companies complete their purchasing process, vendor companies can secure a genuine competitive advantage over their rivals.
An example could be developing an automated calculator that helps the client company quantify its needs (acting during the first step, the origin of the need) and share the results with other stakeholders in the process. Another example is developing a digital tool (a “digital twin”) that allows the client company to build and customize the entire solution being offered, from technical requirements to economic parameters.
Facilitating the execution of the entire B2B purchasing process through the strategic use of information, opportunistically leveraging the new tools (both digital and otherwise) that Covid-19 has forced upon us, can be a powerful strategy. Companies can design this approach to rethink their relationship with customers, thereby increasing demand for their products and services.
Article written by:
Riccardo Siciliani
former Manager Lenovys
He is a Manager in the Delivery Unit Strategy & Innovation at Lenovys, and manages projects related to the definition and implementation of corporate strategies, the innovation systems and application of Lean Product and Process Development principles with clients operating in the manufacturing, food & beverage and financial services sectors.
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