All sales teams spend time, thought and effort compiling their pitches. They actively try to increase the perceived value of their proposition before the actual negotiation starts. It's a key part of the process for sales teams, yet it's virtually absent from most buying processes.
The majority of buyers only interact with suppliers when they negotiate with them. What they seem to take for granted is that the supplier wants to sell -- and that they don't need to talk up the benefits.
Some even see it as a weakness to have to sell the proposition, or lack the sales skill and collateral to negotiate.
In public sector procurement, the trend seems to be towards blind bid tenders to an extremely demanding brief. The assumption is that the best suppliers want to bid for the business, and understand the benefits of winning the contract. As a service provider myself, I make a choice not to engage with public sector tender processes. It simply isn't worth it. I know that if the process makes me opt out, it's likely to do the same to others.
There's no consideration of what adds value for the supplier, what would attract them to improve their offering.
All of these aproaches are based on leveraging the buyer's negotiating power, and creating competition within the supplier base. None of this is wrong -- but it's only part of the picture. And it means buyers diminish their chances of getting the best supplier.
The best buyers spend time getting into the suppliers' heads and actively focus on changing the perceived value that suppliers ascribe to the deal.
This starts long before the actual negotiation using a variety of channels and contacts. This is the selling side of deal-making, and it's about creating that attraction.
Here's a scenario where the supplier's a manufacturer of finished goods and the buyer's a retailer.
That manufacturer could sell direct to consumers, through mail order, through the internet or, like Avon, through their own proprietary sales force. A retailer offers them a service: to augment or to outsource this capability, for a slice of the action. But how big should that slice be?
Here are some questions buyers can consider:
- What can you offer: how differentiated are you from other channels in the supplier's mind?
- What's the strategic value of being seen in your environment?
- Can your teams and marketnig channels build awareness for a supplier's products and services?
- What about development insight and data -- how can you use your closeness to the customer to benefit a supplier?
- Can you absorb some risk on new product development and launch?
The buyer might seek benefits in other ways too. Using a sales mind-set, they may choose to get suppliers more deeply hooked in to their own customer agenda, prioritising their own specific consumers by sharing their customer insights with more clarity and frequency than the other channels, differentiating themselves from other retailers and increasing supplier loyalty.
The same thinking can be applied to a wide range of buying areas, beyond simply retail. It's a mindset shift that enables the best buyers to get the very best supplier deals in the market place, not just because they exploit their balance of power, but because they actively sell their route to market, with features and benefits, understanding the suppliers' needs, and looking beyond the next round of negotiation.
Finding buyers that not only get this, but actually do it, is rare. Let me know if you're one of them -- or have other tips for improving buyer-supplier relationships.