Selling to purchasing, or to any financial decision-maker, is wrought with problems for salespeople.
First, because of the method in which purchasing buys, they necessarily turn ever purchase into a commodity purchase. This is true, even when the purchase is of a service that differentiates itself by creating value through the application and execution of its ideas.
Second, selling effectively is made much more difficult when the salesperson is removed from the context of the company’s business problems. Most of the time, purchasing simply lets an RFP. Salespeople are forbidden from meeting with decision-makers, stakeholders, and the end users of their product or service, eliminating the ability to generate the new ideas that might create additional value for both the company and the sales organization.
Finally, purchasing departments make the price the first consideration, instead of the cost, lining up bidder prices neatly in a spreadsheet and occasionally weighting them in some manner to try to account for the differences in value.
But as the purchasing department’s power has grown (especially over the last two economic declines), so has their responsibility. They are finding themselves with the same responsibility as the salesperson: value creation (which is part resourcefulness and part business acumen) and managing outcomes.
Lowest Price Isn’t Enough
Purchasing departments will always be concerned about price. But acquiring the lowest price isn’t enough anymore. As power has shifted to purchasing, so has the expectation that what they purchase be something more than simply the lowest price.
More and more, purchasing is responsible for understanding how the offerings they choose from create value for their companies. They are recognizing that the choices that they make are far more important than simply selecting a vendor; the choice is now one of selecting a strategic partner.
As salespeople have long been required to create value by developing solutions that help their clients solve their most challenging business problems and take advantage of their most important opportunities, purchasing now finds itself with the same responsibilities on the other side of the table.
The Relationship Rethought
The relationship between sales and purchasing has been adversarial. In the past, the purchasing departments power, in part, came from the withholding both access to the organization and the information that would have enabled better solutions from salespeople.
For our part, those of us in sales would have rather called on the company’s parking lot attendant than purchasing; with the parking lot attendant we would have had a fighting chance of gaining access to the organization.
It is time for both sales and purchasing to rethink this relationship. It isn’t effective to go into relationships with an adversarial, value claiming approach—on either side of the table.
An adversarial approach costs too much in the way of diminishing the sales organization’s ability to understand the company’s real needs and to create a solution that produces out-sized results; it costs too much in the way of preventing relationships that will later be critical to the execution of the solution; it costs too much in misunderstandings that occur because information was withheld at early stages of the purchasing process.
But most of all, an adversarial approach costs the buying organization too much to focus on price instead of cost, and it costs the selling organization too much to quote price instead of focusing on the creation of real value.
What Is Needed Now
The new relationship is going to need to be a lot less adversarial and will need to move a lot closer to the types of relationships that have long existed between salespeople and their non-purchasing department clients.
Purchasing is going to have to become subject matter experts on what they purchase, and they are going to have to assemble their own company’s internal teams in way that ensures that the solutions they buy are more than the lowest price. This means the sharing of information and access to the people most affected by the decision to change, those most responsible for the outcome that the sales organization is responsible for helping to create.
Salespeople, for our part, are going to have to get a lot more comfortable selling purchasing on the value of the strategies that we use to create solutions for our clients, those that enable us to become a strategic partner and not merely a vendor, as well as those that allow us to differentiate our offerings. Our first sale is going to have to be a change in the process whereby purchasing makes a buying decision.
As we come to the close of the most challenging economic downturn in almost a Century, and as we stare down the barrel of future disruptions, surviving and thriving together means changing how we approach each other here, as both of our abilities to create value depend on this change.
Purchasing is the new sales. Where once simply acquiring the lowest price was enough to indicate that purchasing had done its job well, now the judgment has shifted to their ability to select strategic partners who can help solve the company’s most pressing business problems and help them take advantage of their best opportunities. Purchasing is now soundly in the value creation business. As this change occurs, both sales and purchasing need to rethink this relationship.
- In what way does purchasing prevent value creation? What changes are necessary on their end of the relationship to better enable real value creation?
- How do you sell purchasing on making these changes? How do you move them off of price and onto something greater, even if it is lowest overall cost?
- How do those of us in sales help to change the adversarial relationship into something better for both our clients and for our own organizations?
- What do we in sales gain by avoiding purchasing, and how do we best bring them onto our team? What tools and processes do we need to have to best make our case?
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Filed under: Sales 3.0