Top 5 Hidden Biases in B2B Decision-Making and How to Overcome Them

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And now, off to today's topic! Sorry to keep you waiting.

Introduction

Today, we're diving deep into the fascinating world of B2B decision-making biases with insights from a marketing legend. I've recorded a lot of episodes with amazing people and experts, and I'll use this newsletter to get them and their expertise closer to you. This time, I'm sharing with you insights from the one and only Rory Sutherland !

Rory is the Vice Chairman of Ogilvy UK and is renowned for his groundbreaking work in behavioral science and marketing.

So today, we explore the nuances of decision-making in B2B contexts and how understanding these biases can lead to more effective marketing strategies.

In case you prefer listening, here's the full episode with Rory:

The Role of Company Culture in Long-Term Success

Company culture plays a significant role in fostering longevity and variety within organizations. At Ogilvy, there's a possibility to work in multiple roles (Rory has worked in seven different roles over 33 years). This variety within a single organization is possible because of Ogilvy’s culture of promoting from within and maintaining a consistent set of values.

David Ogilvy was one of the first to recognize company culture as a competitive advantage. A strong, consistent culture allows for a greater range of brain types and personalities to thrive within the same organization. This diversity of thought and approach is crucial for creative problem-solving and innovation.

Interestingly, Ogilvy's culture, often referred to as Marmite (you either love it or hate it), tends to polarize. Those who thrive in it often stay long-term, and some even return after leaving.

The organization's shared, deeply ingrained values make it simpler to promote from within rather than hire outside. This internal promotion ensures that employees are well-versed in the company's culture and operational methods, providing a seamless continuation of service and innovation.        

Have you thought about the values of your company? Which one stood out? Let me know in the comments below.

The Impact of Video Conferencing on B2B Relations

One of the most significant shifts in B2B interactions has been the adoption of video conferencing technologies like Zoom. This technological shift has not only changed working patterns but also the way businesses interact with their clients. Choosing a financial advisor based on their professional Zoom setup, was a proxy for their approach to business.

The critical mass adoption of video conferencing has redefined social norms and business interactions. Before the pandemic, meeting in person was the default and video conferencing was secondary. Now, video conferencing has become the norm, akin to ordering a Coke anywhere in the world. This shift has significant implications for B2B marketing and the potential for increased international interactions and opportunities.

During the lockdown, the number of conversations with clients and partners in distant regions increased exponentially. This surge in international communication is a testament to the transformative power of video conferencing, making global interactions as simple as local ones.

And now, with offline events being back, it's important to observe what you're doing at those offline events and implement it online, as naturally as possible. A combination of offline and online events is the best combination if you want to win big.

The Dichotomy of Consumer and B2B Decision Making

In B2B marketing, there’s often a false dichotomy created, where businesses see their clients and customers as a limited audience and everyone else as irrelevant.

It’s crucial to understand the importance of broader brand fame and visibility in B2B, which can influence a wide range of decisions beyond direct transactions. ~ Rory Sutheralnd

Defensive decision-making is a significant behavior to consider. Individuals in organizations often make decisions based on their defensibility rather than their optimality!

This behavior is rooted in evolutionary and argumentative hypotheses, where humans evolved to understand social interactions and argue for their decisions rather than purely rational decision-making.

The social brain hypothesis suggests that humans evolved big brains not to understand the world, but to understand each other. This means that our decision-making processes are inherently social.

The argumentative hypothesis posits that reason evolved not to make decisions, but to argue for a course of action, defend decisions, and assess the arguments of others. As a result, people often choose actions that are easier to defend rather than those that are objectively better.

Let me quote myself on this:

This is why not taking action is often the outcome of decision-making. As I like to say, people in big companies (mostly) like to protect their asses (excuse my language), and to be able to sell to them, you need to understand those nuances and politics. ~ Nemanja Zivkovic

Defensive Decision Making and Its Implications

Defensive decision-making manifests in organizations in various ways.

For example, the "Heathrow effect" explains why people default to booking flights from Heathrow to JFK because it is the safest and most defensible option. This tendency to choose options that minimize blame rather than maximize benefit leads to suboptimal decision-making.

In B2B marketing, this behavior can result in companies sticking to well-known brands and solutions (e.g., IBM, McKinsey) to avoid blame, even if better, more innovative options are available. Addressing these biases and providing reassurance and defensibility in offerings is crucial for marketers aiming to introduce new products or services in a B2B context.

Understanding the concept of defensive decision-making is crucial for marketers. The need to avoid blame frequently takes precedence over achieving the best results when making decisions. ~ Rory Sutherland

For example, in corporate settings, individuals might favor well-known brands or solutions because they are easier to defend in case things go wrong. This bias often leads to missed opportunities for innovative and potentially better solutions.

I wrote about this last week, make sure to check that edition named Why 78% of Buyers Choose Familiar Brands: TrustRadius (and Yours Truly) Reveals All

And Rory added his personal touch to it, too. Watch this video to explore how B2B buyers make decisions to avoid blame and the implications of defensive decision-making on business growth and innovation.

The Process of Making Decisions in B2B Contexts

B2B decision-making processes are complex and often influenced by multiple stakeholders. This complexity introduces several biases that can affect the quality of decisions.

One of the primary biases in B2B is the avoidance of blame. In many organizations, the downside risk of making a wrong decision far outweighs the potential benefits of making a right one. This risk aversion leads to conservative choices that are easier to defend.        

For example, when faced with the decision to choose between a well-known, established vendor and a new, innovative one, many decision-makers will opt for the former.

