The question on how to sell best to B2B customers has filled many sales books over the years. Most sales theories are predominantly seller centric and approach this question often only from the salesperson’s perspective. The flipside, namely how the B2B customer buys has rarely been part of the conversation. But that very B2B customer has not been sitting idle. Quite the opposite. They have, over the past 40 years, invested heavily into optimizing their own buying approach, formalizing how they want to be sold to, managed through a dedicated internal business function – procurement. This article outlines the developments of this procurement function and discusses the implications it has for B2B sales methodologies. It raises the question whether procurement, with its processes and tools, has in fact formalized how to optimally sell to a B2B customer and is ultimately the next evolutionary step in modern sales theory.
Procurement now manages the customer’s buying journey. End to end!
40 years in the making, today, the most advanced procurement organizations control close to 100% of the expenditures of their businesses. That is 100% of another company’s sales revenues!
The seller’s counterpart in the sales process is less and less the actual end user of the product or service they offer. It is the professional buyer rather that takes over the customer’s buying journey, serving as intermediary between the salesperson and internal stakeholders, independently and at times fully autonomously taking the respective decisions to buy or not to buy.
Why are companies doing that, “shielding” the supplier from interacting with the customer’s internal stakeholders?
A ballooning number of suppliers to manage, combined with an unsustainable cost structure, had many businesses realize the ineffectiveness of allowing their organization to freely buy and select suppliers without a methodic approach. Procurement emerged effectively as a professional skill and steadily reached far beyond the mere task of controlling expenditures and cutting costs. Many business leaders realized that those organizations that invested in a procurement function as an enabler and facilitator between external supplier capabilities and their own business requirements, gained competitive advantage and ultimately could grow market share faster compared to those that did not [1-7].
Today’s leading procurement teams have streamlined their customer‘s buying journey, which was mainly perceived, on both sides of the negotiation table (by the customer themself and the supplier), as a chain of unproductive, reiterative steps with loose ownership and accountability structures (see figure below).
Procurement was effectively tasked to assume ownership of this buying journey, responsible to structure decision making and facilitating stakeholders through guidance and the application of its own process. Today the buyer’s involvement spans from problem identification, the inception point of each buying journey, to contract execution and hence solution implementation, end-to-end (figure below, process in pink).
Buyers are tasked to identify and challenge internal business needs (1). They consult the internal stakeholders on external capabilities (2). They deliver the required solutions in the most efficient way possible by linking and leveraging the best external suppliers with the company needs (3-6). Procurement provides a service and plays the role of a commercial consultant to the business.
As a result the buyer has become in many companies the ultimate decision maker, determining where and with whom company monies are spent, advocating for or against certain supplier capability.
What does this mean for the sales function today?
The immediate implication is that sellers need to change their focus and attitude fast!
Despite these developments within the procurement discipline over the past decades, there is still a certain myopia amongst most modern sales methodologies, suggesting avoiding procurement as much as possible, recommending keeping it at arm’s length at best.
The opposite should be the case. Instead of shunning procurement, sales teams should reach out to the B2B buyer, supporting them proactively in their processes, benefiting from this new buying journey coordinator.
Procurement can be the ultimate sales enabler for a supplier in its role as influencer of business needs, of demand and product specifications.
Buyers drive decision-making processes and initiate projects with multiple internal stakeholders.
Its role as a commercial single point of contact offers new suppliers, that potentially were previously disregarded, an opportunity to win business for the first time without needing to spend resources on assessing where the decision-making power resides.
It equally allows incumbent suppliers to reach a much broader audience within the customer’s organization than ever before. It is in procurement’s self-interest to deploy great supplier capabilities across all business units in their organization. The buyer can serve as the internal advocate for the supplier, helping to sell their solutions to the various outlets in the business.
Most importantly, sales teams need to create a thorough understanding of this new counterpart in their sales process. What are the buyer’s approaches to managing the customer’s buying journey? How do they conduct their own procurement process? How do they build and maintain the relationship with suppliers? These and many other factors are crucial questions that suppliers need to consider to build winning B2B relationships.
Not all buying organizations are yet at that stage of managing all steps of the customer’s buying journey. Procurement is still transforming itself. Some teams have reached their desired end destination and others are determined to get there fast. Both factions know though what the future will look like and seek out those external business partners and sales teams that support them in their evolution to become that strategic, customer-centric buying team that their CFOs and CEOs demand.
The procurement function is here to stay and its influence will only further expand. Business leaders continue to put their company expenditures into the hands of procurement. The return on investment is just too great to be ignored with a ROI value of 10:1 according to a recent study by the Hackett Group [8]. Professionalization of procurement will only accelerate, enabled through the introduction of new technologies. The result is a fundamental revision in B2B relationship management, which requires the seller to rethink their sales approach.
What does this mean for the sales function moving forward?
The main implication for sales is yet another one. Could procurement even be the next evolution in modern sales theory?
Procurement’s process-driven approach to managing the B2B customer’s buying journey has ultimately led to the de-codification and methodization of how to best sell to a B2B customer.
With its procurement processes and underlying tools, the buying function has created and defined a method on how to optimally identify customer needs, how to best understand the market and explore external business solutions, how to find the perfect supplier product, and how to continuously extract value from the external business relationships. Ultimately, procurement has developed a formula, their strategic sourcing process, on how to best sell their supply chain solutions to their internal B2B customer, the user of the supplier’s product or service. A methodical approach that facilitates and streamlines the customer’s buying journey. Appreciated and valued by the company stakeholder.
This might be an affront to many sales theorists and practitioners out there who would rather stick to traditional sales techniques that seem to have worked in the past. But sales excellence, the future of sales, clearly goes beyond just mastering questioning techniques. It is more than perfecting influencing and negotiation skills. It requires more than being an expert in countering tactics or how to handle objections and rejection. Sales excellence is that very art of building winning business relationships with the customer holistically. Relationships that last and that are characterized by mutual trust.
The procurement function can be that place to turn to, to learn how to build these close B2B relationships with the customer methodically and successfully. Buyers, together with their stakeholders, the customer organization, elaborated how they want to be sold to, how a business problem is translated into demand for a supplier product or service most effectively. Their approach, tools and processes can be reapplied by sellers and become the guiding point to true sales excellence.
As counterintuitive as it might sound, procurement could be the natural evolution in sales. Which sounds more like a revolution for some.
References:
- “A next-generation operating model for source-to-pay”, McKinsey & Company, Samir Khushalani, Edward Woodcock, 2018
- “Pursuing purchasing excellence in chemicals”, McKinsey & Company, Raffaele Carpi, Marco Moder, Frank Plasschaert, and Marco Ziegler, June 2016
- “Shifting the dial in procurement”, McKinsey & Company, Tarandeep Singh Ahuja, Yen Ngai, May 13, 2019
- “Why Investing in Procurement Makes Organizations More Resilient”, Rafael Ramirez, Ciaran McGinley, Steve Churhchouse, HBR, June 17, 2020
- “The future of procurement. One survey, two perspectives”, Oxford Economics, 2015
- “Leading Procurement Strategy: Driving Value Through the Supply Chain.”, Dr Carlos Mena, Martin Christopher, Remko van Hoek, KoganPage, 2015
- “Realizing the power of procurement”, Kearney, Mike Hales, Yves Thill, John Fiorentino, Sonali Agarwal, 2020.
- “Raising the World-Class Bar in Procurement Through Digital Transformation”, The Hackett Group, Laura Gibbons, Christopher S. Sawchuk, Srinivasa Rao Dabbera, June 2018
