Who Makes the Purchasing Decisions in Business Markets?
Figuring out who exactly in B2B markets is responsible for what gets purchased and when often requires some detective work for marketing professionals and the salespeople they work with. Think about the college textbooks you buy. Who decides which ones ultimately are purchased by the students at your school? Do publishers send you e-mails about certain books they want you to buy? Do you see ads for different types of chemistry or marketing books in your school newspaper or on TV? Generally, you do not. The reason is that even though you buy the books, the publishers know that professors ultimately decide which textbooks are going to be used in the classroom. Consequently, B2B sellers largely concentrate their efforts on those people.
That’s not to say that to some extent the publishers don’t target you. They may offer you a good deal by packaging a study guide with your textbook or some sort of learning supplement online you can purchase. They might also offer your bookstore manager a discount for buying a certain number of textbooks. However, a publishing company that focused on selling its textbooks directly to you or to a bookstore manager would go out of business. They know the true revenue generators are professors.
The question is, which professors? Some professors choose their own books. Adjunct professors often don’t have a choice—their books are chosen by a course coordinator or the dean or chair of the department. Still other decisions are made by groups of professors, some of whom have more say over the final decision than others. Are you getting the picture? Figuring out where to start in B2B sales can be a little bit like a scavenger hunt.
The professors who form a committee at your school to choose textbooks are acting like a buying center. Buying centers are groups of people within organizations who make purchasing decisions. Large organizations often have permanent departments that consist of the people who, in a sense, shop for a living. They are professional buyers, in other words. Their titles vary. In some companies, they are simply referred to as buyers. In other companies, they are referred to as purchasing agents, purchasing managers, or procurement officers. Retailers often refer to their buyers as merchandisers. Most of the people who do these jobs have bachelor’s of science degrees. Some undergo additional industry training to obtain an advanced purchasing certification designation1.
Purchasing agents can have a large impact on the expenses, sales, and profits of a company. Pier 1’s purchasing agents literally comb the entire world looking for products the company’s customers want most. What happens if the products the purchasing agents pick don’t sell? Pier 1’s sales fall, and people get fired. This doesn’t happen in B2C markets. If you pick out the wrong comforter for your bed, you don’t get fired. Your bedroom just looks crummy.
Consequently, purchasing agents are shrewd. They have to be because their jobs depend on it. Their jobs depend on their choosing the best products at the best prices from the best vendors. Professional buyers are also well informed and less likely to buy a product on a whim than consumers. The following sidebar outlines the tasks professional buyers generally perform.
The Duties of Purchasing Agents
- Considering the availability of products, the reliability of the products’ vendors, and the technical support they can provide
- Studying a company’s sales records and inventory levels
- Identifying suppliers and obtaining bids from them
- Negotiating prices, delivery dates, and payment terms for goods and services
- Keeping abreast of changes in the supply and demand for goods and services their firms need
- Staying informed of the latest trends so as to anticipate consumer buying patterns
- Determining the media (TV, the Internet, newspapers, and so forth) in which advertisements will be placed
- Tracking advertisements in newspapers and other media to check competitors’ sales activities
Increasingly, purchasing managers have become responsible for buying not only products but also functions their firms want to outsource. The functions aren’t limited to manufacturing. They also include product innovation and design services, customer service and order fulfillment services, and information technology and networking services to name a few. Purchasing agents responsible for finding offshore providers of goods and services often take trips abroad to inspect the facilities of the providers and get a better sense of their capabilities.
Purchasing agents don’t make all the buying decisions in their companies, though. As we explained, other people in the organization often have a say, as well they should. Purchasing agents frequently need their feedback and help to buy the best products and choose the best vendors. The people who provide their firms’ buyers with input generally fall into one or more of the following groups. Individuals can fulfill multiple roles. Multiple individuals can be classified with the same role.
Initiators are the people within the organization who first see the need for the product. But they don’t stop there; whether they have the ability to make the final decision of what to buy or not, they get the ball rolling. Sometimes they initiate the purchase by simply notifying purchasing agents of what is needed; other times they have to lobby executives to consider making a change.
Users are the people and groups within the organization that actually use the product. Frequently, one or more users serve as an initiator in an effort to improve what they produce or how they produce it, and they certainly have the responsibility for implementing what is purchased. Users often have certain specifications in mind for products and how they want them to perform. An example of a user might be a professor at your school who wants to adopt an electronic book and integrate it into his or her online course.
Influencers are people who may or may not use the product but have experience or expertise that can help improve the buying decision. For example, an engineer may prefer a certain vendor’s product platform and try to persuade others that it is the best choice.
If you want to sell a product to a large company like Walmart, you can’t just walk in the door of its corporate headquarters and demand to see a purchasing agent. You will first have to get past of a number of gatekeepers, or people who will decide if and when you get access to members of the buying center. These are people such as buying assistants, personal assistants, and other individuals who have some say about which sellers are able to get a foot in the door.
Warning: Do not be rude to or otherwise anger the faculty secretary. This is good advice for salespeople and students as well as faculty members.
Patrice_Audet – Secretary Office Sales Telephony – CC0 public domain.
Gatekeepers often need to be courted as hard as prospective buyers do. They generally have a lot of information about what’s going on behind the scenes and a certain amount of informal power. If they like you, you’re in a good position as a seller. If they don’t, your job is going to be much harder. In the case of textbook sales, the gatekeepers are often faculty secretaries. They know in advance which instructors will be teaching which courses and the types of books they will need. It is not uncommon for faculty secretaries to screen the calls of textbook sales representatives.
The decider is the person who makes the final purchasing decision. The decider might or might not be the purchasing manager. Purchasing managers are generally solely responsible for deciding upon routine purchases and small purchases. However, the decision to purchase a large, expensive product that will have a major impact on a company is likely to be made by or with the help of other people in the organization, perhaps even the CEO. The decision may be made by a single decider, or there may be a few who reach consensus. Further, deciders take into account the input of all of the other participants: the users, influencers, and so forth. Sellers, of course, pay special attention to what deciders want. “Who makes the buying decision?” is a key question B2B sales and marketing personnel are trained to quickly ask potential customers. The main decisions they make are 1) which product and 2) from which vendor.
Buyers are the people who negotiate the details. They will work out delivery, invoicing, acceptable substitutes, process for handling issues, etc. They are the ones who work closely with the vendors.
A final word about purchasing agents: different organization will define this term differently. In some organizations, the purchasing agent is the buyer role, in some it is the decider role, and in some it is a combination of those two roles.