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The Point by Buyers Meeting Point

“The Sales Guy”: Collaboration v. Information Asymmetry (Part 1)

 

Buyers Meeting Point attends many sales AND procurement webinars/webcasts. One of the interesting things about seeing both sides is that you start to notice trends. Sometimes those trends are aligned, and sometimes… well, read on and see.

 

Buyers Meeting Point attends many sales AND procurement webinars/webcasts. One of the interesting things about seeing both sides is that you start to notice trends. Sometimes those trends are aligned, and sometimes… well, read on and see.

Our next few contributions from The Sales Guy will take us through a comparison of current perspectives on interaction – the sales perspective and the procurement perspective.

The predominant focus in sales webinars right now is on achieving collaboration with their customers and prospects.  Collaboration might mean brainstorming on product development, discussing operational issues that a solution could better address, or the creation of a strategic roadmap for the function(s) in question.  Regardless of the exact outcome, the principle is the same: become a trusted advisor and your solution will indirectly sell itself.

On the procurement side of things, collaboration is more an issue of visibility - particularly with regard to information transparency that might get buying teams closer to a pure economic understanding of the market they are buying from. I recently attended a CombineNet webinar that featured Jason Busch of Spend Matters talking about spend volatility. He put forth the idea that since procurement can NEVER achieve full pricing transparency, we should pursue "information asymmetry" or doing our best to get more information than our suppliers have before entering a negotiation.

So our questions to The Sales Guy were:

  • How do you feel the procurement/sales dynamics as described above will interact/collide?
  • What is a sales perspective on market pricing visibility and the potential effectiveness of "information asymmetry" (assuming it can be attained)?

 

From The Sales Guy…

How will the procurement/sales dynamic interact or collide? 

I expect both sides are seeking "information asymmetry" since they consider it a negotiating advantage.  Sales people will not disclose detailed cost information on their products/services or weaknesses in their offering compared to competition.  Procurement will not share every detail of their need for the products/services under negotiation.  Realistically we hope to minimize the information imbalance so that both parties feel they are receiving fair value in return for their contribution.  By lowering the barriers between the parties we create a more open relationship and increase the likelihood of a mutually beneficial long-term business relationship.  If a supplier brings a differentiated solution to a customer that is a critical need, both sides must trust the other.  If not that relationship will eventually deteriorate to the detriment of both parties.

 

What is a sales perspective on market pricing visibility and the potential effectiveness of "information asymmetry"?

Market pricing is a difficult concept for sales people offering unique or differentiated solutions.  When a prospective customer attempts to compare supplier A versus supplier B in a spreadsheet comparison (often referred to as "column fodder) the savvy sales person will circumvent this process and seek a higher authority to identify the customer's need.  Solutions oriented suppliers will explain their offerings are quite different from the competition's version.  Therefore an Excel exercise will not give the customer relevant information.  What is more useful is an open discussion that identities the needs or challenges of the customer and determines if the supplier's solution can remedy these issues.  Once procurement has determined the relative value of suppliers' offerings only then can the economic comparison take place.

The potential effectiveness of "information asymmetry" rests in its ability to keep customer and supplier from getting too comfortable in their position.  We do not want to see information held so tightly there is a lack of understanding on either side.  That will eventually lead to one or both parties failing and resultant damage to the working relationship.  Both sides of the table should feel they are trusted but neither side should feel they are in a dominant position.  We all must feel we are competing for our business every day; that's what drives improvement and productivity gains.

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Join us next week when we look further into the idea of differentiation from a sales perspective and how that relates to procurement’s efforts to draw all possible solutions into an ‘apples to apples’ comparison.

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Tuesday, 20 November 2018

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