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Neil Rackham: B2B buying behaviour is becoming increasingly polarised

By on Apr 22, 2014 No Comments

We’re all very familiar with the idea that modern B2B buyers are increasingly well-informed and far less dependent on individual sales interactions to get hold of the information they need to make buying decisions.

But according to a recent survey revealed by Neil Rackham of SPIN Selling fame, B2B buyers are also demanding more expertise and support from sales people than ever before. How can these two apparent contradictions be rationalised?

It turns out that the answer lies in the increasingly polarised nature of B2B buying behaviour…

As Rackham revealed in a recent discussion at the University of Portsmouth Business School, until a few years ago, B2B customers were generally prepared to pay a little more for the benefit of getting advice about their purchase.

Transactional vs. consultative buying behaviours

Rackham_ThenThere was until recently a substantial “middle ground” of B2B buyers who were not completely transactional in their buying behaviour but at the same time did not require (and were not prepared to pay for) a full-on consultative selling relationship.

In many markets, this middle-ground-thinking represented the majority of mainstream buyers. But things have changed. B2B buying has become increasingly polarized between the extremes of highly transactional and highly consultative behaviours.

Rackham_NowPerhaps this “squeezed middle” should come as no surprise: we’re seeing exactly the same pressures in many markets. You’ve only got to look at the UK supermarket landscape, where buyers are rapidly polarising towards cost-leader brands (Aldi, Lidl and Asda) and value-based brands (Waitrose and M&S) leaving middle of the road brands like Tesco struggling to maintain their market position.

But just as in B2C, customers don't always make exclusive choices and many behave situationally: B2B customers may choose to buy some things transactionally and other things consultatively, even from the same supplier. In many situations, it’s often impossible (and frequently dangerous) to characterise customers as always being exclusively transactional or consultative.

Avoiding being stuck in the squeezed middle 

So how can B2B sales and marketing organisations adapt? Well firstly, if your customer base exhibits both transactional and consultative buying behaviours, you had better have two separate go-to-market models - a low cost transactional channel and a high value consultative channel.

Trying to “tweak” or stretch what is essentially a single underlying business model a little bit in either direction in an attempt to compromise won’t satisfy anyone involved in the process - one or other party will soon conclude that the cost-value equation is wrong.

Two buying behaviours: two sales models

There’s an inescapable conclusion: if you’re going to have to run two separate go-to-market models, you’re going to have to run two separate sales forces. No sales force can be effective if the same salespeople are pursuing both transactional and consultative opportunities.

There’s an obvious economic explanation for this: Any salesperson that is talented enough to succeed in consultative selling is too expensive to use in transactional sales where customers don’t want, don’t need and won’t pay for high-level sales talent.

But, as Rackham pointed out, there’s also a psychological reason: When salespeople manage both transactional and consultative opportunities, they invariably pay too much attention to the short-cycle low-margin transactional business at the expense of longer-cycle higher consultative opportunities - and they are often unwittingly encouraged in this behavior by the signals they’re getting from quarterly driven sales management.

Concentrating your energies

So the conclusion is obvious: remove responsibility for low-margin transactional sales from your high-cost field sales organisation and switch it to a telesales, web-based or indirect channel. Focus your scarce, hard-to-hire value-creating sales people on high-payoff consultative sales opportunities. Concentrate their energies where they can create the greatest value for both the customer and your organisation.

This is a challenging change management exercise. It’s likely that many of your sales people will resist having opportunities taken away from them. Interestingly, the smartest top performers often see the logic in it more easily than their middle-of-the road-colleagues, particularly if they feel that the company is supporting them by heavily resourcing the most attractive high-value opportunities.

You may need to implement some form of transitional compensation scheme. You may well find that the change exposes weaknesses in some of your existing sales people that may have to be addressed through training or re-assignment to more suitable roles.

Change now or have change forced upon you

It is unlikely to be a completely painless transition. But the alternative - of staying “stuck in the middle” is likely to be increasingly painful, and putting off the transition will almost inevitably mean that your hand will be forced against your will at some future date.

So - where does your current go-to-market approach fit along the transactional - consultative buying curve? And what's the risk that your current model is an increasingly uncomfortable compromise between the two?

Images ©Neil Rackham

Republished with author's permission from original post.

Categories: ! BlogSales Performance
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