Evolving How Businesses Make Buying Decisions

Companies purchase all sorts of goods and services to operate.  Advanced manufacturers have intricate supply chains often providing highly unique and technical inventory components.  Wholesalers and retailers purchase physical goods from suppliers and manufacturers to be resold to other businesses or end consumers.  Nearly every company in some form purchases information technology, legal, search & staffing, accounting, engineering, marketing, and advisory services to name just a few.  

 Accessibility to information via the web has significantly changed the way customers make buying decisions.  The process companies undertake to procure goods and services, whether raw materials, components, professional services, supplies, or high end consulting, has changed substantially in that any company anywhere can position themselves to discover and be discovered.   

But once a business is found and a prospect is ready to make a purchasing decision, more traditional buyer categories still tend to drive outcomes.

Buyer Categories

Relationships

The extent to which strong relationships drive business decisions simply cannot be overstated.  However, increased real-time access to alternatives means that savvy businesses likely will choose to do business with a relationship only to the extent they can’t get better price, quality, or value (whatever is most important to them) from any other source.  

In the past, often times the relationship purchase ruled the day, but we’ve observed it’s evolving to become a component and less often the ultimate factor.

Low Cost

Certain purchasing decisions appropriately warrant low cost being the driving factor.  When quality isn’t an important factor, the difference in quality between suppliers is negligible. Or perhaps suppliers are abundant and undifferentiated, then making a buying decision on cost makes a lot of sense.  

Purchasing office supplies for example might fall into this category – simply pricing out the supplies needed to a few vendors and making a decision based on price likely makes the most sense.  

Quality & Impact

Some purchases require a quality based decision almost without regard to cost.  Perhaps getting the right result is so important that you need to hire a one-of-a-kind specialist to defend against high risk litigation, and the fee is very high, but so too is the risk.  

Or maybe manufacturing and quality tolerances need to be so tightly controlled because any minuscule variance would render finished goods inoperable and valueless – clearly cost should be a minimal driver in the decision in this instance, with quality and impact winning out.

High Value

Value is the benefit of a product or service relative to the cost of acquiring it when compared against other alternatives.  We’ve found that many purchasing decisions for our own firm fall into this category: technology software and service, legal counsel, marketing services, and specialized consulting services being chief among them.  

While we are certainly sensitive to the cost of acquiring these services as a small business, we’re much more concerned with evaluating vendors through the lens of the overall value they’ll create for our company instead of just picking the cheapest service.  

As we’ve seen a trend within our own company shifting from relationship to high value based purchasing decisions, we’ve also observed a similar trend in our customers’ evaluation of our engaged search services.  

We now make most purchasing decisions based on value, and while relationships and cost are important, we don’t allow either to supersede what we feel is in the best interest of advancing our company, thereby creating value.  

We expect our prospective customers to make the same evaluation of us.