SMM Jan_Feb_2013 : Page 12
training Dancing lessons Buyers and sellers are moving away from sales as a competitive event and moving toward greater collaboration. BY DAVE STEIN, CEO AND FOUNDER, ES RESEARCH GROUP, INC. When you speak with sales training y that t I do, professionals with the regularity it’s only y natural to develop some insights about t the recent t trends affecting g our industry. As impartial analysts, however, my y ﬁrm, ES Research Group (ESR), relies on empirical data a to draw w real conclusions. So we conduct t research. Our individual observations can be fairly accurate, but t there are times when the real numbers surprise us. This past t fall, ESR R and global performance improvement t ﬁrm BayGroup International conducted a comprehensive survey y on the “State of Sales and Purchasing.” Our goal was to better understand how w sales professionals t within their perceive procurement customers’ organizations and how procurement t professionals perceive sales within their suppliers’ organizations. We asked about t what t they y have experienced over the past t few w years and what t lies ahead. A total of f 239 “buy y side” and 352 “sell side” negotiators participated, and they y were each asked exactly y the same questions. The results of f the survey y were remarkable in a number of f ways, not t the least t of f which was the level of f agreement between the two sides. The data a makes very y clear that t the relationship between buyers and sellers has changed dramatically y in the last t ﬁve years and is still changing. The negotiation process has become increasingly y complex. Buyers now w have the upper hand. Both sides see a need to move away y from the traditional understanding g of f negotiation as a competitive event t and toward greater collaboration—a a dance, if f you will, and everyone is learning g new w steps. In a recent t ESR R webinar about t the research, BayGroup International’s president, Ron D’Andrea a made the observation that t procurement t has now achieved a “cabinet-level position” and, charged with the responsibility y of creating g economic value for the buying company, is driving g real change. “They y are looking g to ensure there is a process in place and the process is followed. As a result, sellers have become more proactive about t understanding g the buying g process and planning g how w to engage procurement t much earlier,” D’Andrea a said. Supplier reduction programs have also had an impact, requiring g sellers to work in new w and creative ways so they y can better meet t buyers’ needs while continuing g to generate the same level of proﬁtability y and revenue for their own organizations. “When there are fewer t are chosen will have suppliers, those that much greater opportunity,” D’Andrea noted. “They y should be working g on strategies to help procurement t people meet t their own needs and the needs of the organization.” Both buyers and sellers perceive themselves to be skilled negotiators, but also recognize the skill of f the party y on the other side of f the table. Each recognizes that t their negotiation support t system has areas of f weakness, including g leveraging technology y and systems and implementing g effective post-negotiation debrieﬁng g processes. The survey y data a also revealed some stark disagreements. Buyers, for instance, strongly y favor RFP processes, while sellers tend to see the RFP as a barrier that t blocks their ability y to demonstrate ...both sides have something to gain from understanding the other’s mindset... 12 JAN/FEB 2013 SALES AND MARKETING .COM
Dancing lessons <br /> <br /> Buyers and sellers are moving away from sales as a competitive event and moving toward greater collaboration.<br /> <br /> When you speak with sales training professionals with the regularity that I do, it’s only natural to develop some insights about the recent trends affecting our industry. As impartial analysts, however, my firm, ES Research Group (ESR), relies on empirical data to draw real conclusions. So we conduct research. Our individual observations can be fairly accurate, but there are times when the real numbers surprise us.<br /> <br /> This past fall, ESR and global performance improvement firm BayGroup International conducted a comprehensive survey on the “State of Sales and Purchasing.” Our goal was to better understand how sales professionals perceive procurement within their customers’ organizations and how procurement professionals perceive sales within their suppliers’ organizations. We asked about what they have experienced over the past few years and what lies ahead. A total of 239 “buy side” and 352 “sell side” negotiators participated, and they were each asked exactly the same questions.<br /> <br /> The results of the survey were remarkable in a number of ways, not the least of which was the level of agreement between the two sides. The data makes very clear that the relationship between buyers and sellers has changed dramatically in the last five years and is still changing. The negotiation process has become increasingly complex. Buyers now have the upper hand. Both sides see a need to move away from the traditional understanding of negotiation as a competitive event and toward greater collaboration—a dance, if you will, and everyone is learning new steps.<br /> <br /> In a recent ESR webinar about the research, BayGroup International’s president, Ron D’Andrea made the observation that procurement has now achieved a “cabinet-level position” and, charged with the responsibility of creating economic value for the buying company, is driving real change.<br /> <br /> “They are looking to ensure there is a process in place and the process is followed. As a result, sellers have become more proactive about understanding the buying process and planning how to engage procurement much earlier,” D’Andrea said.