Buyers vs. Users

Breakfast cereal makers learned a long time ago that kids are their consumers, but parents are their buyers. To sell a box of cereal, Kelloggs has to convince kids that the cereal is delicious and convince parents that it is economical and healthy (or at least acceptably unhealthy). Such dual value propositions are increasingly important for information businesses that sell to business and professional customers. To sell successfully to a corporate customer, an information company must satisfy the needs of both end users and buyers, who often have different goals. End users want products that make their jobs easier, perhaps by eliminating steps, errors, or time. By contrast, buyers – in the form of CFOs, CIOs, CEOs, or other senior managers — are typically interested in the needs of a department or enterprise. Buyers frame their goals in terms of reduced cost, reduced risk, improved customer service, or increased revenues. End users don’t always get what they want unless they can demonstrate that it also contributes to departmental or corporate goals. For example, a Bloomberg subscription has long been prized by people on Wall Street, as much for its extensive information as for prestige value. CFOs at financial firms, however, have been trying to reduce costs in recent years and have made end users justify their information expenditures.
The contrast between the goals of end users and buyers has become starker for several reasons. Technology makes information services more broadly accessible thereby raising the visibility of information purchases. Many information companies have repositioned themselves as serving enterprises, rather than just end users. Elevating themselves this way is a legitimate strategy for increasing their value, but also challenges vendors to sell to higher levels beyond the end users, who are typically their traditional internal champions.
Information services are increasingly connected to or embedded in workflows, making it more difficult for end users or even departments to make decisions on their own. For example, in hospitals, as electronic medical records emerge as a core infrastructure component, many other types of information products and services must integrate with them. The selection of a drug database for pharmacists and nurses, for example, may be driven as much by its ability to integrate with the hospital’s electronic medical records as by its inherent content strengths.
Finally, the economic distress has forced many companies to take a much harder look at their expenditures, even those that previously were automatic purchases. For example, faced with client challenges to billing rates, law firms have become more rigorous at running themselves as businesses, including the hiring of professional staffs with procurement expertise. At many firms, the days of a partner getting any tools he or she wants are over.
The lesson for information companies is that they must be armed with compelling value propositions for end users as well as buyers. Winning end user support is necessary but insufficient to close a sale in a corporate environment. Convincing the buyers that the product or service will benefit the company is equally important and sometimes harder to do. No matter how good Fruit Loops taste to a kid, they still have to pass muster with mom or dad.

About Lee Greenhouse

Longtime strategy consultant focused on the business of information content, applications, and services.
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