The logic and dynamics of Go-to Brands apply to the business world
B2B customers still want connection. They want to feel well understood and well cared for, and they want mutual commitment, without an exploitation of power in the relationship. And they still want progress. They want confidence in the effectiveness of future product generations, and to trust that their partners’ research and development focus is, and will continue to be, on the issues that advance their world.
A Go-to Brand in the B2B sector is a trusted strategic partner across product lines and generations. It is a business that is won sole-source, rather than through competitive tender. And it pays off.
A Go-to Brand in the B2B sector is a trusted strategic partner across product lines and generations.
Brand matters even more
It’s easy to assume that “emotional” consumers are most strongly influenced by brands, whereas “rational” business buyers evaluate vendor product features and prices undistracted by brand stories. But it doesn’t work that way.
To understand the significance of brand in B2B, look at tablets, a product that is chosen by both business and consumer customers. Working for one of the world’s largest PC makers, we asked survey respondents to choose the device that they would most likely buy in a sequence of simulated choices that presented tablets with different features, prices and brands. We wanted to pinpoint actual influencers, not stated preferences.
Our statistical analysis of those simulated choices showed the relative impact of individual features, prices and brands on purchase decisions. Consumer choices were driven 34% by features, 39% by price and 27% by brand; for the business buyer, the impact of brand (39%) and price (27%) were exactly reversed.
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The strong influence of brand in B2B is quite rational. For a business, choosing a product goes well beyond consideration of features and/or price. Consumers can afford to be fickle, if they choose, with little penalty by choosing a different brand of toothpaste or tablet the next time they make a purchase.
For business customers, the cost of switching brands is often higher. The company may have to train their people on a different supplier’s equipment or adapt their operations to a different supplier’s performance. A purchase choice in B2B is rarely a one-off. It is often an implicit commitment to buy future products and services, including future offerings that do not yet exist, and to depend on ongoing support. Those considerations amplify the importance of the company behind the product. B2B buyers are concerned with the vitality and longevity of the brands of the products they buy.
Will you be my partner?
Increasingly, B2B relationships go far beyond purchase choices. We see a pattern in our work with B2B clients. Most seek to establish a higher role in the value chain, moving from product vendor to solution provider and, ultimately, trusted business partner. From chemicals to construction, from oilfield services to 5G communications networks, the numbers are remarkably consistent. Operating businesses in each of those fields can achieve savings of up to one-third the total cost of ownership if they work strategically in partnership with their technology providers, engineering end-to-end solutions together rather than buying the individual parts through competitive tenders. The optimization of individual procurement activities sub-optimizes the whole.
To realize the potential of the end-to-end solution, the customers must feel a strong connection to the provider. They don’t have to love them, but they must enjoy doing business with the provider and feel confident that they are well understood and will always be supported. They must know that the trust in the relationship will be rewarded by mutual commitment, not exploited or one-sided. Second, customers must feel that the provider can help them make progress in achieving their goals — not just with the current product line-up but also with future generations of technology, competition and leadership.
In a partner relationship, you can’t just be as good as your last product. The customer must feel confident that your next product will work magically, too, because that is how you operate — your researchers and developers are focused on the right issues to advance the customer’s world.
To achieve the strategic goal of moving up the value chain — moving from a vendor responding to tenders to a trusted, strategic partner — you need to be a Go-to Brand for your target customers.
Go-to brands will win in the Fourth Industrial Revolution
The trends we have outlined will be amplified in the Fourth Industrial Revolution. Advances in robotics and in the capacity, instantaneity and intelligence of 5G networks, as well as in the Internet of Things, are creating the opportunity for huge productivity gains as whole production ecosystems become smart and self-optimizing. Realizing those gains will require companies to become more interconnected than they are today, both commercially and in terms of operations and information.
Who are the companies to whom you will open up in those ecosystems? When your operations are all smart and connected, who will you allow to reach into the belly of your organization and interact directly with the sensory networks that control everything?