Most B2B sales professionals have at one time or another found themselves in front of a professional buyer who stalls a deal. It usually goes something like this: the sale has been going pretty smoothly, you’ve got buy-in from influences and the sponsoring executive, their vision matches your differentiators, and you’ve even lodged it with the boss as a high likelihood in your pipeline. Then you sense a kind of pause and a slight hesitation in the buyer’s tone. And then they utter the unthinkable: “I’m afraid we now have to get you in front of procurement.”
The rise of procurement as a sales process blocker is a reasonably recent phenomenon. In my area of consulting to technology sales teams, I see it all the time: sales managers and reps experiencing a power imbalance they don’t know how to steer their way out of. It has to do with the low level of business acumen across the sales organisation and a lack of inquisitiveness about how customers make money and the economics of their business. We don’t try to understand them, so they don’t try to understand us. So procurement departments just aren’t in the habit of assuming that a sales organisation might have something extra to add to their problem solving process.
If the essential function of procurement is to compare competing sellers, then it is up to the sales professional to demonstrate value that outstrips cost and thus maintain differentiation from competing sellers.
“How does one pain resonate differently for each influencer, and how do we match our solution to that so it works in the favour of the executive as well as procurement?”
These procurement departments are an army that has been embraced by the world’s major corporations. Part of the procurement person’s role is, of course, to drive price down. They are singularly focused on the price that will be paid. Now that’s a different issue to the cost that will be incurred, but they’re generally rewarded for driving invoice price down they do that by trying to make all of the competitors look identical.
And it’s not always bad news for the seller. If you stop and just think about it, not every single sale that’s made in B2B is made with the cheapest offer. Plenty of companies are very successful while being some of the higher priced offerings in their marketplace. This is partly about the sales strategy you’ve built inside your organisation, but it’s also partly about corporate pricing and product strategy.
In Australia, with fewer big players in any given market, the challenge is different again. What’s interesting about this market is that procurement people have the mindset of ‘We know what the options are, and our job is to pit the options against each other’. That’s where I think the procurement function can be dangerous here, because they have a desire to compare apples to apples even when it’s not reasonable or helpful to do so.
If you’re a sales organisation that wants to win in a volatile world, you really need to be thinking about how to sell an orange and how to get key decision-makers to understand the concept of differentiation. Procurement is knocking down that differentiation and trying to find some key components among a select, small group of vendors. I always recommend to my clients that without differentiation, every pitch will fall flat, so we spend time getting crystal clear about how to demonstrate value and uniqueness from the start.
No sales professional wants to get involved in a race to the bottom on price, however today’s enlightened procurement managers can be persuaded away from a reverse auction mentality if we think intelligently about how to frame our offering. It’s the responsibility of sales to create the vision and be authentic when doing it, which you can do by coaching your team in influencing and vision creation.
Salespeople who view procurement people as the enemy or an extension of the finance department do so at their own peril.
Procurement is not just about getting the right price, it’s about partnering with the right supply chain; with the right surety of supply and quality. So it has gone from raising a purchase order to actually knowing what it is that they buy, knowing it complies, knowing how to measure it, and making sure from a supplier performance management point of view that over the tenure of the contract it continues to deliver what was promised.
To that end, the measures for procurement people can be shifted from ‘let me compare like for like and drive down costs’, to a mindset that’s amenable to value-creation, innovation, point of difference, and total cost of ownership. It’s our job as sales professionals to help procurement become concerned with sourcing and locking in mutually beneficial partnerships.
“Today’s enlightened procurement managers can be persuaded away from a reverse auction mentality if we think intelligently about how to frame our offering. It’s the responsibility of sales to create the vision and be authentic when doing it”
We need to be aware that influencing procurement towards this kind of evolution will take time. There certainly is still that old ‘Price is all I care about’ mentality, but there’s a growing trend towards people that are making value decisions instead of price decisions.
The key for sales professionals is to recognise that changes have taken place within the procurement function, work alongside it, and commit to evolving with it, instead of working against it.
If you go back 30 or 40 years, the general pedigree of a person who was put into procurement was the person that was not good enough to keep but too good to fire, and basically all they did was process purchase orders. But those days are well and truly over.
When certain kinds of science began to permeate the market, procurement pros got trained not just how to buy better, but also how to make smarter decisions. Perpetual inventory, just-in-time inventory, RFID controls and supply chain management became a very specific science, so procurement people exploded in terms of their significance in the organisation. Unfortunately, the sales profession didn’t adjust to that then, and still hasn’t quite come to grips with it, so we were left a little bit behind.
