How does behavioral economics affect new product development in B-to-B (B2B)? When developing new products for your customer base, market research insights can drive innovation that will account for human’s natural uncanny ability to be non-sensical. Humans make irrational decisions all the time, and a common misconception is that in B2B all humans and purchase managers suddenly become super logical and make only the very best decisions based on price, value and rational mindsets. B2B purchase decision makers make irrational decisions just like consumers, albeit for different motives and with different outcomes.
Here are some of the things to consider when developing new products for the irrational B2B customer:
- Understand humans have built-in irrationalities
The first step in new product development is to design your survey instrument recognizing that B2B purchasers do not behave rationally. They will choose a brand name they can associate with, from a brand they admire and will pay extra for it. Incorrect assumptions and perceptions can influence even the most measured, calm, and experienced B2B purchasers. Comfort zone, the status quo, and mindset are massive drivers in hindering new product adoption, so focus on capturing data that fully understands all aspects of value within an incumbent product.
- Reassure B2B Buyers
If a consumer makes a purchasing mistake, no one knows it but the consumer. If a B2B purchaser makes an error, the entire department (if not the whole company) is aware. New suppliers must recognize that if they want to have a shot at winning new business with a new product, they must overcome a giant comfort zone – so much so that the purchaser is made to believe that the danger is actually in not making a switch.
- Create overwhelmingly superior new products
B2B Buyers would rather pay more for a product they know, than switch to a lower cost solution they don’t know. B2B suppliers often make the mistake of merely providing more value or being more economical cost. In reality, a B2B supplier must research every single facet of the value chain that the incumbent supplier delivers, and beat them overwhelmingly on every point to have a shot at replacing them. If you cannot meet this threshold, you must seriously question the investment in the new product.
- Convince B2B buyers to switch.
B2B Buyers love their comfort zone and enjoy the safety of knowing that they risk nothing in keeping a supplier as status quo. Your research must investigate what would convince a B2B buyer to change over to your new innovation, and the questions you ask must dive underneath the surface to uncover the mindset that drives the buyer to purchase the incumbent product. Any ability to convince the buyer to switch will come from your ability to ask the right questions, without allowing anyone to “lead” the respondents to a particular answer.
New product development in B2B must overcome several obstacles to be successful. You will deal with buyers that want to stay with their comfort brand, avert loss, and not change the status quo. Your new product must break the cycle of brand affinity that your customer may have had for considerable time length, and do so in a way that shatters all previous conceptions of value. Asking the right questions before, during, and after a new B2B product launch can help make sure your next B2B product launch is successful.