What factors weigh on tech purchase decisions?

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Jan 20, 2017
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MarketingCharts staff

Through a special arrangement, presented here for discussion is a summary of a current article from MarketingCharts, a Watershed Publishing publication providing up-to-the-minute data and research to marketers.

Tech marketers targeting small businesses should focus on their owners as 83 percent of these companies lack an IT staff and 72 percent of owners say they’re typically responsible for making tech buying decisions. That’s according to Salesforce’s recent “2016 Connected Small Business Report,” which delves into how small businesses use and perceive technology.

The report indicates that, on average, small businesses spend about 15 percent of their annual budgets on technology. That makes price a key consideration — and in fact it’s the most commonly cited “important” factor when making tech buying decisions, named by roughly three-quarters (74 percent) of the small business owners surveyed.

While there’s less consensus surrounding other factors, many small business owners pointed to convenience (43 percent) and compatibility with current infrastructure (37 percent) as important considerations when making technology purchase decisions. Vendor trust (32 percent) and technology that scales with their business (28 percent) are important to more than one-quarter of respondents.

Important factors in small business tech purchase decisions chart

It’s clear that customer education is also important for marketers targeting small businesses. In a recent survey from Cox Business and Forbes Insights, small businesses that had scaled up cited the following as their leading technology challenges during that process:

  • Understanding changing technology needs and what products and services to use (31 percent citing as top challenge); and
  • Finding reliable, ongoing IT support for expanding technology resources (17 percent).

Research also shows that to improve the tech purchase experience, vendors should clearly articulate how the solution helps small businesses improve specific business goals.

The Salesforce survey taken in mid-November included 304 small business owners in the U.S. with less than 100 employees and less than $1 billion in annual revenue.

DISCUSSION QUESTIONS: What common mistakes do retailers make when it comes to tech purchases? What factors should be most important?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Vendor selection is an increasing challenge for retailers that want to get it done right with minimum internal time and energy."
"Unfortunately, the “user” experience varies greatly from the “buyer” experience when it comes to technology."
"It’s a mistake to consider the price of technology alone; understanding how new technologies could impact the business, opportunities, and threats... "

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7 Comments on "What factors weigh on tech purchase decisions?"


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Lyle Bunn (Ph.D. Hon)
Guest

Vendor selection is an increasing challenge for retailers that want to get it done right with minimum internal time and energy. Suppliers and offerings are numerous, and too often the suppliers that sell most effectively are not the ones that deliver the best value. Sourcing draws heavily on internal resources and, when moving into new areas, it can be difficult to articulate features that are mandatory, future-proofing or nice to have. Retailers should be clear about their objectives and how any new tech will likely interface with existing approaches. Since many retailers have business improvement initiatives moving forward at different paces by various champions, linking the silos of initiatives becomes important to project and enterprise advancement.

Ryan Mathews
BrainTrust

If you notice, one critical option was missing from Salesforce’s chart, “Allows my business to innovate and/or grow.” Why should cost outrank efficacy or innovation? Well, because the people purchasing the technology are focused on point solutions to past or current need, not on long-term change or growth. So that’s a problem in and of itself. I suspect many retailers would be better served hiring a tech consultant — but where would they find her or him and how would they evaluate his or her experience and judgement? The best answer, if you are a retailer, is to do your tech homework before you have a need for a patch to keep you going. Retailers need to think about where they are going, how they want to present to the market, who their customers are and what they want and then — and only then — should they begin thinking about what kind of tech infrastructure they need to support their ambitions.

Dan Frechtling
BrainTrust

Unfortunately, the “user” experience varies greatly from the “buyer” experience when it comes to technology. This is especially true for small retailers and other SMBs. Vendors and owners alike fixate on the selling process, often leading to disappointment post-sale. A very common disappointment is getting locked into a solution before fully understanding it.

How can a business owner avoid this? Choosing technologies — and vendors — that allow buyers to make changes post-sale helps to a great degree. This includes configurations (which modules are used), usage (the volume consumed, especially seasonal fluctuations) and service (“how-to” and other answers fast).

By offering flexibility, vendors can close higher contract values because owners will pay a premium for the option to change later.

Ralph Jacobson
BrainTrust

Retailers need to take a simple and direct approach to technology investments. 1) Assess true technology needs, 2) Review utilization of current systems. I have seen retailers want to “rip and replace” applications that are only leveraging 10% of current functionality. And 3) Compare those vendors that can augment current systems with cognitive, machine learning capabilities without replacing the applications. That will build enormous potential with the smallest investment.

Richard Amari
Guest

Like the survey reveals, the age old factors are still relevant; cost, features, vendor performance, etc. But I have been hearing more retailers consider the vendor vision or strategy more prominently in the decision making. Technologies and capabilities are moving fast; retailers understand that many solutions are yet to be completed, but they still need to make progress. Accepting a solution that has good but incomplete functionality can be acceptable if the vendor vision and development roadmap is clear and paints an acceptable picture (timeline and functionality).

Sterling Hawkins
BrainTrust

Suppliers and offerings are numerous, but there’s the additional factor of new technology categories growing at an accelerating rate as well. Mobile, eCommerce and more traditional technologies are the cost of entry these days. Retailers are now also confronted with emerging technologies such as IoT, VR/AR, 3D printing, etc.

It’s a mistake to consider the price of technology alone; understanding how new technologies could impact the business, opportunities, and threats is key. When combined with organizational ability to embrace new technology to see a measurable ROI, a retailer can become much more effective at capitalizing on change.

Adrien Nussenbaum
Guest

Price is always important, especially for smaller retailers. One thing to consider is the pricing model — is it set up in a way where the vendor is incentivized to make the customer successful. When a pricing model is built to reward success, it builds trust with the customer and creates incentives on both sides to work hard for each other.

wpDiscuz
Braintrust
"Vendor selection is an increasing challenge for retailers that want to get it done right with minimum internal time and energy."
"Unfortunately, the “user” experience varies greatly from the “buyer” experience when it comes to technology."
"It’s a mistake to consider the price of technology alone; understanding how new technologies could impact the business, opportunities, and threats... "

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