<br /> <br /> Supplier reduction programs have also had an impact, requiring sellers to work in new and creative ways so they can better meet buyers’ needs while continuing to generate the same level of profitability and revenue for their own organizations. “When there are fewer suppliers, those that are chosen will have much greater opportunity,” D’Andrea noted. “They should be working on strategies to help procurement people meet their own needs and the needs of the organization.” <br /> <br /> Both buyers and sellers perceive themselves to be skilled negotiators, but also recognize the skill of the party on the other side of the table. Each recognizes that their negotiation support system has areas of weakness, including leveraging technology and systems and implementing effective post-negotiation debriefing processes.<br /> <br /> The survey data also revealed some stark disagreements. Buyers, for instance, strongly favor RFP processes, while sellers tend to see the RFP as a barrier that blocks their ability to demonstrate value to decision-makers. Nearly half (47 percent) of buyers favor e-auctions, while sellers fear that the growing prevalence of online auctions commoditize their offerings and reduces the buyers’ understanding of its value.<br /> <br /> Over the past five years, the sales process has undergone a major transition and we are just beginning to understand the implications. Clearly there’s no going back. As buyers and sellers continue to find ways to create economic value for their respective organizations, and to manage the tension that is an inherent part of any negotiation process, both sides have something to gain from understanding the other’s mindset, encouraging collaboration among all of the stakeholders early in the process, and learning the “moves” that will help each achieve their desired results and the dance begins again.<br /> <br /> ES Research Group’s in-depth industry research and independent evaluations of sales training companies helps companies make the right decisions about sales training programs. Learn more at esresearch.com.<br /> <br /> Brilliance in your midst <br /> <br /> Some of the best sales trainers are already on your team — or at least in the building<br /> <br /> Learning doesn’t always have to come through formal training. That message is frequently preached, but just as frequently neglected.<br /> <br /> Procter & Gamble leadership trainer Paul Smith shares an example of this in his book, “Lead With A Story” (Amacom, 2012) . Smith recalls that before retiring in 1998, Bob Smith spent 41 years in purchasing for companies making products from commercial building material, to school furniture, to fertilizers. Early in his career, when he was first promoted to purchasing manager, he found that his predecessor had been buying steel almost exclusively from one supplier.<br /> <br /> When he met the salesperson representing that steelmaker, he understood part of the reason why. He was the kind of person that buyers love to deal with—honest, fair and not afraid to go to bat for his customers back at headquarters if they needed something special.<br /> <br /> But Bob believed having a single source of supply for a key material was risky. He started purchasing from additional suppliers, but he still bought most of his steel from the longtime supplier.<br /> <br /> Soon after, his ideal salesperson got promoted. Unfortunately, his replacement was as agitating as the previous salesperson was ingratiating. Skipping all of the normal pleasantries in his first sales call with Bob, the new sales rep bloviated about representing one of the biggest steel producers in the country and how he was Bob’s biggest steel supplier.<br /> <br /> He pulled a detailed report out of his briefcase and said, “It looks like you were buying significantly more in prior quarters. What happened?” <br /> <br /> Bob explained his philosophy about avoiding single suppliers. But the new salesman was unsympathetic to that answer. He left after telling Bob, “I certainly hope the next time I call on you we’ll have seen a change in these numbers.” <br /> <br /> “I’ll bet you will,” was Bob’s simple reply.<br /> <br /> By the time the salesperson returned to see him three months later, his orders had dropped 200 tons. He entered Bob’s office with an entirely different attitude. “I guess you can tell I’m new at this,” he said.<br /> <br /> It was never clear to Bob why the salesman’s first call was so arrogant and caustic. But he learned that it didn’t work. He took the time to learn about his customer’s needs. Orders picked up over the next quarter and continued to grow as the salesman’s skills grew.<br /> <br /> It was an important lesson for the salesperson. Equally important, points out Paul Smith, is that it became an important lesson for the salespeople at Bob’s own company, who were scattered around the country. These salespeople dropped by to have informal chats with Bob whenever they were at HQ. Why? Because Bob’s office is where they heard stories like the one about the arrogant new sales rep.<br /> <br /> “The lesson to be learned from this story isn’t just how a salesperson should treat the buyer. There’s a much more important idea,” writes Paul Smith. “Every company that manufactures a product has a purchasing department and a sales department. The buyers in the purchasing department, like Bob Smith, spend every day dealing with salespeople. Some are good, some are bad. Some they award enormous sales contracts to. Some they send away disappointed. Who better to teach the sales department how to do its job successfully than the buyers?” <br /> <br /> Most companies situate the sales department and the purchasing department at opposite ends of the building.<br /> <br /> That’s a wasted opportunity, Paul Smith says. “If your training budget is a little tight, tap into the best source of advice on successful sales techniques in your company the purchasing department.” <br /> <br /> Make arrangements for sellers and buyers to spend more time together. They both have much to learn from each other.