B2B Buying Process Understanding: Steps, Examples, and Differences from B2C
Why knowing a B2B purchasing process is so important? All B2B processes are a bit more complicated compared to B2C. This makes it more complex for businesses to sell to companies or buy from them. However, purchasing goods or services is crucial for everyone who wants to leverage their business to a new level.
This article provides a complete guide on the B2B buying process, including its steps, B2B buying process examples, and differences from B2C. This guide will serve as a valuable resource for B2B marketers, sales teams, and businesses, helping them understand the buying process and develop effective strategies to drive growth and success.
What is B2B Buying Process
The business to business buying process (B2B buying process) is a set of steps needed to sell and purchase goods or services between businesses. Compared to B2C, the process is typically more complex and supposes having more decision-makers involved and larger budgets at stake; the transactions are also longer.
Diving into the B2B buying process steps is crucial as understanding it can help businesses to tailor their marketing and sales strategies to meet the specific needs of their target clients and reach more business goals in a shorter time. When the business leaders realize how the B2B buying process works, they have a chance to improve their operations significantly:
- The company gets more customer insights and learns how customers go through their buying journey. This can help upgrade the journey by enhancing strong points and eliminating bottlenecks.
- By contacting the most important stakeholders, the business can tailor communication strategies, provide higher-quality information and address the specific needs of each stakeholder. For example, it turns out that over 70% of modern decision-makers are millennials. This means that businesses working in old-fashioned ways must change their communication approach significantly.
- The business realizes opportunities for enhancing its relationships with the customer. Building trust and maintaining relationships can lead to long-term partnerships and repeat business. McKinsey claims that 70% of all decision-makers prefer digital interactions. Learn what your target audience prefers: providing personal experience is the key to success.
- Understanding the buying process enables businesses to differentiate themselves from competitors effectively. A deep understanding of a customer’s needs enables companies to create their own personal approach and leverage the customers’ loyalty.
- Additionally, understanding the B2B buying process can help businesses identify potential roadblocks or objections and develop strategies to overcome them. Gartner shows that 77% of B2B buyers encounter some difficulties in the purchasing process. This means that the one who finds this bottleneck first and improves it can win half of the competition.
The trends to consider in B2B buying process
8 Steps in B2B Buying Process
The B2B buying process in software is a long journey to go. However, to make it easier to understand, we can definitely shorten it to the eight most important steps:
1. Identification of needs
The first stage in the organizational buying decision process is identification of needs. This is where the buyer identifies a need or a problem that requires a solution. After some challenge or need appears inside the company, the team starts identifying the specific products, services, or solutions to address these needs.
2. Researching and evaluating potential suppliers
What is the second step in the business buying decision process? Once the needs are identified, the buyer conducts research to select potential suppliers that can offer the best solution. The company may search online, attend trade shows, or gather data in any other convenient way. The key things companies assess are capabilities, reputation, experience, and the suitability of vendors’ offerings.
3. Establishing evaluation criteria
In this step, the company establishes criteria for comparing and evaluating potential suppliers. Besides prices and reputation, other criteria are usually assessed: price, quality, delivery time, customer service, technical support, scalability, and compatibility with existing systems.
4. Contacting and engaging with suppliers
Now, it’s time to contact potential suppliers to discuss companies’ needs and obtain more information about the products or services offered. The buyer requests quotes or proposals, arranges demos, and tries how the product will work with their existing systems.
5. Evaluating proposals and selecting a supplier
At this stage, the buyer evaluates proposals from potential suppliers based on the established criteria and selects a supplier that best meets their needs. The decision-making process may involve multiple stakeholders within the buying organization, and the final goal is to select the supplier that best meets the company's needs, aligns with its requirements, and offers the most value.
6. Negotiating and finalizing the deal
Basically, this is a buying stage. After selecting a preferred supplier, the company enters negotiations to finalize the deal. Pricing, terms, conditions, and any customizations, warranties, or service-level agreements are discussed. The main goal of this step is to draft and sign a contract that responds to the needs and expectations of both sides.
