What do B2B buyers care about most - the 40 elements of value

What Do B2B Buyers Care About Most

Whenever consumers make a buying decision, they are basing that decision on several factors, or elements of value. B2B buyers are often working with objective criteria to make their purchase.

They are looking for a certain quality at a certain price.

Yet even B2B buyers have subjective and personal concerns that play a part in their decision. Understanding all the elements of value in a B2B sale, both rational and emotional, can help you to enhance your value proposition and increase customer loyalty.

You shouldn’t fall for the commodity trap! There are many ways in which you can distinguish yourself from competitors and find your place in the market. The key is to look at the bigger picture and study all elements, but also to know which elements are important to your customers.

B2B Elements of Value

In 1943, Maslow proposed a psychological theory known as the ‘Hierarchy of Needs’. The theory suggests that human actions are motivated by a desire to fulfil increasingly complex and subjective needs; from the very basic survival and comfort needs at the bottom, to self-esteem and actualisation at the top. A similar hierarchy can be constructed to explain the motivations for buying products or using services.

Management consulting firm Bain and company examined and analysed three decades worth of qualitative and quantitative research to understand what the most important factors are when it comes to their client’s buying decision. They came up with 40 elements of value, which can be further divided into five categories: Table Stakes, Functional Value, Ease of Doing Business Value, Individual Value and Inspirational Value.

The 40 elements of value te b2b buyer cares about most
The 40 fundamental B2B elements of value - Bain & Company

Table Stakes

Right at the bottom of the B2B buyer elements of value pyramid are the table stakes. These elements are the minimum requirements that you need to be able to enter a market or do business with a customer. Your product or service must meet the client’s specifications, be an acceptable price, and comply with regulations and ethical standards.

Functional Elements

Above the table stakes are the functional elements of the sale. These are based on performance and direct economic impact. Does your product increase your customer’s revenues and/or decrease their costs? Is the product high quality, innovative, and does it offer a scalable solution?

Your B2B buyer wants a product or service that is top quality and makes their company money. Most B2B sellers prioritise functional elements. You should also make sure you deliver on these, but do not neglect higher levels. There’s more to a sale than its functional elements.

Ease of Doing Business Value

Next up comes the ease of doing business value. This type of value is added if the client feels like the whole buying process is seamless. This section includes:

  • Operational Values – In which the sale improves your customer’s operations by simplifying, organising, connecting or integrating aspects of their business.
  • Strategic Values – In which the sale improves your customer’s business strategies by reducing their risk and improving their reach and flexibility.
  • Productivity Value – Where the sale increases the customer’s productivity, saving them time, reducing effort and hassles, and improving information and transparency.
  • Relationship Value – This is the first subjective value that we have encountered so far on the B2B buyer hierarchy of needs. This level focuses on whether you are a good fit for the buyer, and whether your relationship with them offers extra value. These include responsiveness, commitment and stability, expertise, and whether you are a good cultural fit.

Individual Value

As we move to the top level of the pyramid, the needs of your B2B buyers become highly emotional and subjective. At this level, a buyer’s needs are both personal and professional. Personal needs include benefits to personal growth and success, reduction of anxiety, design and aesthetics, as well as any value derived from fun and extra perks. Career needs include any element which enhances the buyer’s professional reputation, marketability or network.

B2B buyers are responsible for making important and often expensive business decisions, and as such, they are dealing with a lot of pressure and emotion. To reduce this pressure, you could offer buyers risk reduction and reputation assurance. This can be as simple as a money-back guarantee or providing instant backup when a system fails. Some companies base their value proposition around risk reduction by offering a service which inherently reduces risk in a company, such as insurance.

Inspirational Value

This is the highest level of the pyramid of needs, and as such is the most subjective and the most difficult to quantify. At this level, the buyer is considering values such as hope, vision and social responsibility. They are looking for a better future; for themselves, their business and the world. Indeed, the new generation of B2B buyers, known as ‘digital natives’, value social and environmental responsibility more than those who came before them – over 80% find it important.

Table stakes and functional elements are simple to measure and enhance. You can easily make your product better, faster, stronger! But the higher elements of value are more complex. You can add inspirational value by giving back to society, and by tying in the purchase with a higher purpose – for example, by donating a certain amount for each sale (social responsibility) or by offering and delivering revolutionary technology that steps a company into the future.

Important Elements Vary Across Industries

The hierarchy of buyer’s needs gives us an overview of all the different elements that can appeal to your B2B buyers. Each element is arguably important, but it is unrealistic to think that a company can target all the elements at once in its value proposition or deliver all of them to a customer. Most companies aim to excel in certain areas and invest in elements which need a boost.

Buyers also value different elements depending on the product or service that they are purchasing. For example, commercial property insurer FM Global build their value proposition around risk reduction and succeed in reducing buyer’s business interruptions and losses. They have among the highest customer retention rate in their industry.

Agricultural machinery company John Deere offer value in the form of expertise and reputation and have recently invested in increasing productivity and economic value with apps that give information about soil conditions and reduce fuel use.

IT Infrastructure Vs Commercial Insurance

Bain and Company, who we mentioned before as having identified the 40 elements of value in B2B sales, worked with Research Now and Lucid to survey 2,300 B2B buyers in both the IT infrastructure industry and the commercial insurance industry to see how sellers performed on 36 of the 40 elements of value. The Table Stakes values were left out of the study, as they are considered pre-requisites to doing business.

