Why B2B Buyers Choose the Safest, Rather than the Best, Solution
Late last year, we conducted new research exploring how B2B buyers make purchase decisions and how they assess risks and rewards. The results were very surprising and showed how risk avoidance makes defensive decision making the norm. Often, instead of buying the best solution for the business, buyers select the solution that is safest for them personally.
B2B buyers often flee from perceived risk and crave trust. We sometimes forget that, unlike B2C buyers, who are usually making a personal purchase decision, B2B buyers are in the peculiar position of making weighty purchase decisions on behalf of their employer. It’s a balancing act, with B2B buyers operating as if they have a split identity.
On one level, they need to understand the purchase requirements, risks, and rewards from the perspective of the business they represent (for example, how the decision could make the business more competitive or further the company’s strategic ambitions). B2B buyers are people, too, however, and will naturally factor their own professional ambitions and personal concerns into their decision-making process (for example, who gets blamed if things go wrong and how the purchase decision will improve their own work world).
These two perspectives are often in conflict.
The B2B Risk-Reward Gap
To explore how B2B buyers balance these conflicting perspectives, we conducted a survey and asked buyers to think about a significant purchase decision they’d made in the past year. We then asked them to assign a score for the levels of risk and reward that would accrue to them personally and also to the business they represent (the results are shown in Figure 1).
(Figure 1: How B2B buyers assess the risks and rewards of a purchase decision for the business they represent and for themselves professionally.)
From the perspective of the individual buyer, most rewards for a purchase decision go to the business while more of the risks are shouldered by the buyer themselves. In other words, buyers believe that they face the most risks and negative consequences of a purchase decision and don’t see the upside rewards that mostly accrue to the business they represent. This was true for all buyers across the multiple markets we explored. This is the risk-reward gap in B2B that drives defensive decision making.
We see many other symptoms of the risk-reward gap and of defensive decision making. For example, in Forrester’s B2B Buying Survey, we have seen the average number of buyer-seller interactions jump 58 percent, from 17 in our 2019 survey to 27 in 2021, a sign that buyers are doing much more due diligence. Similarly, we have seen buying groups that span multiple departments in an organization jump from 28 percent in 2019 to 43 percent in 2021. This data suggests that buyers are working harder to spread responsibility, and risk, for decision making over large, formalized groups.
Building Trust and Reducing Risk With Defensive Decision Makers
How can sellers deal with the risk-reward gap and build trust? One useful way to solve for this problem is to understand how, from the perspective of individual buyers, risks and rewards change for different demand types. Forrester identifies three demand types that describe different market scenarios from the perspective of the problem definition and the solution options available to buyers (see Figure 2). In “established markets,” which is the most common demand type, both the problem definition and the solution options are well understood (an example is sales force automation systems). In the “new paradigm” demand type, the problem definition is well understood, but the solution options are new (for example, with conversational AI systems in call centers and for customer support). The final and least common demand type is “new concept,” where both the problem definition and the solution options are new (an example of this is the metaverse for B2B).
(Figure 2: Solving for defensive decision-making will depend on the specific demand type.)
For each of the different demand types, the tactics that sales, marketing, and product teams deploy to build trust and mitigate individual buyer risk will change. Taking the example of a new paradigm, the buyer perceptions of risk will be relatively high, although there is also the promise of significant rewards. Typically, buyers have an existing solution and are being asked to change, itself a risky proposition. In this scenario, sellers need to develop mechanisms that make the rewards more tangible and real while alleviating perceptions of risk. A common playbook, especially in the software industry, is to reduce risk by offering incremental trials or on-ramps for the new solution so that buyers can experience tangible rewards and back out with no cost. Another tactic in this playbook is to increase the personal reward realized by individual buyers by positioning them as innovators and leaders in their profession and thus to confer status on them personally.
Rebalancing the B2B Risk-Reward Gap
Defensive decision making is not the exception; it is the rule. Sales, marketing, and product teams need to adapt their tactics and find new ways to build trust with B2B buyers.
Start by recognizing the human scale of B2B buying. Purchase decisions are made by individuals who have specific personal and professional cares and concerns. Selling organizations must be more empathetic and recognize, and address, the personal and professional risks impacting individual members of the buying group rather than solely delivering appeals and messages at the organizational level.
Understand the risk profile of your buyers and map offerings by demand type. Align sales, product, and marketing by creating specific playbooks and make sure that sales and marketing have the tools and resources to run these plays effectively.
Rebalancing the risk-reward gap is one of the surest ways to generate trust with your buyers.
Ian Bruce is vice president and principal analyst at Forrester Research, with more than 20 years of international experience managing marketing, brand, and communications strategies for B2B companies. Mike Pregler is vice president and research director at Forrester, an award-winning sales and marketing thought leader with 30 years of experience in global high-tech companies.