Rory Sutherland on the psychology of B2B decision making
Rory Sutherland’s session at FINITE Fest is packed with useful insights into the psychology of B2B decision making, and how B2B marketers can be aware of biases to serve their audience better.
Rory Sutherland on the psychology of B2B biases
To hear more marketing psychology insights from Rory Sutherland, FINITE members have access to the full session – Apply here for a free membership and join B2B tech marketers around the world to expand your career.
FINITE Fest, the free one day virtual conference covering B2B tech marketing trends, was proudly supported by Clarity Performance.
Here’s what the session covered:
- How do biases affect B2B purchases?
- What biases exist in B2B?
- The status of B2B marketing and persuasion
- How the social norm affects B2B buyers
- Risk aversion in B2B
- What digital B2B marketing shouldn’t be
- What digital B2B marketing should be
- Why we should use both new and old B2B marketing methods
How do biases affect B2B purchases?
Biases in B2B marketing occur when human decision making deviates from what is considered to be rational. What seems to be an irrational buying decision, can often come from intelligent thought. Conversely, what seems like a rational decision from a B2B buyer can often be illogical.
One example of a buyer’s bias is when people in a restaurant pay more for ‘Pembrokeshire potatoes’ than they would for simply ‘potatoes’. The decision seems irrational, as it appears the diners are paying for an adjective. However, the decision is rational. They’re paying more for the supposed quality and value that ‘Pembrokeshire’ brings.
Why are buyer’s biases more prevalent in B2B?
B2C buyers don’t have to explain their purchase decisions to a panel of judgemental executives. Whereas in B2B, buyers are not just one person, but a panel of executives. This makes for compounding biases, which grow worse as more people are influenced by them.
What biases exist in B2B?
“You make the decision that’s easiest to defend, or least likely to come under attack.” – Rory Sutherland
- The greatest bias in B2B is that people need their decision to make sense.
- B2B buyers are risk averse because the consequences for a wrong B2B decision are more severe than the reward you would gain if the decision is correct.
- Buyers tend to go with the low ambiguity solutions first, not the simplest solutions.
The status of B2B marketing and persuasion
Marketing rarely gets credit for the brilliance and success of a business, and marketing language tends to have a lower status than legalistic or financial language. In business, there’s a balance of economic justifications and psychological ones. We tend not to acknowledge both, but why not?
“Persuasion has a lower status than incentives and incentives have a lower status than legislation.”
One example of economic reasoning comes with the question: why are there more fish restaurants by the sea?
The most common answer for this question would be to do with supply, demand, operations and logistics. The fish are in the sea so they’re delivered to the nearby restaurants fresh and ready to eat.
In actual fact, people associate fish with the sea, and the occasion of being by the sea makes people want to eat fish. We’re more comfortable eating fish when we’re by the sea.
This business situation has economic reasoning as well as psychological, but the psychological reasoning goes uncredited.
How the social norm affects B2B buyers
When someone strays from the social norm, it’s their fault if it goes wrong. For B2B marketers, this means that their product or service should ideally fit within the social norm. For example, B2B conferences in the future will need to be hybrid, and the ones that aren’t will be labelled ‘weird’.
“Now, if you don’t have a livestream of your conference, you’ll look like the illuminati or the freemasons, you’ll look like a weirdly secretive oddball.”
Norms are habits. The majority of what happens is because everyone is doing what everyone else does, and they’re doing what they’ve done before. Once everyone is buying your product or service, everyone else will. B2B buyers will stick to the norm to avoid blame for their ‘weird’ decisions.
Learn even more about the psychology of B2B marketing here.
Risk aversion in B2B
“In B2B, avoiding catastrophe is more important than achieving perfection.”
Evolution has that in order to reap the benefits of life you have to stay alive. What’s the best way to stay alive? Avoid making catastrophic decisions. In a business environment, there are a lot of things you could do to get fired, but not much you can do to get a £1mil bonus.
People with lower levels of job security have become disproportionately risk averse.This means B2B buyers do what they’ve always done, they do what everyone else is doing, or they make a decision that is so obvious it hardly counts as a decision.
In a career environment, you never get blamed for doing something boring. People can’t be blamed when a senior person tells them to do something. But if they do something eccentric without being asked and it goes wrong, the consequences are more targeted and intense.
The process of your decision making can defend the negative consequences of a decision. If you’ve got a model to give you an unambiguously correct decision, you can defend the process that led to it.
In an entrepreneurial setting, you can make eccentric decisions if the consequences will reap better results than no decisions. Conversely, in an institutional setting, the decision needs to be conventional so that the personal consequences are better.
B2B marketers should make their product or service the most conventional decision. They should soothe risk aversion by letting the buyer know that the choice is a simple, risk-free one that won’t hurt their career.
Learn more about the psychology of emotion in B2B marketing here.
What digital B2B marketing shouldn’t be
Advertising behaviours are now intelligent in the short term, but economically damaging at the large scale. Advertising is now optimised around the wrong context just because it keeps people’s jobs.
What looks rational in the short term, is not necessarily rational for the system overall. E.g. feeding restaurant attendees a microwave meal at a high cost is good in the short run. However, the reputational repercussions of doing so would not have good long term consequences.
“In many cases the things that look efficient at a small scale or in the short term, but are long term inefficient.”
Digital marketing is now a targeting optimisation game, rather than a test of creativity. Modern companies would rather have an incremental progression of revenue than testing out big ideas to make a breakthrough.
What digital B2B marketing should be
In digital marketing, B2B marketers tend to measure short term transactional sales and conversions because they’re easy and quick.
The digital marketer shouldn’t work to reach numerical targets so that they can keep their job. The digital marketer should work to showcase things that the individual consumer would buy.
The role of digital marketing is to make someone buy something they were already going to buy, a little bit sooner. Continue optimising the last mile, as conversions are really important. But that’s not the entirety of marketing.
Why we should use both new and old B2B marketing methods
As B2B marketers, we need to explore new areas and find new ways to connect with prospects and customers. To prove this, we can learn from bees:
Bees do a dance to the rest of the hive to show where they can find and reap an abundance of nectar. You’d think all the other bees would follow the dance to the nectar. However, a significant proportion of the bees ignore this dance, and they instead go off at random.
Bees don’t see it as either/or the dance or none, they see it as both/and. They exploit the dance and explore more. If they only obeyed the dance, they would get more nectar in the short term. But in the long term, they wouldn’t find more nectar from new sources.
“If you only exploit what you know and you don’t explore what you don’t, you become over optimised on the past, but secondly, you never get lucky.”
The queen bee understands that you need both, and that creative and compliant bees are complementary to each other.
People start using a map as if it’s reality, and over time as more people use the map, what’s not on the map becomes more important than what’s on it.
“Entrepreneurs understand the importance of the random bee, and they’re allowed to go with a decision that’s counter intuitive, hard to defend but may have a great outcome.”
Hear more from insights from Rory Sutherland by listening to his episode of the FINITE Podcast on The Marketing Objectivity Trap.