Making a Better Match. How online matchmaking services will make it easier for B2B buyers and sellers to find each other.

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1 Making a Better Match How online matchmaking services will make it easier for B2B buyers and sellers to find each other. 1

2 Making a Better Match How online matchmaking services will make it easier for B2B buyers and sellers to find each other. Over the past 20 years, procurement has become a key source of competitive advantage for businesses. In a growing number of industries today, the company that wins is not the one with the best product or the best sales force but the one with the most effective supply chain. One reason for this is because building that supply chain is not easy. Buyers spend more than half their time (56%) educating themselves about the products, services and materials they need to buy, according to IDC 1. Much of this time is wasted: 86% of buyers say most of the content they find is neither useful nor relevant to them. As a Procurement Director, I would say 90% of the physical sales material I received went straight in the bin, says Peter Smith, who led the procurement function in three large organizations. And that percentage figure is probably higher for electronic communications! This is a problem not just for procurement departments, but for vendors. When the Chief Procurement Officer controlled less of the annual spend, vendors could work around the procurement organization by having their sales force build relationships with the internal end users. But now that procurement either participates in or leads as many as 9 out of 10 contracts 2, this is becoming less and less feasible. The CPO is in charge of making some very strategic decisions these days, and does not have time to shoot the breeze with the vendor s regional sales rep: only 16% want to discuss their options on the phone, and only 12% of buyers want to meet a rep in person. As a Procurement Director, I would say 90% of the physical sales material I received went straight in the bin. Instead, 71% want to do their own research 3. Most procurement people prefer to read material online before they talk to a salesperson. They rely mostly on supplier websites and Google searches -- an extremely slow and inefficient way of gathering the information they need. B2B buyers research needs are wide, deep and growing. A recent Accenture survey of corporate buyers found that a growing number of them (30% now versus 22% in 2013) research 90% or more of products online before they purchase. They want to read business cases, solutions worksheets, case studies, white papers, and other relevant news. Accenture also found that procurement officers complained that they often have to look hard to find the specific information they need. Such detail is frequently hidden deep within reports and not easily found. 2

3 Multi-industry e-commerce platforms such as Amazon or Alibaba might sound like a solution to their problem, but in fact they also tend to be of limited value to buyers. Most of these platforms focus on driving transactions in ways like those of the e-commerce sites they were modeled on, despite the fact that B2B buyers needs are very different. Easy transactions aren t the most important issue to B2B buyers. In order to make a strategic purchase, professional buyers don t need one-click buying; they need the ability to conduct exhaustive research and due diligence. An opportunity and a risk This suggests that the number-one marketing challenge for a B2B vendor is not so much developing the very best product possible as delivering the essential information about their offering to the right people and following up with them. 76% of buyers say they choose vendors who deliver effective messages and with whom they can have intelligent conversations, according to a recent Forrester survey 4. I just don t have time to talk until I have a very clear sense of the market and the vendor s offering. But this conversation is an opportunity that must be earned. I just didn t have time to spend talking with potential suppliers until I had a clear sense of the market and the specific vendor s offering. A vendor needs to start earning my trust before they pick up the phone this is about building what could be a longterm relationship, says Peter Smith. After noting some high-profile product failures brought on in part by auction sites that focused on price at the expense of quality, most companies today are looking not for the lowest price widget, but a reliable partner to recommend and deliver the right widgets. Price is usually important, but it s often not the most important factor, says Smith. And a low price is worthless if the supplier lets us down or fails on quality. An additional risk for the vendor is that this conversation is often an infrequent opportunity: more and more high-performing companies are choosing to create long-term strategic partnerships with a select number of suppliers. As a result, if the vendor misses a first opportunity, it may not get a second chance for a very long time. The upshot is that despite all the advances in communications over the past 20 years, making a connection between buyer and seller is harder than ever: buyers must navigate sites geared toward sales, when they just want information, and vendors are funneled into a high-pressure sales mode when what they really want to do is start a conversation. To get around these problems, some buyers turn toward expensive specialized consultants who have the expertise to steer them to the right products. Meanwhile, sellers pay dearly for solid leads for specialized products: on average $272 per lead, according to AdvertisingAge. 5 A failure to find a better venue to exchange this kind of information could hurt both buyers and sellers. Professional buyers could be at risk of disintermediation by their internal clients if they don t find a way to speed up their research cycle. Vendors too face a risk, by continuing to annoy buyers who don t want time-consuming personal contact until the purchase decision is almost complete. For vendors, buyers hunger for targeted content will prove to be either a risk or a major opportunity. On the risk side, long-established local distribution channels are beginning to be disrupted as buyers seek out new, more globally focused purchasing options. However, the opportunity for those who figure out how to sell in this new global marketplace will be immense: vendors who adapt to this new situation quickly, will soon have the chance to gain a more global reach into a B2B market that a MasterCard study estimates to have hit well over $130 trillion. 3

