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White Paper – Getting People To Switch – Part 1 of 3

Today we bring you Part 1 of our white paper on “Getting people to switch” (written by Paul Hague). Parts 2 and 3 will be published this Thursday (24th Aug) and next Tuesday (29th Aug) respectively.

Introduction

What does make people switch? What is it that makes someone change their mind or their behaviour? These are crucial questions to any marketer and particularly baffling to the business to business marketer. This is because we b2b marketers operate in a world complicated by the multi-faceted decision making unit comprising buyers, technicians, management policy setters and so on – all who claim to make their decisions rationally. This white paper offers thoughts on b2b switching behaviour and the forces that shape these decisions.

The starting point for our understanding of “what would make them switch” is to recognize that there are different groups of people with different needs in our target audience. It would be an unusual situation for everyone to be motivated by the same things. Of course, this presupposes that we have an understanding of our market and know how customer groups differ in terms of meaningfully different needs.

Our understanding of the different needs of customers helps us begin to work out what would change a “buyer’sâ€? mindset. In other words, we can expect someone who says that they are driven by quality to have their head turned by a quality product or someone who is paranoid about their source of supply, will be attracted by a strong brand that they can trust. However, these are broad brush views and things are not as simple as that.

In our search for what drives behaviour in business to business environments, let’s look at four classically different segments. Most people reading this white paper will work with a company that supplies functional products (or services) – products that are bought because they are needed to facilitate the production of some other goods or services down the value chain. These functional goods can be located in one of the quadrants in the following diagram (figure 1).

In the south-west corner is the “paper clip” quadrant representing products that are of low value and that are not strategic to the buying company’s future. In the north-west corner is the “electricity” quadrant, representing undifferentiated products where the annual spend may be quite high but the supplier could be any one of a number of reputable companies who are not embraced as strategic partners by the buying company.

Figure 1 The Strategic Supplier Matrix

The “consultancy” box in the south-east of the matrix, represents an interesting group as here we have suppliers who may not dominate the purchase ledger but who certainly have a strong strategic input into the future success of the purchasing organisation.

Finally, we have the plant and machinery group in the north-east quadrant. This box typically includes suppliers of products and services such as plant and machinery that are strategically vital products to the companies that operate them and for whom they account for a substantial amount of their costs.

The behaviour of “buyers” in each of these segments can be expected to be very different. The buyers of paper clips operate at a relatively low level within a company, delegated to buy bits and pieces of office equipment to ensure that the business functions smoothly.

The buyer of paper clips does not want to be embarrassed by paper clips that break. Also, they want someone they can trust to provide the cornucopia of office supplies needed to run a modern office – a one-stop-shop. But frankly, they may not know too much about paper clips and how they are made. Indeed, they may not care what type of steel they are made from or the quality of their finish. They may be more influenced by the care and attention given by the sales person who calls regularly and remembers their birthday with a bunch of flowers.

Contrast this with the buyer of “electricity”. This is the commodity box where the products on the shopping list account for a substantial expenditure but where there is very little differentiation in the buyer’s eyes between suppliers. Products in this box are always subject to price pressure as this is the most obvious lever that prompts switching. In fact, it is a box of opportunity where the clever marketer can explore customers’ needs and add services that create a “lock-inâ€?. Of course, in this quadrant there will be companies that buy entirely on price but a surprisingly large proportion will be happy to consider paying more for stock management, emergency deliveries, and technical service support.

Moving on, the companies that supply strategically important products or services are generally regarded as specialists and as a result, there may be considerable loyalty to a supplier. In this box, the brand of the supplier is likely to be important, especially if they have a reputation in a field. Personal relationships are also a major influence. This is very much the “who you know” and reputation quadrant.

Finally, companies buying products and services that account for a significant spend and that are also strategically important are reluctant to switch to another supplier. A switch may take place but only after careful consideration of the consequences of the move. Airlines do move to new suppliers of aircraft but they have to carefully weigh up the effect on spares management, maintenance, crew training and customer preferences.

Look out for part 2 this Thursday (24th Aug). For more market research white papers, click here

This entry was posted on Tuesday, August 22nd, 2006 at 9:34 am and is filed under Articles, Customer Satisfaction, Market Assesment, White Papers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.