So let us assume for a moment that sales people come from Mars* and procurement people live on Venus*. The table below summarizes some characteristics as I recollect them from my practice.
See also on Big
Five; Emotional Intelligence
(eg Coleman**); Entrepreneurial
Orientation (Lumpkin & Dess, 1996).
Starting in the academic realm, B2B sales
(& marketing) seem firmly positioned in the domains of commerce and
entrepreneurship, whereas procurement (purchasing) is in the domain of
operations management or at best in supply chain management. Still following
the two planets concept: Procurement struggles with executing corporate strategies,
with demands from internal customers and stakeholders, and with growing
requirements on sustainability and risk management. Public procurement
additionally must be transparent and adhere to strict regulation. Sales people struggle
with the digitalization of procurement systems, with increased competition,
shorter product life cycles, margin pressures, and complexity & volatility
in market demands.
Train them!
Train them!
Sales training programmes still use the AIDA model (Attention, Interest,
Desire, Action; Strong,
1928) and recent research suggests this model still works (Hassan,
2014). Fortunately, sales programmes also
use more modern models, such as the SPIN
model (Rackham,
1978). Via this model the seller tries to determine problems of the buying
organisation via four types of questions on the Situation, the Problem,
the Implications,
and the Need-Payoff. These
four questions combined help the seller to make a buyer aware of his problems, and
then the seller can offer his/her solution. An alternative is using a selling
technique presumably based on Socrates (400 bc) that
should stimulate critical thinking with the potential buyer.
These models have proven their value in practice but then ignore tendering processes in large-organisation procurement. Such processes (though sometimes perceived rigid and formal) are demand-driven (pull approach in SCM jargon) and do not always fit the push approach of a sales organisation. Hence, we have a contradiction: listening to the voice of the customer (marketing orientation, e.g. Kohli & Jaworski, 1990) and trying to understand the customers desires, insights and opinions versus we need to push products & services and hence push sales for the continuity of our own organisation (sales or product orientation). But this type of finger pointing is not the point I wanted to make in this Saturday blog.
The point is the mismatch between the potential value that the seller can offer versus the value for money that the buyer needs in a particular case. In part this mismatch relates to different (short term or long term) personal or organisational objectives, in part to different processes or timeframes. Take for example Dutch public procurement: a massive 60 billion euros of annual sales goes via the digital portal TenderNed. One important sales competence “building personal relationships” does not work via this portal. This competence is only effective after the seller has submitted a winning bit; but then the rational contract and supplier management phase starts with KPIs, agreed quality levels, progress meetings etc. As most public tendering organisations chose the so-called open procedure, the opportunities for suppliers to discuss specifications and options are limited. However, there are more procurement routes, each offering limitations and possibilities for a good sales force (See for some examples: construction or healthcare in the UK; or public procurement in Scotland).
Executive sales training programmes
sometimes recommend bypassing the procurement department and going straight at
the decision maker. Whether this is a good strategy may also depend on the
procurement maturity of the client or the type of organisation. Paesbrugghe
e.a. (2017) for example has found that as purchasing evolves from respectively price-focused, cost-focused solution/innovation focused to strategy-focused,
each purchasing stage requires a different sales strategy. Moreover,
procurement in for example public organisations acts as a dominant gatekeeper
and tender legislation or firm policies forces such organisations to involve the
procurement department. Interested sales teams could then better try to
understand the process and write a winning bid. (See e.g. the suggestions from
this Australian consultancy
firm). Nevertheless, both sales and procurement would benefit from a dialogue on their respective roles.
Two To Tango
As the 1950’s song aptly said: It Takes Two to Tango: both the seller and the buyer need to agree on an optimal relationship. Since long this has been done via simple account management models or 2x2 supplier portfolio models (e.g. Kraljic, 1983) which have their benefits and limitations. Gelderman& Van Weele (2003, p. 212) have for example recognised nine supplier strategies in the Kraljic’s matrix of which several are of a win-lose nature. Other research (e.g. Dubois & Petersen, 2001) have concluded that the Kraljic’s matrix is not suitable for managing partnerships. Recent research in the US (2012 - 2016) has popularised the vested business model that focuses on win-win relations. (More on Vested in a next blog).
Two To Tango
As the 1950’s song aptly said: It Takes Two to Tango: both the seller and the buyer need to agree on an optimal relationship. Since long this has been done via simple account management models or 2x2 supplier portfolio models (e.g. Kraljic, 1983) which have their benefits and limitations. Gelderman& Van Weele (2003, p. 212) have for example recognised nine supplier strategies in the Kraljic’s matrix of which several are of a win-lose nature. Other research (e.g. Dubois & Petersen, 2001) have concluded that the Kraljic’s matrix is not suitable for managing partnerships. Recent research in the US (2012 - 2016) has popularised the vested business model that focuses on win-win relations. (More on Vested in a next blog).
In summary, my guess is that sales and procurement people can benefit from an understanding of viable relationships or business models. Both parties must have and exercise their ethical values. Both need to reflect and learn from best practices. Both parties need to master relevant strategies and tools e.g. in buyer-seller negotiations. (For Dutch blog readers – check our negotiation ebook special in Shoppen Voor Professionals; due Mid-July 2017).
Same interests?
SME buyers do not live on Venus and SME
sellers do not come from Mars. They know they live on the same planet earth and
both want to remain in business. Recently I saw an SME owner decide to continue
his business with a current logistics supplier. The pricing was higher compared
to competition but the SME owner trusted his intuition. The SME value
proposition was product leadership and he believed the current
supplier could provide several (non-quantifiable) benefits. One of the many critiques
on the Gray book** is that he stereotyped us humans too much.
(Kimmel, 2017 youtube video). Let us not make the same mistake in buyer-seller
relations.
* Most of these stereotypes are not true.
** Note that science is a process of questioning validity of earlier statements: both the books of Gray and Coleman have met criticism.
*** At Hanze university, in September 2017 we will again run the
honours minor of B2B Sales & Innovation Talents with some nice interaction
of sales and procurement. In February 2018, we will run the International
Procurement minor for the 3rd year; with some advanced buyer-seller
negotiations. Hanze is becoming more entrepreneurial in its teaching and
applied research.
** Note that science is a process of questioning validity of earlier statements: both the books of Gray and Coleman have met criticism.