B2B Buying Stages

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While the B2B buying process is similar to the B2C buying process in some regards, it is also different in several regards. For example, in both the cases, the process of buying begins at the stage of need recognition. However, the process of searching for potential sellers or suppliers and then the final buying is generally lengthier in the case of business to business buying compared to B2C buying.

In this post, we will discuss the various stages in the B2B buying process in detail.

Stages in the B2B Buying Process

  • Need Recognition
  • Need Description or Quantification
  • Search for Potential Suppliers
  • Supplier responses to Request for Proposals
  • Proposal Evaluation and Supplier Selection
  • Establishing Order Routine
  • Post Purchase Evaluation and Feedback

Need recognition:

Like B2C buying, B2B buying also starts with need recognition or someone inside the organization recognizes a need that can be solved by a particular product or service. Usually, while it is the users of the product or service that recognize the need, sometimes others can also serve as initiators. For example, inside an organization, the need for a particular machine or software may be recognized by the employees or managers. However, in certain cases, the head of marketing or CEO may decide to implement a new process and therefore decide that the need for a particular equipment or software or technology exists.

Need description or quantification:

In the B2B buying process, the second stage is related to the description or quantification of the particular need. This is when the buying center comes into action. The buying center is a group of people who come together to help make the buying decision. They start describing the need or adding parameters to what needs to be purchased.

Need description generally includes a description of the product or service, its necessary features, the quantity it is needed in and where it is needed and other descriptions. If the product is technical or more complex, the buyer will specify the technical attributes of the product. This will help decide if there is a solution available in the market or the organization needs a customized solution.

However, users and influencers also play a crucial role here in the second stage. They would help describing the product or service that would be most suitable in the given case. For example, if a company needs a new technology, the users and influencers will help describe what type of technology will fit their requirements and if it needs to be compatible with some other technology or technology product. How it must be used and how it can be accessed as well as certain other questions can be answered with the help of users and influencers.

Search for potential suppliers:

Following the need description stage, the search for potential suppliers begins. In this stage, the people involved in buying the product or service will start searching for the product and the vendors who can supply them. Generally, search starts with an online search for the product and vendors. However, they also search for potential suppliers using other methods like by attending trade shows, and conventions as well as sending messages to their existing suppliers. Buying firms also depend on some other resources for getting information on products and vendors. They check out expert blogs related to those particular products or services they need as well as trade magazines or visit suppliers locations and attend webinars by potential suppliers.

The purchasing agents generally play a crucial role when it comes to searching for potential suppliers and seeking the ones that are most qualified for supplying the product. Deciding which vendors are the most qualified for providing the required product or service requires considering several important questions like which ones are the most reliable and financially stable and if they can supply the product in the longer term also. Another important consideration in this regard is related to the location of the supplier and whether the supplier needs to be located close to the business or can one source from another country. If one needs a product, might me buying from a vendor located in the same region would be less costly. However, if one is sourcing a technology that can be purchased and used online, then vendor location might not be as important a consideration as service quality and availability. Based on these criteria, it becomes easier to disqualify the vendors that do not fit the requirements.

Supplier responses to requests for proposals:

Based on the previous stage, the qualified vendors that made the cut are sent a request for proposal. The request for proposal is basically an invitation to submit a bid for supplying the required goods or services. An RFP or request for proposal basically outlines what the vendor can offer including details related to product quality, pricing, financing, delivery, after sales service, customization options, return options, and in some cases details related to the product’s disposal.

Now, what good suppliers or marketers do is rather than providing only the basic information related to their products or services, provide the buyers with detailed and helpful information in the RFPs. Their focus is on the buyer’s need or the problem and how their product can solve the problem or can be customized to address the need in a better manner.

Several times what the vendors do is to formally present their product before the group making the buying decision. If the product in question is a physical product, vendors may also offer a sample for testing and use. They might also hold discussions with the buyers to help them get to know the product better and how to use it. Satisfied customers may also be asked to provide testimonials.

