B2B Tech Buying Cycle Is 20 Percent Longer
It takes longer to buy enterprise technology now than it did three years ago.
So says global research and market intelligence firm IDC, based on its survey of 199 companies that made large technology purchases during the past 12 months.
According to IDC's "2012 Buyer Experience Study," the buying cycle was 4.5 months in 2009, and has steadily increased to 5.4 months.
About 40 percent of the companies surveyed said they would prefer their buying cycle to be three months. So why does it take so long? For 60.8 percent of the companies, the internal buying process complexity hampers efforts, while 35.6 percent blamed poor marketing and sales efforts by vendors.
"One trend that may be at play here is that the business side is getting more involved in certain areas of technology purchases," explains Kathleen Schaub, vice president of the CMO Advisory Service at IDC. "In some areas, there are new stakeholders coming into the decision-making process that may not have been [involved] before."
Three years ago, the average number of stakeholders involved in the buying process at the typical midsized organization was four. Schaub says that number has increased to six or more. Large enterprises experienced the same shift, although not as pronounced; small organizations stayed about the same.
"We definitely think, in part, that this is related to the recession," Schaub notes. "Everyone tends to be a little more risk-averse. Budgets move up into the higher echelons in a company, so more justification is required."
However, Schaub points out that the economy is just one factor involved. The surge in cloud computing and software-as-a-service (SaaS) applications is causal as well.
IDC refers to a "third wave" of technology as the culmination of big data, mobile, social, and cloud solutions, which brings solutions closer to the end user than ever before. As a result, a shift has occurred in how problems are solved —and by whom—within organizations.
"The other thing is that businesspeople are a little bit different than they were in years past," Schaub explains. "Not only are people bringing iPads to work, but they're also bringing technological expertise and very sophisticated consumer habits. That is having an impact on how buying is changing."
Another finding from the Buyer Experience Study is the disparity between when buyers and vendors identify the start of the buying cycle. Marketing and sales leaders at the vendor companies report that 19 months is the average sales cycle for enterprise technology deals, Schaub says, which is much greater than the buyers' ideal of three months.
The disparity could be attributed to the fact that the "buyer is always online," according to Schaub, and that sales and marketing might usher someone into their lead management system when the person was actually just researching.
"The larger trend that marketers and sellers have to recognize is that the buyer is now king, and they now have to provide a real buying service instead of doing the 'tricky selling thing,'" Schaub says. "We found that companies are willing to leave a vendor in order to reduce their buying cycle time. A little over thirty-five percent—more than a third—are willing to go somewhere else, even if they like your product."
Help Speed Up the Buying Cycle
IDC's Buyer Experience Study respondents were clear about how vendors can help them speed up their buying cycles. Clare Gillan, IDC's senior vice president of executive and go-to-market programs, shared what they are looking for on the IDC Technology Marketing blog:
- Listening: Vendors should hear prospective clients out before they offer a one-size-fits-all solution.
- Justification: Help companies write a business case.
- Honesty: Be up-front about your product, even its shortcomings.
- Pricing: Provide all available price options up front and in detail.
Fewer than 1 in 7 B2B Customer Relationships Are Optimal
Gallup study find the need for a shift from price-focused strategy to one of customer engagement.
SAP Introduces Net Margin Analysis
New tool reveals hidden B2B expenses.
Beyond CRM: Improving Sales Process Execution
Differentiating between a sales process and CRM is the first step.
Cortera Launches B2B Purchase Insights Tool
The solution provides users with purchase and payment behavior data on 20 million U.S. companies.