The research asked the buyers to rate the elements of value from 0-10, and from this, the researchers defined the ‘high-value’ elements. They then correlated these values with customer loyalty and the chance of repeat purchase.

The results suggested that excelling in multiple high-value elements led to a higher Net Promoter Score (NPS) – Customers recommended the product more. They were also more likely to make the same purchase again if many elements of value were strongly represented.

IT Infrastructure

The IT Infrastructure industry is often considered a commodity market which is based on little more than selling standardised hardware with similar functions. In such a market, you would expect the price to be a major element of value, and indeed B2B customers ranked “cost reduction” as the most important when surveyed. However, the research demonstrates that multiple elements were at play in the buyer’s decision.

  • The elements that most influenced customer loyalty (NPS) were product quality, expertise and responsiveness, followed by hope, integration, vision and risk reduction.
  • Seven out of ten of the important elements for loyalty were in the Ease of Doing Business level of the pyramid.
  • Cost reduction didn’t make the top 10 elements of value when it comes to loyalty, despite customers reporting that it was important to them.
  • Sellers who excelled in 6 or more high-value elements had an average of 34% likelihood of recommendation and 43% strong indication of repeat purchase, compared with only 6% recommendation and 21% repeat purchase when the seller had 0 high-value elements.
  • The best performing of the 10 IT infrastructure companies was Microsoft Azure cloud computing platform. They had high scores on 20 out of the 36 elements, and as a result, had the highest loyalty rating.

Commercial Insurance Carriers

When it came to commercial insurance carriers, the results were slightly different. In the case of IT Infrastructure companies, there was an almost 1:1 statistical relationship between the number of high-value elements on offer and the customer loyalty. This relationship was still prevalent, though the correlation was not as strong, implying that loyalty was harder to gain for insurance carriers.

B2B customers of commercial insurance sellers reported that they found risk reduction, cost reduction, availability and reduced anxiety to be among the most important elements. Analysis of the NPS suggests that the most important elements for retention and customer loyalty were product quality, expertise and responsiveness.

The research shows that commercial insurance carriers and IT infrastructure sellers can benefit from investing in both objective and subjective elements of value, and for both industries, the Ease of Doing Business elements were highlighted as being particularly important. Customers from each industry had different expectations of elements of value, and different elements encouraged loyalty and repeat purchase.

Commercial Insurance Carriers

When it came to commercial insurance carriers, the results were slightly different. In the case of IT Infrastructure companies, there was an almost 1:1 statistical relationship between the number of high-value elements on offer and the customer loyalty. This relationship was still prevalent, though the correlation was not as strong, implying that loyalty was harder to gain for insurance carriers.

B2B customers of commercial insurance sellers reported that they found risk reduction, cost reduction, availability and reduced anxiety to be among the most important elements. Analysis of the NPS suggests that the most important elements for retention and customer loyalty were product quality, expertise and responsiveness.

The research shows that commercial insurance carriers and IT infrastructure sellers can benefit from investing in both objective and subjective elements of value, and for both industries, the Ease of Doing Business elements were highlighted as being particularly important. Customers from each industry had different expectations of elements of value, and different elements encouraged loyalty and repeat purchase.

Enhancing the Elements of Value

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Now that you have a working model for understanding the elements of value in a B2B sale, it’s time to apply that knowledge to your own company. As we have seen, the importance of each element according to the customer varies across industries. There are 40 in total, 36 without the Table Stake level. That’s a lot of elements, so you need to know which ones to focus on.

Here’s how you can go about conducting an analysis of the elements and their value in your business:

  • Take A Benchmark – Compare your value proposition to your competitor’s. Do this from your customer’s perspective, not your own. Conduct surveys and questionnaires to obtain as much data as possible. Ask customers to compare the elements of value to your rivals. If you can gain a large sample, you will learn a lot!
  • Conduct Interviews – Follow up your surveys and questionnaires with in-depth interviews, so that you can gain rich data and fuller understanding of your customers and how they view your buying process. Talk with a variety of members of the buying team to learn about their values.
  • Develop Ideas – Use the data you have collected to identify the most important elements of value for your customers, and the elements that you are most lacking. Develop ideas around how you can add value in these areas. Hold meetings and set your teams off on the task.
  • Refine the Ideas – You can make improvements to the ideas you come up with before you even roll them out. Talk to your customers and explain the ideas to see if they are appealing, and whether they would indeed improve value for the customer. When you are ready, test the idea, then ask around again to see if you managed to meet expectations and add value.
  • Repeat Benchmark – With the changes made and the extra value added, take the benchmark once again to see how you stack up with competitors. See if your customers report more value in the elements that you invested in and ask them once again to identify your weak spots. Repeat this process indefinitely!

Your B2B customers care about more than just the Table Stakes. They find functionality to be important, but they also value other objective and subjective elements. By learning about your customer’s preferences and important elements, and discovering the problem areas in your buying process, you can make the right investments to bring your value proposition up to par with your competitor’s.

It all starts with listening to your buyers!

Learn more about the 40 Elements of Value


About the Author

Alex - Leadfreak

Alex is head honcho here at Leadfreak and likes to spend time speaking with clients, solving problems, and getting results. When he's not immersed in the digital world on behalf of his clients, he has a keen interest in sports, world affairs and looking for his next opportunity.

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