How B2B sellers can avoid the commodity trap

by Ofentse Sefolo
How B2B sellers can avoid the commodity trap

The differences between business-to-business (B2B) and consumer decisions are not cut-and-dried. While B2B sellers are tasked with optimising prices, meeting specifications, complying with legislation and evaluating a number of vendors rigorously, there are also personal concerns that business clients bring to the purchasing process.

Business clients also evaluate a number of more subjective issues, such as whether a product can enhance the buyer’s reputation or reduce anxiety. Recognising the full range of both rational and emotional factors behind business purchases – and tailoring the value proposition accordingly – is critical to avoiding the commodity trap.

Harvard Business Review (HBR) analysed scores of quantitative and qualitative customer studies to help B2B suppliers understand the spectrum of customer priorities. Forty “elements of value” were identified and these elements fall into five categories: table stakes, functional, ease of doing business, individual, and inspirational.

These elements were sorted into levels of a pyramid, with elements that provide more subjective value at the top and those with more objective value at the base. HBR’s elements of value approach extends those insights to people in corporate roles and their motivation for buying and using business products and services.

Consider how this pyramid applies to flooring businesses. The base of the table has elements that are ‘table stakes’ for your business clients. They will be looking at whether your flooring product is an acceptable price, meets the required regulations and specifications, as well as whether it abides by ethical standards.

Functional elements are placed above table stakes and this element addresses a client’s economic or product performance needs, such as cost reduction and scalability. Delivering on those has long been a priority in old-line industries such as manufacturing. As both buyers and sellers, B2B companies still focus most of their energy on functional elements.

The third level of the pyramid includes elements that make it easier to do business and some of the elements offer purely objective types of value by improving operational performance or increasing a customer’s productivity. The first set of subjective judgements from buyers are also encountered at this level, including things that enhance relationships between parties, such as a good cultural fit and a seller’s commitment to the customer organisation.

Additional types of subjective value are one level up and these address individual buyer’s priorities, whether they are personal (reduced anxiety, appealing design and aesthetics) or career related (increased marketability or network expansion.)

For a strategist or a product manager, mastering the intangibles of the customer’s total experience – all the service, support, interactions, and communications wrapped around an offering – is much harder than making an offering faster, cheaper, or more durable. The more emotional elements at the top of the pyramid are what will help B2B sellers avoid the commodity trap.

Full thanks and acknowledgement are given to www.hbr.org for some of the information contained in this article.

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