While some small business purchase behavior is similar to their larger brethren, most B2B sales people don’t recognize they differentiations between how the “S” of SMBs purchase. That translates into frustration for the small to medium business owners, which means lost sales opportunities or a longer sales process with stops and starts for vendors.
A few peculiarities of a small business? They actually want sales calls and expect sales people to be a source of information and advice. But they don't want the sales person to "drive the deal" -- small business owners like to kick the tires for themselves and get advice from other sources.
Trial and Error vs. Vendor's Word
The Alternative Board (TAB) conducted a study in the fall of 2014 to understand how business owners make buying decisions (registration required). TAB is a business advisory board and strategic coaching franchised organization in 11 countries serving private business owners.
The study’s findings echo what my company found when interviewing small business CEOs as part of developing Sellers’ Compass journey maps for clients. Business owners want to learn about new products and services from vendor sales’ teams and their websites but don’t expect or want sales to influence the decision that comes from other business owners.
Seventy-five percent of business owners look to vendors to educate them on new products, services and best practices either through conversations with sales people or the vendor’s website. While these business owners will give vendors the initial benefit of the doubt in the accuracy of their information, 46 percent look to other business owners who are using the product or service for advice and validation.
Having “an enthusiastic group of references” and video customer testimonials is critical in the decision process. Vendors without an evangelizing customer base risk never getting an "at bat," making the short-list or the sale.
The good news from our research is that vendors get the benefit of the doubt. Business owners give them a shot at presenting their product and the value. When they get that shot, they need more than their word or their collateral material. They need to come with solid third party references and evidence that backs up their claims.” Dave Scarola, Vice President of TAB.
The TAB Small Business Pulse study found that professional associations and industry organizations were losing influence in the purchase decision, a trend we're seeing across all industries and company sizes. Not taking the word of vendors, 64 percent of small business owners will “chose personal trial and error compared to demonstration by the vendor.” Seeing is believing and business owners prefer to experience first-hand how a product works before making a decision. Offering freemiums and “Try and Buy” programs is a strong selling strategy with the SMB segment.
A Wake Up Call
The role of relationships is one difference between SMBs and Fortune 1000 companies. In our client work we’ve found that F1000 and larger organizations weigh the quality of the relationship during the purchase process more heavily than SMBs. Smaller companies want to see that products and services deliver the advertised results first before they focus on the quality of the vendor relationship.
From the business owner’s perspective, having a trusted network of peers is key to making smart buying decisions. Owners value the advice of other business owners more than any other source in making their decisions. It’s important that business owners have that trusted network of peers to help them avoid mistakes and take advantage of opportunities,” shared Scarola.
Small and large businesses agree on the importance of value over revenue. The TAB study found that
56 percent of small business owners chose added value, 32 percent increase revenue, and 12 percent reduce cost” in how they ranked the importance of outcomes. Another similarity is that both groups expect products to perform as advertised and deliver promised ROI. Small business owners go one step further with 22 percent 'expect products to make things easier for them and their staff' and 15 percent 'expect the purchase to make their customers/clients happier.'"
Contextual relevancy is important to all buyers. In the TAB study, small business owners found vendor information “to be too sales-oriented (57 percent), insufficient in detail (21 percent), over technical (10 percent) and repetitive (8 percent).” They want information that is relevant (49 percent), informative (40 percent) and from independent sources (9 percent).
The bottom line is that vendor organizations need to stop treating customers in a one-size fits all manner and expecting sales teams to discover engagement differences. SMBs have very different journey maps and engagement expectations than their larger brethren, even in the same industry. For example, small business owners preferred to be contacted by email or phone where social selling techniques are more effective with larger businesses.
The TAB study is a wake-up call to all vendor organizations. Vendors need to invest the 30-45 days necessary to develop journey maps for each of their target customer segments, followed by aligning their sales methodology, processes and sales/marketing to customer expectations. It’ll pay off in more revenue and customer loyalty within one to two quarters.