I plead guilty to enjoying a cold beer or two, and I’ve watched with amazement as the decade-long bull market in the craft beer industry shows no signs of abating.
When you speak with sales training professionals with the regularity that I do, it’s only natural to develop some insights about the recent trends affecting our industry. As impartial analysts, however, my firm, ES Research Group (ESR), relies on empirical data to draw real conclusions. So we conduct research.
Our individual observations can be fairly accurate, but there are times when the real numbers surprise us.
This past fall, ESR and global performance improvement firm BayGroup International conducted a comprehensive survey on the “State of Sales and Purchasing.” Our goal was to better understand how sales professionals perceive procurement within their customers’ organizations and how procurement professionals perceive sales within their suppliers’ organizations. We asked about what they have experienced over the past few years and what lies ahead. A total of 239 “buy side” and 352 “sell side” negotiators participated, and they were each asked exactly the same questions.
The results of the survey were remarkable in a number of ways, not the least of which was the level of agreement between the two sides. The data makes very clear that the relationship between buyers and sellers has changed dramatically in the last five years and is still changing. The negotiation process has become increasingly complex. Buyers now have the upper hand. Both sides see a need to move away from the traditional understanding of negotiation as a competitive event and toward greater collaboration — a dance, if you will, and everyone is learning new steps.
In a recent ESR webinar about the research, BayGroup International’s president, Ron D’Andrea made the observation that procurement has now achieved a “cabinet-level position” and, charged with the responsibility of creating economic value for the buying company, is driving real change.
“They are looking to ensure there is a process in place and the process is followed. As a result, sellers have become more proactive about understanding the buying process and planning how to engage procurement much earlier,” D’Andrea said.
Supplier reduction programs have also had an impact, requiring sellers to work in new and creative ways so they can better meet buyers’ needs while continuing to generate the same level of profitability and revenue for their own organizations. “When there are fewer suppliers, those that are chosen will have much greater opportunity,” D’Andrea noted. “They should be working on strategies to help procurement people meet their own needs and the needs of the organization.”
Both buyers and sellers perceive themselves to be skilled negotiators, but also recognize the skill of the party on the other side of the table. Each recognizes that their negotiation support system has areas of weakness, including leveraging technology and systems and implementing effective post-negotiation debriefing processes.
The survey data also revealed some stark disagreements. Buyers, for instance, strongly favor RFP processes, while sellers tend to see the RFP as a barrier that blocks their ability to demonstrate value to decision-makers. Nearly half
(47 percent) of buyers favor e-auctions, while sellers fear that the growing prevalence of online auctions commoditize their offerings and reduces the buyers’ understanding of its value.
Over the past five years, the sales process has undergone a major transition and we are just beginning to understand the implications. Clearly there’s no going back. As buyers and sellers continue to find ways to create economic value for their respective organizations, and to manage the tension that is an inherent part of any negotiation process, both
sides have something to gain from understanding the other’s mindset, encouraging collaboration among all of the stakeholders early in the process, and learning the “moves” that will help each achieve their desired results — and the dance begins again.
ES Research Group’s in-depth industry research and independent evaluations of sales training companies helps companies make the right decisions about sales training programs. Learn more at esresearch.com.