Sales has never been the easiest of careers to embark on. Calling on prospects with solutions the decision-maker doesn’t see the need for (or one that is simply dealing with other priorities) is a tough but necessary ask. It takes a special blend of personal resilience, character and optimism to make a success of such a career choice, and I’m routinely impressed with the quality and endeavour of the people I meet who hold this role.
I recall my early career when, at Black and Decker, suppliers’ sales reps would visit and participate in product specification discussions with designers and buyers (a form of co-creation), where the rep’s input was at least respected and often significantly valued. But now buyers, having done much desk research, are already almost two-thirds around the buying cycle before today’s reps even get a chance to present their value propositions. As always, there are exceptions: If the supplier is providing leading-edge tech and/or is a ‘critical’ supplier, then early access to customer decision-makers is pretty-well assured. But most suppliers are providing goods and services that are in Kraljic’s ‘Transactional’ box, and the reps of these suppliers obviously fare much less well. For these, the rise of procurement has been a far from good news story.
Indeed some account managers find having to deal with the professional buyer is a source of deep frustration, as they see their route to the knowledgeable product or service user restricted (or even barred). And it’s not getting any easier.
Adverse economic conditions have been with us for some time; chronically low inflation following the financial crash, coupled with unrelenting globalization (both fuel buyer expectations of more value for less cost); and new uncertainties over Brexit and the election of a potentially protectionist US President Trump.
Company investment was recovering post-crash, but there are reports of it slowing again following the Brexit vote, suggesting that companies continue to hoard cash rather than risk it in the current climate. Companies selling what they can, using the existing asset base, and buying as little as possible to get by. Consequently, the spotlight has been placed on the Procurement function to apply its expertise to saving money – often urgently.
In the immediate aftermath of the financial crisis Procurement got tough: brutal cost challenges were laid before suppliers, large public sector contracts were re-negotiated and suppliers had to at least partly comply, sometimes just to survive with an intact business model. Reports emerged of increasing adversarialism in B2B relationships, undoing years of collaborative KAM/SRM effort laid down by key account and procurement’s supplier managers in their respective businesses. The message was that there was no longer time for value benefits to emerge from long-term collaboration and continuous improvement; savings were required ‘now’ (!)
But what else has changed in respect of procurement practice over recent years?
Buyers increasingly demand that the risk burden in their contracts is shared with suppliers. Penalties for performance failures, vendor-managed inventory, buy-back, and consequential loss clauses have gained greater prominence in contract negotiations. The practice of contract management has itself become more prominent (despite the rollback of some SRM programmes) with more focus on ensuring suppliers deliver what is expected. Contract lengths have been reported as being shorter in length than before, and the atmosphere has become one of risk-aversion, ‘covering your back’, if you will. One commentator suggests that the over-riding driver of buyer behaviour these days is risk aversion rather than the often-promoted entrepreneurial mindset, and I wouldn’t disagree with that for a moment.
In this complex and occasionally toxic atmosphere it’s difficult for both sides’ relationship management efforts to flourish, and some Sales pros have been left perplexed, confused as to how to operate in this new world, particularly if they’ve relied on relationship-selling as their method of winning and retaining business.
So what should you Sales pros do about all this uncertainty and difficulty? Well, there are no easy answers here, but here are a few themes for you to consider:
Today’s Sales professional should be thinking about operating with a more dispassionate approach to the relationship than they may have done in the past. Relationships matter, but relying on the quality of those personal relationships is, in this relationship-devalued times, a recipe for disappointment.
I know this is the day job of the Sales pro, but ask yourself the question: Could I be more systematic and forensic in seeking to understand the importance of my product or service to the customer? It may be sobering to find yourself in Procurement’s ‘transactional’ box, but a realistic assessment of your relationship status (as well as the needs of the customer) should lead to better decision-making around any relationship-specific investments you think are necessary, including your cost-to-serve calculations.
It’s no longer enough to promote the features of your product or service (even though you understand this already). Buyers already know that stuff from their desk research. Instead, sales people must now rigorously calculate the value impact of their solutions on the customer’s business, and even the value impact on the customer’s customers downstream. A supplier’s value proposition that provides credible total cost of ownership (TCO) calculations is going to be more compelling to the buyer, and give the supplier a competitive edge.
Learning how customer’s procurement operates is becoming a key skill for today’s Sales pro, and tomorrow’s new entrants to the profession can expect ‘The Procurement Playbook’ to become part of their standard professional development curriculum. Without that understanding, then we can have little doubt that the inevitable negotiation game will play out to the professional buyer’s advantage.
The rise of Procurement over the past twenty years represents a small revolution in the way business trade with each other. With organisations more often than not choosing to ‘buy’ rather than ‘make’, the role of the professional buyer is here to stay. Procurement may not yet have achieved a permanent place at the top table, but it’s coming. At the same time Sales, in the face of the digital economy and the ubiquity of supply market information, must fight for relevance. Well-informed buyers in some sectors can easily by-pass Sales and interact with fulfillment functions. But there are others where Sales genuinely is a strategic asset and the skills the pros bring to relationships are crucial for business success. All ‘power to their elbows’ in these challenging times.