7. Implementing and reviewing the decision
With the deal finalized, the buyer implements the decision and reviews the result. This is probably the shortest (if we are talking about the modern flexible and modular systems) but the most important step. The buyer coordinates everything with the supplier, goes through the implementation and testing process, and the company and the vendor ensure the solution works precisely the way it should.
8. Post-purchase evaluation
A post-purchase evaluation is a step where the company checks how the solution works and monitors the progress. This is where the success of the implementation is determined, and the company can for sure say that the implementation was successful.
What to Consider in B2B Purchase Process
In a B2B decision making process, the decision-makers may encounter some unexpected results: for example, the implementation takes longer, or the solution doesn’t comply with internal requirements. To avoid this and ensure that what you buy is really what you think, take some important considerations before purchasing:
1. Assess and define your budget
This consideration contains two important things: first, you should ensure that the product's price is final and you will not need to buy something additionally. Second — assess your budget and ensure you have enough money to finish the implementation.
2. Choose the correct timing
After you ensure the product or service is available, choose the correct time to request it so you can get it in time. If this is software or any solution, ensure it can be implemented within the desired timeframe.
3. Learn more about the vendor
Vendor reputation is crucial to the decision-making process. Check if your chosen vendor has a good track record of delivering quality products or services, meeting deadlines, and providing excellent customer service.
4. Technical requirements
Technical requirements are particularly important. The first thing to do is to check if the product or service can integrate with existing systems and infrastructure and meets technical requirements. Then check that the solution provides everything you need to cover business goals.
5. Product or service quality
Quality is also a critical consideration. Request an SLA from your vendor to invest in a quality product or service that is ready to provide value. Ask relevant questions and request a quotation (RFQ) that will show the real level of service.
6. Compliance and Legal Considerations
Ensure the product or service meets regulatory requirements and the company's internal guidelines. The solution will function well without interruptions if the vendor complies with all relevant laws, regulations, and business policies.
7. Vendor Support
Finally, consider the level of support that the vendor provides. Robust support and convenient communication can help ensure smooth implementation and successful use of your new solution.
Examples of B2B Buying Cycle
Real-life examples of successful B2B buying processes
- Walmart's supplier relationships
Walmart, one of the world's largest retailers, has established strong B2B relationships with suppliers over the years. By leveraging its purchasing power and negotiating favorable terms, Walmart has built successful partnerships that benefit both parties and ensure a steady supply of products at competitive prices.
- Boeing and its suppliers
Boeing manufactures its aircraft with an extensive network of B2B suppliers. Purchasing high-quality products from them is crucial for the company's supply chain, so the correct approach to choosing products and services from other companies led Boeing to many successful partnerships.
- Caterpillar's equipment procurement
Caterpillar also procures raw materials, components, and machinery from suppliers and proceeds with the B2B purchasing process. Strategic solid partnerships based on trust and support enable them to manufacture reliable, durable equipment.
- Procter & Gamble (P&G) and its distribution partnerships
P&G, a multinational consumer goods company, has established successful B2B partnerships with distributors worldwide. These partnerships ensure that P&G products are widely available to consumers through various retail channels, contributing to the company's market dominance.
- Virto Commerce and De Klok Dranken.
If you purchase an ecommerce platform from the vendor, you automatically start the B2B purchasing process. For example, De Klok Dranken has successfully purchased Virto Commerce to build more efficient and profitable client relationships. Read the full story here.
B2B purchasing best practices
These companies have their own approaches to B2B buying; however, they all succeed. We analyzed best practices in their B2B purchasing processes and other best practices and created a list of valuable insights into what can drive successful purchasing decisions:
1. Strategic alignment and thorough needs assessment
The first thing to do before building a B2B buying process is to align it with the business's goals, policies, and general strategic line of a business. Company's goals, objectives, and priorities and ensure that purchasing decisions support those objectives. A comprehensive procurement strategy requires a team to deeply know the company's needs and be ready to collaborate closely with other departments. This involves a thorough needs assessment and clearly defining the purchase's requirements, specifications, and desired outcomes.