This choice is not necessarily because the established vendor offers a better solution but because it is a safer choice that is less likely to be questioned. If the decision leads to a suboptimal outcome, the decision-maker can point to the vendor's reputation as a defense.

This bias towards defensible decisions also influences how companies structure their procurement processes.

Procurement teams often emphasize metrics that are easy to quantify, such as cost and compliance, rather than value creation and innovation. This focus on quantifiable metrics can lead to a preference for established vendors who can check all the compliance boxes, even if their solutions are not the most innovative or effective.        

Another critical aspect of B2B decision-making is the role of internal politics and power dynamics.

Decisions are rarely made by a single individual but involve input from various departments and stakeholders. Each of these stakeholders has their own priorities and biases, which can influence the final decision.

For instance, a CFO might prioritize cost savings, while a CIO might focus on technological innovation. Balancing these competing interests can lead to compromises that satisfy everyone but are not necessarily optimal for the organization.

Moreover, the tendency to avoid blame extends to how companies evaluate and reward their employees.

In many organizations, employees are incentivized to avoid risks rather than pursue opportunities.

This risk-averse culture can stifle innovation and lead to a focus on short-term gains over long-term value creation. Employees may be more concerned with protecting their positions and advancing their careers than with making bold decisions that could benefit the company. ~ Rory Sutherland

Focusing on the Data is Focusing on the Past

Data-driven decision-making has its limitations, especially when it comes to predicting future trends and opportunities. While historical data can provide valuable insights, it often fails to account for the unexpected and the innovative. Relying solely on past data can lead to a narrow view of the future, limiting the potential for creative solutions and serendipitous discoveries.

Watch this video to explore why focusing on data is focusing on the past and how adopting a forward-looking approach can unlock new opportunities in B2B marketing.

The Value of Fame and Serendipity

Let's talk about the hidden value of brand fame and why being famous matters in B2B, and finally stop the critiques of creating a brand and fame here on LinkedIn and why it matters.

In the B2B world, it's often believed that only a few people—your direct customers and clients—truly matter. However, this viewpoint overlooks the broader benefits of brand fame, which extend far beyond immediate interactions.

Brand fame is important for long-term business success, as LinkedIn and the LinkedIn B2B Institute have highlighted. You may know who handles procurement for Ogilvy today, but you have no idea who will take on that role in the future.

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Being a well-known brand brings unmeasured benefits. For instance, when the CEO of a renowned company like Rolls-Royce Aero Engines makes a call, it gets returned the same day. ???????? ?????????? ???? ?????????????????? ???? ?? ???????????? ?????????????? ???? ?????????? ????????. Conversely, lesser-known companies don’t enjoy this privilege.

???????? ???????? ?????????????????? ??????????????????????! While strategic planning is essential, a significant part of your business's success hinges on unpredictable future developments and forces beyond your control.

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So, investing in brand fame isn't just about immediate marketing metrics—it's about positioning your brand for long-term influence and success in a rapidly changing business landscape. As I mentioned somewhere in the comments on Dejan Pataki 's post, I intentionally became first and foremost a person of value.

Naval Ravikant says that when you do that, the network will be available whenever you need it.

But let me tell you:

Networking is everything. The start and end of any story is you knowing the people, and more importantly, that the right people know you, so when they think, "I need someone to help me with marketing, with strategy, and with experience working with B2B Tech and SaaS companies", they think of you. They ask around, and they get the same name. ~ Nemanja Zivkovic

This is what I did, intentionally, and I choose to thank myself today for being able to pull it off. You can do that for yourself and your company.

But let me sum it up.

The value of fame and serendipity in business success cannot be overstated. Being a well-known brand can open doors and create opportunities that would not be possible otherwise. Businesses should focus on increasing their exposure to potential opportunities and not just optimizing for efficiency.

Marketing is a probabilistic game rather than a deterministic one. This probabilistic approach can lead to greater long-term success. ~ Rory Sutherland

Fame in a B2B context ensures that when a chief executive calls someone, their call gets returned promptly. This level of recognition and respect can significantly enhance business interactions and opportunities. Additionally, fame increases the likelihood of serendipitous encounters and opportunities that can drive business growth in unexpected ways.

Watch this video below to understand why marketing is a probabilistic game and how embracing this mindset can unlock new opportunities and drive success in B2B marketing.

Practical Examples and Behavioral Insights

Practical examples and behavioral insights illustrate the application of these concepts.

• The Uber map doesn’t necessarily make cabs arrive faster but reduces the psychological discomfort of uncertainty.
• Similarly, McDonald’s succeeds by being consistently good at not being terrible, emphasizing the importance of minimizing negatives in decision-making.

In the B2B space, similar principles apply.

For instance, companies often make decisions that are defensible rather than optimal. This can be seen in the frequent choice of well-known service providers over smaller, potentially better options.

The focus on defensibility over optimality can lead to conservative decision-making that stifles innovation and growth.        

Conclusion: Embracing Behavioral Science in B2B Marketing

B2B marketing has the potential to be more interesting and inventive than traditionally perceived.

By understanding and addressing the biases and behaviors of decision-makers, marketers can create more effective and impactful strategies. Integrating behavioral science into marketing practices can expand the solution set and redefine problem-solving approaches.

Understanding the intricacies of decision-making biases can significantly enhance B2B marketing strategies and lead to greater success.

Feel free to share your thoughts and experiences on this topic. Let’s continue the conversation on how we can leverage behavioral science to revolutionize B2B marketing.

Stay tuned for more thought-provoking discussions in our upcoming newsletters!

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