(This is a guest post by Shelley West of the Marketing Leadership Council, our sister program for heads of Marketing.)
Our second annual Sales and Marketing Summit, “Inside the Customer’s Purchase Decision,” took place in Las Vegas last week. Over the three-day event, I had the privilege to be a part of many fantastic presentations, events, and member conversations, all focused on arming Sales and Marketing professionals with the ideas, strategies, and tools to deal with the newly empowered B2B customer.
One presentation, in particular, offered a very unique perspective on the purchase process – our colleagues at the Procurement Strategy Council (PSC) offered us a peek behind the curtain at how procurement professionals view the world today. I have to admit, it felt a bit like I had snuck behind enemy lines. After all, it’s fair to say that many in B2B Sales and Marketing(including most of those in the room with me in Las Vegas) think of Procurement as price-haggling, value-killing, nickel-and-dimers. And that’s what we say when we are being nice.
But, as it turns out, from PSC’s point of view, there is actually some emerging opportunity for sales forces to work with (rather than against) Procurement to close more mutually beneficial deals.
Traditionally, Procurement has earned its keep through coverage (getting as much of the company’s purchasing under its control as possible) and compliance (ensuring as many purchases as possible follow a strict set of guidelines and rubrics designed to save money). Those two metrics are nearly maxed out though, both hovering at over 80% at last check for your average Procurement departments.
Things are changing in Procurement’s world too and they can no longer survive just by squeezing suppliers for a few additional percentage points of discount. They need new value drivers to continue to prove their worth.
One way forward, and one that PSC is actively recommending its members pursue, is through more sophisticated brand, product, and cost structure impact that requires deeper partnerships with suppliers. Procurement departments at the best companies are starting to seek out strategic alliances to influence things like product design, supplier-sourced innovation, process reengineering, and shared cost reduction strategies. One of PSC’s members has even reworked its employee compensation incentives to move away from dollars saved to instead reward boldness, new ideas, and creative partnerships.
It is true these evolved Procurement behaviors currently exist mostly in leading edge companies, but sales forces are starting to see more opportunities to inject some additional value back into deals and sell true solutions rather than unbundled products and services. For now, the onus is still going to be on Sales and Marketing to find, encourage, and even push for these types of alternative value creation. And the best way to do this remains teaching customers something new in a way that leads back to suppliers’ unique differentiators.
Have you come across this new breed of Procurement? What are some of your strategies for proving your (non-monetary) value to cost-conscious buyers? Share your ideas in the comments section below.
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