Proposal evaluation and supplier selection:

Next comes the evaluation of proposals and the final selection of suppliers. For the selection of the vendors, the RFPs are evaluated. The members of the buying team must agree on the criteria for evaluation of the RFPs and the importance of each for achieving perfect results. Based on their goals and objectives, different organizations evaluate different parts of a RFP differently. For example, while price may be the most important consideration for one organization, the other may want only top quality products. For some organizations, the service provided by the vendor may also be a top concern. If the buyer is a discount store, it might be interested in lower prices and will evaluate the RFPs based on its top concern. However, a brand that wants to manufacture premium products would want only the best quality material from the vendor and would focus on quality while evaluating the RFPs.

However, there are several other important concerns for the buyers also like the continuous availability of the product and the reliability of the supplier. Buyers want the guarantee that the vendor will be able to make the product available continuously since otherwise, the buyer’s manufacturing and sales would be hurt due to lack of raw materials. Reliability of the supplier is usually an important concern for businesses since if the vendor stops supplying the required products, it will halt the buyer’s production and sales and will cost the firm its reputation and customer base.

Another important criteria that is mostly applicable in the case of high cost or complex products is that of after sales service. Some firms that are buying complex or costly products would consider this factor before vendor selection. For example, if an organization is simply ordering napkins for daily use, it would not consider after sales service as the selection criteria. However, if the same organization is considering the purchase of vending machines or software, it would consider after sales service or training employees how to use the machine or software as an important criteria for the selection of qualified vendors.

Usually, finding the best vendor can become a bit complex. However, this is where the scorecard approach to rating RFPs helps. Companies can create score cards with the desired criteria and weightage for each one and give them to the members of the buying team to rate the vendors. Then based on the ratings from the buying team members, the results can be tabulated and the best qualifying vendor be selected.

An important question that generally arises before firms at this stage is whether to select a single supplier or multiple suppliers. The priorities may differ based on firms and the type of product required. For example,a company that is buying a simple product might need no more than a single supplier which will also mean less paperwork and other buying processes. If someone is buying from a single supplier, he would need to file a single purchase order and conduct a single contract negotiation rather than multiple. However, it depends on several factors like the reliability of the suppliers, product required, and sometimes also on prices. In the cases where pricing is the most critical factor, buying from a single vendor might be more profitable for the organization since it can expect higher volume discounts.

However, it can also be risky to depend on a single supplier and particularly when the product or service required is complex. In such a case, the company might be left with just one supplier and difficulties might arise if the supplier decides to raise the prices suddenly or stops supplying products due to some reason or even goes out of business. To avoid such situations from arising, firms that require the continuous supply of a product work with multiple vendors. It can also have other benefits since suppliers would not easily raise the prices knowing that the company can easily switch to the other vendors. The vendors would also compete harder to provide good quality products at competitive prices when the number of suppliers is higher.

Establish Order Routine:

After the supplier has been selected comes the final ordering part. This is the stage in which the final order takes shape. The final order will include the agreed upon price, order quantity, expected time of delivery as well as other terms of negotiations including return policies and warranties. The order is sent to the vendor either on paper or online. The order can be in the form of a one time order or it can be in the form of multiple orders whose deliveries are to be made from time to time. In some cases, buyers use an inventory management system that is shared with the vendor so that the vendor can monitor the inventory and send replacements whenever required.

Post purchase evaluation and feedback:

Just as in case of B2C buying situations, B2B buying also ends in a post purchase evaluation. As a part of the post purchase evaluation, the buyer might conduct user surveys to see how much the users are satisfied with the product. Sometimes buyers might establish performance criteria for their suppliers like on time delivery, product quality, customer satisfaction and other similar criteria and provide them ongoing feedback regularly to let them know if their performance is growing better, has remained stable or has become worse. It also helps the suppliers know which areas they must make improvements in. It can be compared with the ongoing performance evaluation an employee receives as a part of his job.

In several cases, businesses share a lot of data with their suppliers to improve collaboration between the two. If the performance of a supplier has worsened, it is not always the supplier entirely to blame. There might be a number of factors at play here. Even the purchasing company itself might be to blame. It is why companies must focus on collaborating with their suppliers and providing them with the necessary data and tools that can help them improve their performance. Multiple companies provide their suppliers with education and training required to perform according to the company’s expectations. The use of modern and technological tools for supplier management also helps in this regard and can help improve supplier performance.