Did the buyers win? Not so sure…
The title of this article was inspired by my recent rereading of the book published by my associate, Frédéric Vendeuvre, and Christopher Guerin, CEO of Nexans. The book is a gold mine for anyone seeking to lead a sales transformation project at their company. The “differentiated sales” process laid out in the work is not an umpteenth sales method but rather a way of reinventing how to sell your company. It involves overhauling the sales process: improving client insights, listening more attentively through a more systemic, analytical approach, surprising clients with your professionalism and information gathering, and daring to speak frankly about the constraints of the profession.
These examples show the sort of in-depth projects needed to turn the corner and aim for excellence.
The dialogue between buyers and sellers is a frequent topic among the many covered. Here are the key messages in a nutshell.
Buyers have gained a leg up.
For some years now, procurement has been attracting top talent and evolving. In addition to becoming more professional, the function has been attracting elite managers. Procurement positions are always more alluring than sales roles. The new buyers hired have continued to implement more innovative systems and tools that put pressure on suppliers:
- procurement information systems
- RFI (Request For Information)
- RFQ (Request For Quotation)
- RFP (Request For Proposal)
The only thing missing is a RFS (Request For Survival) to help them decide who will be able to stay in business after years of declining profits. In sum, buyers have driven a hard bargain for many suppliers, during a period that has given them a sense of impunity.
Many have gone a step too far and the pendulum will eventually swing in the other direction. One could go into great detail about the highly relative efficiency of purchasing departments, which employ disproportionate methods to low-value and key purchases, sometimes expending more of their organization’s energy than they save. One could also note that it’s not always the “cut-throat” or the most “greedy” person who gets the cream of the crop: strategic suppliers with added value, who end up taking their good ideas elsewhere.
A second set that’s up for grabs
The buyers won the first set, but the match isn’t over. The balance of power doesn’t always play to purchasers’ advantage and the trend could reverse course in the years to come. In any case that’s what Natacha Tréhan, a professor who teaches in the DESMA master’s program, predicted in an interview with Décision Achats magazine.
In 2025, the balance of power will shift to the suppliers.
There is going to be a transfer of power to best-in-class suppliers. Many purchasing directors have emphasied the point: “ In the future, the best-in-class suppliers will choose us.” As such, it will become vital to stand out from procurement competitors in order to becomes these suppliers’ preferred client.
General management will expect buyers to “bring in business.” Purchasers will be able to enter new markets by capturing their suppliers’ innovations. To help create value, executive leadership will want buyers to work with marketing and sales to gain market share.
Carrying out a successful sales transformation
Cultivating sales teams’ negotiating skills will be an important part of winning this second set, but that alone will not suffice. Sales departments will have to set more ambitious goals and establish a full-fledged sales transformation plan. This is the theme of the third section of the authors’ book.
I won’t go into all the details laid out in the book, but I will list a few of the main crossing points to keep in mind when aiming for such an ambitious endeavor.
You can’t transform your sales process, improve customer portfolio or target service solutions without first revisiting your pricing and margins for each client. Pricing is a major lever that is rarely used for fear of losing the company’s edge, and also as a matter of habit. Purchasing departments are closely tracking their savings in lock step with the finance function, but sales teams rarely keep such a watchful eye on things. Growth and profitability targets are often conflicting and the margin target rarely comes out on top. The book presents many ways to revise your pricing structure that will serve as an inspiration to those who want to tackle the project.
Redefine negotiating processes and knock clients off their pedestal
This may involve adopting a whole new mindset. Attentiveness, empathy and other interpersonal qualities are not the most important nor recommended when faced with a client who systematically attempts to lower prices or swells sales costs with constant, time-consuming competitive bidding.
Look at the big picture with client segmentation
Improved segmentation with three or four criteria (margin / revenue / market share / potential) allows you to make more effective decisions on priorities and resources, as well as to choose better sales strategies. It’s an area where the process is just as important as the outcome. The authors stress that the sales teams can only fully grasp the effort vs. client ROI relationship when they establish their own objective analysis with expense figures for each client. At that point, implementing strategies such as a price hike or terminating a relationship becomes much easier and less nerve-racking.
By way of conclusion, I have one criticism of the book! The title is wrong.
In my opinion, it should actually be called Pursuing a Successful Sales Transformation. That’s the topic that’s really covered throughout the book. It’s mainly intended for managers wondering how to overhaul sales processes to “win the second set” and boost the company’s sales performance in a market that reshuffles the deck on a daily basis.
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