We all remember Abraham Maslow's hierarchy of needs, with several levels ranging from physiological needs to self-actualisation. However, management consulting firm Bain & Company has come up with its own pyramid of values aimed specifically at buyers. This pyramid maps out both the objective and subjective criteria that are used during the decision-making process.
A procurement-inspired pyramid of values that influences the decision-making process
Based on quantitative and qualitative customer studies conducted over the last thirty years, Bain & Company has mapped the most important criteria for buyers in their decision-making process. Like Maslow's hierarchy, this pyramid includes both the most basic needs (price) and the most complex (vision).
There are exactly 40 criteria or Elements of Value, sorted into 5 categories:
1. Table stakes refer to the basic challenges and objectives associated with procurement, such as technical specifications, prices and compliance with the procurement policy.
2. Functional values include economic or performance-related criteria, such as cost reduction, product quality etc.
3. Practical values combine the concepts of ease and efficiency, such as saving time, easy implementation, flexibility etc.
4. Individual values echo the buyer's personal or professional situation and include network expansion, stress reduction etc.
5. Inspirational values are linked to emotion and looking to the future. These values bring together vision, hope and social responsibility.
Diagram of the value pyramid for buyers
Defining criteria that have an impact on how buyers make decisions
It is important to highlight a major phenomenon that is affecting the decision-making process: buyers are not aware of the real criteria that are influencing their decisions.
This was proved in an experiment conducted by Bain & Company. A group of buyers were asked about the Elements of Value that were most important to them in their decision-making process when purchasing IT infrastructures. While the majority of these buyers mentioned cost reduction, this criteria was brushed aside by others following results from a more detailed questionnaire, and didn't even make it into the top 10!
In order to facilitate the decision-making process and improve take-up rates, it is important that buyers survey their internal customers directly, before beginning a project. This will give buyers a better understanding of their customers' Elements of Value. It is difficult, if not impossible, to identify what customers need and/or what motivates them if these interactions do not take place.
To delve even deeper into this topic, take a look at the following article to find out more about buyers' objectives and skills: "What are the objectives and skills of an indirect buyer?"
Source: Harvard Business Review