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Behaviorial Psychology

B2B customers aren't rational

The CMO council recently said that most B2B marketing efforts are, by and large, terrible.

The CMO council recently said that most B2B marketing efforts are, by and large, terrible.

Not literally. Close, though. Buyers and influencers find marketing largely “self-serving, irrelevant, hyperbolic, and hyper-technical.” It “lacks depth, objectivity and strategic context that buyers seek.”

To improve, B2B marketers need to better understand how people use information to make decisions.

In 1974, a Purdue professor named Jacob Jacoby studied how consumers process information on product labels and its impact on decision-making.

They asked consumers what qualities they preferred in a particular product. Then, they watched as people selected that product in a store. They found that with more information on packaging, people were less likely to choose the product that best matched their initial preferences.

With more information on packaging, people are less likely to choose the product that best matches their initial preferences.

The implication was clear to Jacoby and his team: Withhold information for the good of the consumer public.

…marketers, consumer advocates, legislators, and other policy makers would do well to redirect attention from trying to provide the consumer with even more information.

Jacoby’s recommendation was driven by his mental model of decision-making. He thought that people have strong preferences, which provide a rational basis for day-to-day decisions.

This is rational choice theory. It has its roots in economics and provides a foundation for much that is taught about consumer behavior and decision-making.

I bought into rational choice theory. And my marketing was crap. I created massive amounts of product information. As the customer moved closer to a decision, I became more and more academic.

I made even worse mistakes. Many of my products were deeply customizable. When the customer asked what the product did for them, I said “What do you want the product to do? It can do anything!” I shifted the burden of defining a value proposition to the customer!

In 2003, CEB/Motista examined how people evaluate differences between vendors. They asked people across multiple industries whether the top vendors in their industry could help them achieve business goals.

The answer? Yes. For everyone. Every vendor was rated nearly identical in their ability to deliver.

Buyers were then asked whether they saw a difference between vendors. 86% of the respondents indicated “no.” The study concluded:

…business value is just table stakes. It gets suppliers into the buyer’s consideration set but doesn’t make them stand out within that set of competitors.

People don’t walk around with a comprehensive set of criteria in their heads, and they don't make decisions by impartially weighing various options.

Moreover, people have limited understanding of differences between products, limited understanding of which differences matter, and little willingness to work hard to build this understanding.

Research shows that group opinion and risk aversion strongly influence the decision-making audience evaluating your product. People don’t want to rock the boat or look stupid by recommending the wrong vendor.

Group opinion and risk aversion strongly influence the audience evaluating your product. People don’t want to rock the boat or look stupid by recommending the wrong vendor.

Everyone feels this way.

To build a great B2B marketing program, you need to discard rational choice theory and focus on how people actually make decisions. Here are some ideas that worked for me.

Specialize: Arguably the most important thing for B2B companies to do, and perhaps the most difficult. Most small or mid-sized company’s best strategy is first to focus on a target market, then grow into carefully selected adjacent markets. The alternative is to dilute your message across multiple markets. The result is inferior overall quality and increased uncertainty around corporate vision and priorities.

Foster emotional safety: your industry's analysts, media, and respected thought leadersBuild your community and maintain relations with analysts, media, and respected thought leaders in your industry. Referrals are important because they help consumers accomplish many of their goals simultaneously:

  • Provide reassurance that table stakes functionality and quality are there
  • Reinforce the trustworthiness of your brand
  • Provide emotional reassurance — social proof — justifying the selection of your product

Foster trust and shared understanding: Take time to learn about your customer’s daily activities and primary goals. Create material that addresses these specific goals and connect your product to them. The more insightful and unusual the connection, the better. People have only so much attention. Unexpected insights are a powerful way to stand out from a crowd of options that, to your customer, all look identical.

Reduce cognitive load: Companies often shift the burden of value discovery to their customer. The more flexible the product, the more likely this is to happen. The customer says, “What can they do for me?” The company answers, “What do you want it to do? They can do anything!” They hope customers will intuit how product features and functions might solve their problems. Don’t do this. Instead, create specifically crafted value propositions.