Rising inflation, the Russian Invasion of Ukraine, and other tensions create a lot of uncertainty in markets. But uncertainty is nothing new. We just went through it (and are still going through it to a degree) with COVID-19. And there will always we changing circumstances in markets that we have to deal with. Our forecast team is working continually to understand how this impacts what people buy and how much. That is where behaviors are most likely to change. But how they buy will probably not change significantly, beyond the potential for increased scrutiny of purchases.
All of that being said, I do think this is a good time to remember that you can’t really understand what is going on by assuming that all customers will react the same way. In times of crisis or increased scrutiny, some organizations see an opportunity to gain, or strengthen, competitive advantage knowing that their competitors are likely to be more risk averse. So, with everything going on, I thought it might be helpful to look at some still relevant Gartner data using our Enterprise Technology Adoption (ETA) profiles. This is from a study we conducted about buying efforts undertaken in 2019 and 200. We looked at the number of buying efforts organizations pursued–and how many of them were effectively canceled — the decision that was made was not to do anything. I’ve probably shared some of this before, but it is worth a new look.
Part of what we wanted to do was see how much the pandemic impacted buying efforts. We were expecting a dramatic difference in the number of efforts pursued in 2020 vs 2019. We did not see it. Basically, for every ETA grouping, and overall, there was a slight increase in buying efforts considered in 2020 compared to 2020. But the more interesting thing would have been cancellations. Surely, we would see a difference there. Not really.
The only two groups that canceled a higher percentage of buying efforts in 2020 compared to 2019 were the two strict planning organizations – Fast Followers and Disciplined Followers. This does reflect the discipline they bring to the decision process. For every other group, they canceled the same percentage or less in 2020. The overall % of cancellations is just more evidence of the New Chasm. The organizations that are more likely to be effective at buying, namely the Agile Leaders, Fast Followers, and Disciplined Followers cancel a significantly lower percentage of buying efforts than those that are on the other side of the new chasm.
Just to add a bit more detail before discussing some speculation on what this might mean for the current, and future situations, we can look at the percentage of the 2020 efforts that were cancelled due to implications of the COVID-19 pandemic.
Here the picture is a bit different. The more effective buyers were more likely to have canceled buying efforts due to COVID than the others!
As uncertainty mounts, the macro trends of markets, using our forecasts, are important to understand. But for specific opportunities, you can’t think macro–you need to think micro-and truly work to understand the situation of your customer. The questions I would be asking:
- What is the ETA of the prospect?
- How important is the project for which your product or service is being considered?
- How much risk is associated with the project?
- How does the cost outlay for the customer look over time?
- and more
But above all, don’t make blanked assumptions. You can start with the knowledge that more than 1/2 the market struggles–but many still invests. Those that are more likely to cancel don’t cancel everything–but you will need to connect and understand other issues and dynamics.
Just as the more disciplined and effective buying organizations gain advantage from that discipline, now is the time to step up your efforts in building a culture of deep understanding of the customer. Doing so will give you a competitive advantage. We’ll talk about this more at the virtual Gartner Tech Growth and Innovation Conference. Hope you join us.