vlerick sales forum & deloitte study: sales & procurement: friends or foes?
DESCRIPTION
The key finding of a recent Harvard Business Review article that Solution Selling was dead, came as a rude wake-up call to a lot of companies that were just beginning to embrace the solution selling concept. One of the key suggestions from that article suggested that salespeople work together with the procurement team at the customer to make sure that the procurement professionals actually “internally sell” the salespeople’s solution. This is quite surprising, considering the fact that traditional sales models encourage sales people to go around the procurement organization, which in turn is not appreciated by the buyers. But is this still really the reality on the field- Are sales and procurement enemies or can they actually be friends. Together with Deloitte Belgium the Vlerick Sales cluster set out to try and understand the current feelings prevalent amongst salespeople and their procurement counterparts. They also focused on internal issues both for sales and procurement within their own organizations and how this affected the relationship outcomes.TRANSCRIPT
SALES & PROCUREMENT: FRIENDS OR FOES
27 FEBRUARY 2013
3
On the relationship between Sales and Procurement
4
Going beyond the clichés
Walking in each others shoes
Sales as opportunists | trying to close a sale even if not in my interest
Procurement as the dark side only focused on getting the most out of
you | to avoid when possible
ABOUT THE EVENT
6
WHY DELOITTE & VLERICK
• Joint ambition to grow the Sales network and profession in Belgium
• Marketing community strong developed in Belgium, Sales community not
• Ambition:
• Center of expertise around sales
• Backed up by academic research and industry experience
• Professionalizing and strengthening sales capabilities
• Creating strong sales community
• Through focus groups, events and other activities
7
ON THE RELATION BETWEEN SALES AND PROCUREMENT
Survey launched in October – November 2012
To bring clarity on a number of topics:
• Overall state of the relationship?
• Main challenges and frustrations?
• Opportunity to move to ‘win-win’ collaboration?
• Concepts like ‘value selling’ or ‘solution selling’ are widespread, yet also top of mind?
• Is Sales aware of Procurement’s expectations and vice-versa?
• Are both parties backed up by appropriate internal support?
WHAT DID WE DO?
WE LOOKED AT RELATIONSHIPS
9
sales procurement
Overall understanding, perceptions & frustrations
Internal challenges
Internal challenges
• Procurement management
• End-users such as engineering, R&D
• ICT • Finance • …
• Sales management • Marketing • Production and
supply chain • Finance • …
32%
active in procurement
54
respondents
BROAD SET OF RESPONSES
10
68%
active in sales
113
respondents
WHO ARE OUR SALES PROFESSIONALS?
11
Sales management / Sales executive
58,4%
Account manager / Key account manager / Sales representative
29,6%
Inside sales 1,6%
I don’t have sales responsibilities 10,4%
Products 48,8%
Services 36,8%
Solutions 14,4%
Commodity 51,2%
Specialty 48,8%
WHO ARE OUR PROCUREMENT PROFESSIONALS?
12
Procurement / supply chain executive (CPO)
18,8%
Procurement / supply chain manager
31,3%
Buyer / senior buyer 50,0%
I don't have procurement responsibilities
0,0%
Commodity 43,8%
Specialty 56,3%
Products 59,4%
Services 28,1%
Solutions 12,5%
OVERALL RELATION
STILL LARGE DIFFERENCES IN PERCEPTION OF OVERALL RELATION
14
35%
35%
27%
3%
17%
63%
20%
0%
0% 10% 20% 30% 40% 50% 60% 70%
Combative
Cooperative
Partnership
Super Collaboration
Procurement Sales
RELATIONAL AND BEHAVIOUR
WE LOOKED AT VARIOUS BEHAVIORAL ASPECTS
sales procurement
Scoring behavioral criteria on importance and
performance | assess gap Internal
challenges Internal
challenges
• Procurement management
• End-users such as engineering, R&D
• ICT • Finance • …
• Sales management • Marketing • Production and
supply chain • Finance • …
SALES BEHAVIORAL ASPECTS STRONG ALIGNMENT ABOUT WHAT’S IMPORTANT …
Importance
Sales Proc.
