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How AI is playing a key role in purchase decisions

Barb Mosher Zinck Profile picture for user barb.mosher July 5, 2024
Summary:
The 2024 G2 Buyer Behavior Report finds that AI is making an impact on purchasing practices.

purchasing

The 2024 G2 Buyer Behavior Report is out, and it looks like software and tech spending will increase next year for most companies. AI capabilities will also be an important part of the purchase decision.

Over half of survey respondents (52%) said spending on software and technology will increase in 2025. This is just a few points lower than last year, when 55% said spending would increase in 2024. Much of that spending will be on software and technology that includes AI.

It seems we have reached the point where companies are investing in core AI infrastructure, or they expect AI capabilities to be baked into other software they purchase. Although AI has become key for all software, this study found four areas where it is most important:

  • Collaboration
  • Data Analytics
  • Commerce
  • Information Security and Privacy

According to the report, 56% of B2B decision-makers said their company had purchased an AI platform in the last three months. Of these buyers, 83% reported positive ROI from that platform, measured in several ways, including productivity and cost savings.

Bryan Brown, Chief Analyst and Cofounder of GTM Partners said this about buyer beliefs around AI in software:

Buyers now believe software companies have actually done something useful when it comes to AI. Vendors aren’t just adding AI messaging to their marketing; they’re taking it seriously to build meaningful use cases. Five years ago, AI was still hype because it mostly existed in

behind-the-scenes modes. It wasn't accessible or transparent. We're now at a point where vendors are accelerating the development of AI products that can make a real difference—but buyers want to see ROI and are expecting it to have a big outcome.

AI also seems to be reshaping the buying process, particularly among those who consider themselves "AI power-users." The typical flow of the buyer's journey is discovery, research, evaluation, decision, and implementation, and for most, the majority of time is spent on research. However, with AI power-users, more time is spent on discovery and less on research. They also spend the least amount of time on evaluation.

It’s still a self-service buyer journey

Not every company has a clearly defined buying process (in EMEA and North America, 25% don't have a defined process), which can impact how software and technology are bought. It's unclear whether that's for all purchases or only purchases at a certain level. It's fair to point out that when you purchase something small that doesn't have security implications or can easily be discarded, the purchase process can be simple.

Buyers also clearly prefer to do most of the work when selecting new software, and this report confirms that. As they reach the decision stage, 69% engage a salesperson.

As Kerry Cunningham, Head of Research & Thought Leadership at 6sense, pointed out, they have made their decision at this point, and changing it is nearly impossible.

So it doesn't matter whether they're initiating the contact or responding, it's going to happen about 70% of the way through the journey. And the fact that everybody's having that at the same time, it tells us very, very firmly that buyers decide when they interact, and they interact when they're ready and not before, and you hounding them and calling them is not going to change when they respond.

Most buyers get their information from public review sites, followed by peers and communities, and then analyst firms. What kind of information are they looking for?

  1. Pricing information
  2. Review sources
  3. Product security specifications
  4. Transparent validation
  5. Trusted reviewer badges

A couple of points here. The vendor provides the product information on review sites, including pricing information and security specifications. That should be the same information on the vendor website. Reviewers offer their opinions and explain how they use the software, so getting a good picture of use cases, ease of use, and implementation challenges is vital to help make a decision.

I've never seen a reviewer provide pricing information, so I asked G2 if the study referred to pricing information offered by the vendor or reviewer. They didn't break it down, so I assume that buyers see vendor pricing information and trust it because it comes from a review site. Because they don't trust the vendor's website.

Distrust in vendor websites has grown from 3% last year to 9% this year, which is quite a jump and makes you wonder why. From my experience working with software vendors, reviewing websites for articles, and helping create website copy and messaging, vendors are working hard at providing essential information on their products. Is it possible buyers don't like to go to the website because there is always some type of CTA (call to action) or lead gen pitch that gets in the way of finding more detailed information, and they aren't interested in getting spam-mailed or called by salespeople?

Think about the content you get on a vendor website that you don't see anywhere else: product tours, customer stories, and detailed product specifications. All of these things are important for buyers who want to make informed decisions.

The shortlists are getting shorter

Yes, buyers are buying, but there's also a lot more scrutiny. In 2023, shortlists contained 4-7 vendors. In 2024, only 31% had that many, whereas 49% only had 1-3. So, vendors have a shorter time to get buyers' attention and prove they deserve to be on that shortlist.

Scott Brinker, Chief Martec, has this to say about the shrinking shortlist:

For all of those who have questioned if consolidation is truly happening across SaaS, B2B buyers shrinking their shortlists is consolidation at work. And to make a selection from that shortlist, they're more concerned about the 'R' in the ROI than they are about the 'I.' This is why we see cost falling as a top consideration among software buyers as other expectations rise. All of these factors mean added pressure for vendors to differentiate and showcase their value, fast.

The buying cycle is also growing, with 49% taking four months or more to complete. To make things worse, buyer needs change during the buying process as product scope requirements change.

Then, there are the off-the-charts ROI expectations. 57% expect to see ROI within three months, and eleven percent expect it immediately. And if the software has AI capabilities, ROI is expected to be fast.

My take

It’s not surprising that companies are looking for software that includes AI; it’s all anyone talks about, including software vendors. Generative AI is the favorite type of AI to get into software, but it’s not the only type. And AI, implemented right, does help improve processes across all departments. There are numerous use cases related to customer and data analytics, collaborative work, marketing and sales automation, and more.

However, it seems too soon to expect AI to deliver ROI faster than software without AI capabilities. There is still much to understand about different AI capabilities and how they support processes. And if companies replace employee resources with AI, will those expected ROI results come as fast?

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