Some time ago I talked to Craig Rooney, an established procurement chief with 30 years in the business (formerly at Porter Davis Homes, now with Metricon in Melbourne). He tells me he’s still surprised by the poor selling behaviours that salespeople continue to display in day-to-day dealings with purchasing professionals. Cardinal among the sins, he says, is a lack of understanding of his organisation’s basic strategies that is all too obvious in salespeople who come in under-prepared.
“If a salesperson sits in front of me and doesn’t comprehend what our business needs are, and therefore what value creation looks like for me, then they’re going to cop the stone wall,” he explains. “If you don’t understand my business, how can you possibly deliver me a value proposition? It translates to a lack of respect.” That’s a poor foundation for partnership building.
The solution, argues Rooney, involves a complete mind shift about how the sales function is run.
“I’m always surprised at the high turnover in sales, and the short-term thinking,” he says. “If I’ve got this week’s or this month’s budget to meet and if I don’t meet it I’m out on my ear, what’s my inclination to go and actually research who the client is and what they need for future viability and sustainability in a declining market?
You’re making as many phone calls as you can on the basis that one in 20 will turn into a sale and a mentality of ‘I need 30 sales to make my budget’. That’s not going to generate partnership.”
However, it’s not all doom and gloom. Genuine opportunities exist in the market right now for sales organisations to transition from price-sensitive vendors to valued strategic partners to customer organisations.
“As a procurement guy leveraging [internal] stakeholders, I always get them to articulate what’s important to them, and invariably it’s price,” says Rooney. “For example, right now in the building industry, if somebody can reduce our build cycle time, that gives us a cash flow benefit that would be attractive to us.
“Understanding what’s important to our business enables us to work out the non-price criteria that we want to evaluate. So what sales wants is also what procurement wants. We’ve got a common goal there.”
The Pathway to Partnership
Having a common end goal is one thing, but negotiating the pathway to achieving it is quite another. As well as understanding the evolving role procurement plays in the buying cycle, successful sales professionals must be capable of identifying the stakeholders whose buy-in is essential to the strength of the potential buyer-seller partnership.
High performing salespeople understand the stakeholders who will mobilise on behalf of the sales organisation, versus core performers who actually focus on a different set of stakeholders who will not advance a deal. So what is the difference? How do high performers identify them, and how do they actually engage them? Well in my experience they think deeply and strategically about what the buyer wants, and how to manage what Solution Selling calls the pain chain inside the company. How does one pain resonate differently for each influencer, and how do we match our solution to that so it works in the favour of the executive as well as the procurement lead.
In most cases – especially in more complex sales – if you find yourself selling to the procurement department as your primary contact, you’ve missed the boat completely. Instead, sales pros need to move upstream and sell to the stakeholders who will ultimately enjoy the functional benefit, the efficiency, the additional productivity, and the economic benefit inside the organisation.
By the time it’s on the desk of the procurement officer, the sale is all but made. There may be negotiation and there may be an arm wrestling match on price, but we’ve made the sale upstream.
Good salespeople understand that while the procurement issue is one of the biggest they’ll have to deal with, there are other stakeholders within the organisation where consensus needs to be built.
There is an answer: be a professional seller with a high impact pitch and a differentiated value proposition and make sure you’re in Column A – the prime vendor position that helps set the vision for what the client wants. Our dialogue is not about how great our product is. Our dialogue starts with what the customer organisation wants to fix, accomplish or avoid.
The salesperson’s dialogue can then shift to the creation of an ‘If/then’ proposition. ‘If that’s your problem, then this sort of outcome would appear to be of value’. Then, and only then, do we connect our product to that vision so that by the time this thing is ready to go to procurement, that selling has been 85 per finished. If we’re not helping the client discover something about themselves, we’re a dinosaur.
4 Steps to Getting it Right
“We certainly do a lot of market research and a lot of internal understanding of exactly what it is we buy.” Procurement pros spend far more time and resources assessing potential suppliers than you might think.
2. Engage Internal Stakeholders
“We engage our internal stakeholders go out to our businesses and ask ‘How is the incumbent performing?’, ‘Is the specification right?’, ‘Is the business criteria right?’, ‘Do we need to modify that?’”
3. Cover All Bases
“Today, we’re looking at overseas options too. For example, will we want to go with imported bricks, which will be heavily affected by the certain potential taxes around sustainability, or do we want to go with light-weight cladding systems that won’t so much be affected?” So don’t assume you’re up against the same competitors every time.
4. Evaluate and Match to Need
“We look at the market from the point of view of the market capacity [versus] our demand, where our demand puts us and try to identify the right supplier mix. The role of procurement is to be objective, analytical, and independent, and not fall in love with one solution.”