4 Missed connections The evolution of the most social of social media dating sites may offer some clues. Before the Internet, couples met through friends, family, church, at work, at a bar or restaurant, and a few through printed personal ads. Today, more and more meet online: in fact, 1/3 of marriages in the United States between 2005 and 2012 were between couples who met online. 6 People date online because it s faster and easier than the traditional ways. Rather than go to parties or hang out in bars in the hope of meeting someone special, single people now have a way to evaluate many more possible matches, reach out only to those people they find interesting, and respond to the few requests that seem plausible. A vendor needs to have earned my trust before he picks up the phone. Perhaps just as importantly, online dating also slows the process down, in a way, because the initial conversation happens only when both parties want it to happen. Although the prequalification system isn t perfect yet, it does raise the odds of a reasonable match. No perfect match If such a system has been shown to facilitate what is arguably the most important decision people make, couldn t a similar system work for B2B sales? Certainly many B2B companies have the know-how to build the equivalent of a Match.com for procurement. The catch is that for one reason or another, the most logical candidates aren t very well positioned to create this kind of marketplace: Vertical industry market platforms can t build it. They are too focused on maximizing the volume of transactions. Their business model is based on sales and virtual storefront rentals, not lead generation. B2B cloud platforms might do the job as well, but they tend to be industryspecific. Their business model will also naturally tend to focus on higherpaying transactions such as SaaS subscriptions. In a few sectors, buyers could conceivably band together to build a more suitable platform, but this could also create potential legal problems (such as anti-trust issues) and leave company purchasing interests too exposed to competitors scrutiny. Vendors face analogous limitations. Other business service providers, such as global consultancies or IT services providers, may have many of the right relationships, but they may be too focused on selling their own solutions to facilitate a relationship with someone outside their organization. Their cost structure and prior loyalties would also make it difficult to support an information-only site. Getting to know you Social networks, such as Facebook, with their focus on content are, from a model standpoint, the closest to what buyers are looking for, and indeed professional buyers and marketers in the B2B space are investing in these promising platforms. However, their general-purpose nature and advertising model do not support the needs of professionals searching for purchasing information. Overall, only 8.6% of buyers say they use social media to support their purchasing decisions, according to a recent Accenture survey. LinkedIn comes the closest to hitting the mark but its recruiting focus makes it too much of a personal tool for self-advertisement rather than a useful purchasing tool. 4

5 A new kind of social network focused on B2B relevant and targeted content exchange as opposed to direct sales could give buyers access to the information they need and vendors access to a showcase from which to present their value proposition to the best advantage. Most importantly, as with the dating sites, a well-designed B2B information exchange would reduce the pressures facing vendors and buyers: after all, it s usually a lot easier to click with someone who likes you. 1 Elusive Buyer 2.0, Ardath Albee, p.4 2 The Power of Procurement, KPMG 2012, p Acquity Group s Annual State of B2B Procurement, How B2B Marketers UseSocial Now Emerging Trends in B2B Social Marketing for 2013, Forrester May AdvertisingAge, B-to-B Marketing Fact Pack, May New York Times, June 13,

6 About SpendLead SpendLead is an online business matchmaking service for companies to find and be found. We facilitate social engagement around vendor offerings and market news to support informed buying decisions and offer continuous lead generation. No advertising. No search. For further information visit spendlead.com or contact us at To sign up for free go directly to app.spendlead.com. About Spend Matters Spend Matters is the most influential and widely read family of procurement websites in the world, with informed and independent coverage of procurement news, analysis, research, technology, opinion and information. In Europe, Spend Matters UK/Europe covers the full range of topics, whilst Spend Matters Netherlands focuses on that country and Public Spend Matters Europe covers government and related issues across the continent. Further information on this topic and others can be found at the website or we can be contacted at 6

7 7 Find and be Found

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