What is a Buyer’s Shortlist?
For any problem a buyer is experiencing and seeking a solution for, there is a vast array of products and solutions available. This is generally referred to as a product category. With the onset of SaaS, each product category can have 25 or more solutions. Buyers, or groups of buyers, cannot work with every solution in a product category. Therefore, they create a shortlist of a few vendors, typically three to four. These shortlisted vendors are the ones they engage with in more detail to determine which one will eventually win their business.
The Significance of Being Number One in the Shortlist
The number one vendor in the shortlist wins 84% of the time. This means that if you are the top vendor in the buyer’s shortlist, the deal is yours to lose. Being number one not only increases your win rate but also significantly reduces the chances of losing the deal. Moreover, it helps build a highly efficient go-to-market engine.
Understanding the Efficiency
To understand the efficiency of being number one in the shortlist, let’s break down the cost of go-to-market into two parts:
1. The Cost of Acquiring a Lead (Marketing Cost): This includes all the expenses related to attracting potential customers.
2. The Cost of Working with the Lead to Convert it into a Sale (Sales Cost): This includes all the expenses related to engaging with the lead and closing the deal.
Generally, the sales cost is much higher than the marketing cost for a particular lead. If a vendor is considered but not selected for the shortlist, they will only incur the marketing cost. However, if the vendor is shortlisted, they will incur both the marketing and sales costs.
If you are a vendor that is shortlisted but does not win the deal, you will have spent both the marketing and sales costs without any return. Conversely, if you are the number one vendor in the shortlist, with an 84% chance of winning, you will recover your costs by winning the deal. This makes the process highly efficient.
84% is Super High, Does This Mean the Buyer is Biased?
Not necessarily. Buyers aim to purchase the best product for their requirements. They go through a thorough journey to figure out the best product. At the beginning of this journey, all products and solutions are considered equal, and each one is given due consideration. However, by the time buyers create a shortlist, they already have preferences and biases based on their research and interactions. This ranking order results in the top three or four vendors being shortlisted.
Even after building the shortlist, buyers still want the best vendor to win. They give equal opportunity to all shortlisted vendors, ensuring a fair process. They contact each vendor, share their requirements, and engage with them equally. However, the impressions formed throughout the buyer’s journey tend to influence their decisions heavily. Therefore, the number one vendor statistically wins 84% of the time.
Conclusion
Being number one in the buyer’s shortlist is not just a metric; it is a critical factor in the success of B2B SaaS companies. It determines the efficiency of your go-to-market strategy and significantly increases your chances of winning deals. Understanding the buyer’s journey and ensuring you make a lasting positive impression from the outset is crucial. As Kerry’s research shows, 84% of B2B Deals Are Decided Before Marketers Even Know About Them. Thus, getting to the top spot in the buyer’s shortlist is essential for success.