Deliver on promises 4,5 4,4
Understanding the customers' business challenges 4,3 4,1
Efficient and proactive communication by sales 4,2 4,0
Long term, close and personal relationships 4,2 3,7
Sharing of benefits 3,9 3,7
Providing new insights 3,9 3,7
Generating performance improvements 3,8 3,8
Exchange of company information 3,7 3,9
Insights on total cost of ownership 3,6 3,8
Transparency of product/service offerings 3,5 3,8
17
• Overall sales and procurement are pretty well aligned on what’s important • 3 important foundations for a strong relation • No alignment on importance of building long term relations • Remarkable low score on total cost of ownership
SALES BEHAVIORAL ASPECTS … YET LARGE GAPS IN PERFORMANCE EVALUATION
18
Importance Performance
Sales Proc. Sales Proc.
Deliver on promises 4,5 4,4 3,8 3,0
Understanding the customers' business challenges 4,3 4,1 3,6 3,1
Efficient and proactive communication by sales 4,2 4,0 3,6 2,7
Long term, close and personal relationships 4,2 3,7 3,9 3,1
Sharing of benefits 3,9 3,7 3,5 2,6
Providing new insights 3,9 3,7 3,4 2,8
Generating performance improvements 3,8 3,8 3,5 2,7
Exchange of company information 3,7 3,9 3,4 3,0
Insights on total cost of ownership 3,6 3,8 3,2 2,4
Transparency of product/service offerings 3,5 3,8 3,4 2,6
Average performance 3,5 2,8
• Yet, significant gap in terms of performance evaluation • Largest gaps in ‘delivering on promises’, ‘communication’, ‘long relationships’
and ‘benefit sharing’
SALES BEHAVIORAL ASPECTS WHAT SHOULD SALES DO?
19
IM
PO
RTA
NC
E
GAP TO BRIDGE
Fix it now
High Fives
We have bigger fish to fry
Tackle it later
• Ability to deliver on promises
• Efficient and proactive communication
Good understanding of the customers' business challenges
• Focus on sharing benefits with the customer
• Providing insight in the total cost of ownership
• Transparency of product/service offerings
• Exchange of company information
• Building long term, close and personal relationships
PROCUREMENT BEHAVIORAL ASPECTS AGAIN ALIGNMENT ABOUT WHAT’S IMPORTANT …
20
Importance
Proc. Sales
Providing clear and detailed requirements 4,1 4,2 Efficient, clear and timely communication 4,1 4,1
Open communication about the selection process 3,9 4,0 Focus on aligning both businesses and sharing benefits 3,9 3,9
Focus on generating top line performance improvements 3,9 3,8 Emphasis on long term personal relationships 3,8 3,9
Providing performance follow-up and feedback 3,8 3,8 Exchange of company information 3,7 3,9 Supporting after sales follow-up 3,4 3,4
• Strong alignment on what’s important and what’s not. • Communication, transparent selection and clear requirement are most
important for the relationship • Aftersales activities are considered as not that crucial in the relationship
PROCUREMENT BEHAVIORAL ASPECTS
21
Importance Performance
Proc. Sales Proc. Sales
Providing clear and detailed requirements 4,1 4,2 3,6 3,2 Efficient, clear and timely communication 4,1 4,1 3,6 3,3
Open communication about the selection process 3,9 4,0 3,6 3,0 Focus on aligning both businesses and sharing benefits 3,9 3,9 3,3 2,8
Focus on generating top line performance improvements 3,9 3,8 3,4 3,2 Emphasis on long term personal relationships 3,8 3,9 3,4 3,1
Providing performance follow-up and feedback 3,8 3,8 3,3 2,9 Exchange of company information 3,7 3,9 3,2 2,8 Supporting after sales follow-up 3,4 3,4 2,8 2,8
Average performance 3,4 3,0
• Procurement evaluates own performance better than sales. Yet, gap is smaller compared to sales behavioural aspects
• Biggest gaps are ‘communication of selection criteria’ and ‘sharing of benefits’
PROCUREMENT BEHAVIORAL ASPECTS WHAT SHOULD PROCUREMENT DO?