2. Market research and supplier evaluation
Best-in-class B2B buying requires identifying potential suppliers through market research and evaluating them. This includes considering factors such as supplier reputation, experience, financial stability, quality standards, delivery capabilities, and customer service. Thorough supplier evaluation ensures that companies select reliable and capable partners.
3. Building strong supplier relationships
Open and transparent communication, regular meetings, and feedback sessions help foster collaboration, trust, and mutual understanding. Maintaining a good relationship with suppliers can lead to better negotiation outcomes, improved service levels, and long-term partnerships.
4. Collaboration and cross-functional involvement
B2B buying decisions often involve multiple stakeholders within the buying organization. Best practices include involving key stakeholders from different departments early in the process. This ensures that various perspectives and requirements are considered and decision-making is collaborative. Cross-functional involvement promotes alignment, reduces resistance, and increases the chances of successful implementation.
5. Clearly defined evaluation criteria
Establishing clear evaluation criteria is essential in B2B buying. These criteria should align with the company's needs and priorities. Key factors such as price, quality, delivery time, customer support, and supplier capabilities should be clearly defined and weighted according to their importance. Clear evaluation criteria enable objective supplier comparisons and aid in decision-making.
6. Negotiation and contract management
Effective negotiation skills and contract management are critical in B2B buying. Skilled negotiators can secure favorable terms, pricing, and conditions that benefit the company. Contracts should be comprehensive, clearly outlining responsibilities, deliverables, warranties, pricing models, and dispute resolution mechanisms. Regular contract management ensures compliance, performance tracking, and issue resolution.
7. Continuous improvement and supplier performance management
Best practices in B2B buying involve continuous improvement and performance management. Regularly evaluating supplier performance against defined metrics, conducting satisfaction surveys, and addressing issues promptly ensures accountability and drives improvement. Monitoring market trends, exploring new suppliers, and seeking innovative solutions help companies stay competitive and drive continuous improvement.
8. Using technologies for improving the B2B purchasing process
Companies such as Alibaba, Cisco, and others, operate their own or third-party ecommerce and eProcurement systems to enhance the process of B2B purchasing. For example, Flokk, Hengdeli, Bosch Thermotechnik, and other companies have successfully built their B2B ecommerce systems based on Virto, easily integrating the new systems with the existing solutions and even binding together B2B and B2C processes.
Differences Between B2B and B2C Buying Process
Both B2B and B2C buying processes refer to customers' actions when purchasing a business; however, the B2B process is a bit more complex and requires more time and resources. The key differences between B2B and B2C buying cycles are here:
- Complex and challenging decision-making
Multiple decision-makers, such as managers and procurement teams, make the process a bit more complicated. The decision-making process in B2B involves more evaluation, negotiation, and consensus-building due to higher stakes and long-term implications.
B2B transactions tend to focus on building long-term relationships between businesses, while B2C transactions are often one-off purchases.
- Purchase volume and frequency
B2B purchases are typically larger in size and involve higher volumes of products or services, while B2C purchases are usually smaller and involve fewer products or services.
- Length of the buying cycle
B2B buying cycles are typically longer compared to B2C. B2B purchases involve extensive research, evaluations, negotiations, and approvals, which can span weeks, months, or even years. B2C purchases, on the other hand, usually have shorter decision-making cycles and may be impulsive or based on immediate needs.
- Marketing and Sales Channels
B2B marketing and sales usually choose targeted strategies. B2C marketing and sales, in their turn, employ mass marketing techniques, including advertising, social media, and online marketplaces.
The difference between B2B and B2C purchasing process
Understanding the B2B buying process is necessary for businesses that base their work on thorough planning and building strong customer relationships. The ones ready to enhance their operations and improve their customers' loyalty choose automation of B2B purchasing processes via the implementation of ERPs, CRMs, and fully-functioning ecommerce systems.
As for the technologies, the best way to skyrocket your sales and organize processes is to integrate all your tools together and use them as a united ecommerce environment. Virto Commerce offers both building an ecommerce platform and integrating it as a center with all your existing solutions. In case you need to learn more about Virto, request a free demo or contact our team for a call where we will tell you more about changing your B2B purchasing process for the better.