The Search for Truth (in Business)
Take a moment to think about the major factors driving changes in purchasing habits over the years among consumers. The rapid rise in Internet usage certainly comes to mind, as does the proliferation of mobile devices. But there’s a singular factor that has been the driving force behind some of the largest changes in the way consumers make purchase decisions. What is it?
People’s desire for objective sources of truth and reputation when making purchasing decisions.
It might not sound revolutionary, but this concept has changed the way the world works for consumers like us. Think about it. Even 25 years ago, how could consumers find the truth about a seller? They could ask their friends, who may or may not have ever dealt with the seller. Or they could read consumer reports and consumer guides that became outdated as soon as they were published. That’s about it. It didn’t matter wether you were looking to buy a $5 lunch special, a $500 television, or a $10,000 car- there was a massive dearth of objective information about products and their sellers. There was no objective source of truth, no third-party source for reputation. As consumers, we had to depend on the biased information provided by stores and seen in advertisements. It wasn’t ideal, but what choice did we have? That was the status quo.
Technology changed all that, and enabled consumer preferences to shift towards their natural equilibrium. Consumers have always wanted to depend on an objective source of truth and reputation before making purchase decisions- we just never had a reasonable outlet for it until technology, specifically the Internet and its uncanny power of aggregation and distributed information collection, made this possible.
The Internet opened the floodgates for a powerful change in consumer behavior driven by a quest for trust. Trust in a seller could now be a function of data; trust could be calculated, trust could be quantified and aggregated by objective, third-party sources. Making a purchase no longer involved a “leap of faith” that must be taken. Think about how this usage of objective trust and reputation information has changed every aspect of consumers’ lives:
- We no longer need to simply trust when a driver says they’re safe. We can check their Uber or Lyft rating.
- We no longer need to take a restaurant’s word for it when they say they have tasty food. We can check their Yelp profile for ratings and menu information.
- We no longer need to take a seller’s word on faith when buying a used car. We can check the Carfax report.
Consumer habits have almost completely shifted towards this new reality where objective sources of truth and reputation are dominant. According to a BrightLocal study, 88% of consumers trust online reviews as much as personal recommendations. That’s an incredible statistic, and demonstrates the massive influence of digital reputation sources.
Given these shifting sands in the consumer sphere, it’s only reasonable to assume that the business world would be even more impacted by a thirst for objective sources of trust and reputation. Why? Simply because B2B purchasing decisions have always been characterized by deep reputation and trust considerations. In fact, price was the main consideration in only 45% of business purchases. Factors like reputation, expertise and knowledge, quality of service, and responsiveness are disproportionately valued by businesses compared to consumers. So, how has this desire for objective sources of truth and reputation been playing out among business purchasing decisions?
Shockingly, there have not been a lot of places where businesses can find objective trust and reputation information about suppliers. Because of this vacuum, the business world has been slow to adopt these preferences.
Over the past few years, there’s been a dramatic shift in business’ purchasing behavior for equipment, supplies, perishables, and even services. Suddenly, business owners’ purchasing behavior has started to converge towards consumer purchasing behavior. Businesses want to see objective information on third-party sites before buying- and it’s understandable. After all, for small businesses every single purchase is critical to the health of their business. For most, their business is more than just a job, it’s their livelihood, their fuel, their passion. So when a brewery wants to purchase a $50,000 tank, or a restaurant needs to buy $30,000 worth of HVAC equipment, they don’t want to take anything on faith. They want to be sure they’re working with the right supplier. Being naive about supplier legitimacy is costly.
Ask yourself this- if you visit a restaurant’s website and see the claim that they’ve got the most delicious food in town, would you trust that it’s true? It seems like a silly question to even consider- the claim is so obviously biased, we almost disregard it completely. Our natural reaction is to try and confirm that the food is of quality, looking at trusted, objective sources of reputation online for the restaurant- Yelp profiles, Zagat reviews, etc. That’s what is starting to happen now for B2B suppliers. Businesses are craving objective information about suppliers to aid them in their purchasing decisions. Just having a website, or having a booth at a trade show, or handing out a business card, is not enough for suppliers to prove their trustworthiness.
30% of small business owners who get quotes directly from suppliers still look for objective reputation and reviews before making a purchase. (source: 2018 Kinnek study)
So we know they’re looking for reputation information, but….are they able to find it? Until recently, the answer was a resounding “no.” Business owners were certainly starting to search on a large scale for objective reputation information about suppliers they were thinking of purchasing from, and yet they couldn’t find anything. They found suppliers’ own websites, to be sure- but how believable/helpful is it to read “We’re the industry’s best!” on every single supplier’s website in the industry?
This is the exact problem we are addressing here at Kinnek. We’re building the objective source of truth for reputation in the B2B world. Suppliers want a way to effectively communicate information about their reputation and trustworthiness in an objective place that doesn’t seem biased or suspicious to prospective customers. And businesses want to use that objective information to inform purchasing decisions and validate suppliers’ reputations. Every single day, Kinnek is making strides to bridge this gap. We’re already seeing dramatic changes in behavior:
Businesses are 4x more likely to purchase from a supplier when finding reputation information about them from objective sources of truth. (source: 2018 Kinnek study)
Small business owners around North America are asking to see suppliers’ Kinnek Profiles while making purchase decisions, even if they’ve met the supplier at a trade show or visited the supplier’s website. We already have thousands of B2B Suppliers who maintain a Kinnek profile and host their customer reviews and other reputation information on Kinnek, and share their Kinnek Supplier Profile with their prospective and existing customers.
If you’re a small business that wants to learn more about how Kinnek Supplier Profiles can help you learn more about a supplier, or if you’re a supplier that sells to businesses and wants to learn more about how you can use a Kinnek Supplier Profile to build trustworthiness among your customer base, email us at email@example.com or call us at (800) 784–3151. We’d love to chat more!
Karthik Sridharan is co-founder & CEO of Kinnek.
A graduate of the University of Pennsylvania, he was formerly a Researcher at AQR Capital Management.