22
IM
PO
RTA
NC
E
GAP TO BRIDGE
Fix it now
High Fives
We have bigger fish to fry
• Providing clear requirements
• Efficient, clear & timely communication
• Open communication about selection
• Sharing benefits
Focusing on business impact by searching for the means to generate bottom line or top line performance improvements
• Emphasize on long term personal relationships
• Provide performance follow-up and feedback
• Exchange company info
Supporting after sales follow-up and participating in satisfaction monitoring initiatives
Tackle it later
FRUSTRATIONS AT BOTH SIDES
FRUSTRATIONS AT BOTH SIDES
24
Procurement Sales
1. Limited information sharing / Poor communication
2. Procurement is not seen as the first point of contact
3. Opportunistic behaviour
Sales Procurement
1. Only focused on cost reductions and price negotiations
2. Lack of strategic insight / Lack of knowledge of business needs
3. Procurement reluctant to give access to other stakeholders
Largest impact on relation
INTERNAL CHALLENGES
INTERNAL CHALLENGES
26
sales procurement
Overall understanding, perceptions & frustrations
Internal challenges
Internal challenges
• Procurement management
• End-users such as engineering, R&D
• ICT • Finance • …
• Sales management • Marketing • Production and
supply chain • Finance • …
LARGE MUTUAL UNDERSTANDING OF INTERNAL CHALLENGES FOR SALES
27
Sales say: Procurement thinks:
Top 4: 1. High administrative burden
2. Focus on short-term objectives
(e.g. revenue) rather than long-term opportunities
3. Internal alignment between departments on situation of customer
4. Internal misalignment, communication and company politics (e.g. regional vs global, sales vs marketing)
Top 4: 1. Focus on short-term objectives (e.g.
revenue) rather than long-term opportunities
2. Finding your way in a complex organization (e.g. different products, departments)
3. Internal alignment between departments on situation of customer
4. Internal decision power of sales department to live up to customer expectations
SAME FOR PROCUREMENT CHALLENGES
28
Sales thinks: Procurement says:
Top 4: 1. Too much focus on cost reduction
instead of TCO or added value
2. Convincing internal client of new
suppliers
3. Internal acceptance as value-adding partner
4. Proving the added value to the
business
Top 4: 1. Internal acceptance as value-
adding partner
2. Convincing internal client of new
suppliers
3. Proving the added value to the business
4. Visibility of what comes up from the business
CONCLUSIONS
© Vlerick Business School
A DUAL PERSPECTIVE: ANECDOTAL EVIDENCE
SALES CONCERNS
Commoditization
Ever extending sales cycle times
Managing the right Go-to-Market Strategies
PROCUREMENT CONCERNS
Too much “black-box selling
Increasing accountability
Managing transaction costs
30
Is SOLUTION SELLING really dead?
OVERALL FINDINGS
31
sales procurement
Overall understanding, perceptions & frustrations
Internal challenges
Internal challenges
• Value-adding partner • Demonstrating added
value • Convincing internal
client • Internal visibility
• Too much focus on short term
• Internal alignment on customer
• Internal misalignment, communication and company politics
Actions Sales: • Deliver on promises • Efficient and proactive
communication
Frustrations wrt Procurement: • Focus on cost and price • No access to other
stakeholders
Actions Procurement: • Clear requirements • Communication • Open communication about
selection • Sharing benefits
Frustrations wrt Sales: • Information sharing /
communication • Not first contact • Opportunistic
WRAP-UP AND CONCLUSIONS
You are bound to work together, so:
1. Start engaging with each other before, during and after formal transactions – will increase value of both sides
2. Step in each-other’s shoes – understand each-other’s objectives and have relevant conversations
3. Do what you say and say what you do
32
Deva
THANK YOU!
VLERICK BUSINESS SCHOOL DELOITTE