Here are some of the questions I use for a”critical” B2B products and services.

1) Is it critical? How?

• For coatings: Long-term protection? Durability? Corrosion? Insulation? Consistency?
• For airframes: Structural? Brakes?

2) What is the cost of using a cheaper product and then having a problem?

• Do you just lose reputation and clients?
• Do you wreck a larger project? A leaking roof seal wrecks the whole house. s
• Do you lose lives or hurt people? Failed drugs. Contaminated plasma.
• Do you lose the entire company? 2-3 airplanes crash and an airline out of business.

3) How long is it used? Can it easily be replaced if there is a problem?

• How long is it used when installed?
• When is this model obsolete?
• Is it something you buy and use every month? Or something that is bought and stays in use for years (roofing seal, aircraft frame, performance coating). Is it a one-time decision you must then live with forever?
• Might be easy to replace (MRI machine) but very expensive. Might be cheap (engine management system) but difficult to remove from cars?

4) How many companies are proven for this product? # of acceptable alternatives for critical product?

• For insurance, it’s easy to buy alternative. For patented drugs it’s hard.

5) Can an unproven company become proven easily?

• Is it hard to know if it works? Or is it hard to show? Does it require a 5-year study (dental implants) or can never really know (airplane frames after 20 years).
• How do you actually test plane parts or roof sealant over 10 years? How test dental implant? A new drug can get FDA approval. A new paint sprayer for a car can be tested easily.

6) For buyer, what is risk vs cost savings of unproven versus proven products?

• Ideally you want low-cost critical product with huge costs of switching. And where it is very difficult to test alternatives.

7) What is the lifespan and lifecycle of product? Consumable, supplier part, capital good?

• Lifespan: How long will product be used after sold (airplane airframe vs. phone battery)? Is reliability long-term a factor?
• Lifecycle: When will it be obsolete? Is it on the edge / frontier of technology?

8) What is the total cost to the buyer? Purchase, maintenance, parts, energy and resources savings, resell?

9) Is it a small % of the cost structure?

10) Is there recurring revenue? How long does it last? SaaS contracts for critical business processes can last forever.

11) Do you have the low-cost position? How many others?

• Even if new critical product is available, it’s just not worth it. Can’t save money so just stay with existing supplier.
• Can others copy or make cheaper version?

12) Is it customized or designed into a product? A little or a lot? (Car engine systems vs. pharma syringes)

• Can the purchase decision be reversed (re-paint the car?). Harder if designed to order? A little or a lot? (replace engine system vs. pharma syringe).

13) Does it require up-front capital or training commitment from business?

14) Are supplier operations integrated with the buyers? A little or a lot?

• Locations next door? Changes logistics costs?
• Designed together / customized?
• Employees trained? Hard to switch?
• Does supply need to be reliable or rapid or high volume? Just in time delivery?

15) Is it protected by technology, patents / other government or a limited supply? How long to last?

16) How powerful are the buyers vs. sellers?

• Big vs. Small? Government?
• Long-term contracts for supply with guaranteed volume? A backlog of orders? Risk of them vertically integrating?

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From the Concept Library, concepts for this article are:

• Switching Costs
• B2B Customer View: Necessary vs. Critical vs. Strategic

From the Company Library, companies for this article are:

• n/a

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I write, speak and consult about how to win (and not lose) in digital strategy and transformation.

I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.

My book series Moats and Marathons is one-of-a-kind framework for building and measuring competitive advantages in digital businesses.

Note: This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.