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Business Performance Benchmarking for Sales and Procurement
This is the transcript from a recent interview with Donal Daly, CEO of Altify. To listen to the podcast on BMP Radio, click here.
Kelly: Hello, and thank you for joining us today. This is Kelly Barner, Editor at Buyers Meeting Point. Today I would like to welcome Donal Daly. Donal is the founder and CEO of Altify, a provider of enterprise sales methodology for enterprise database sales organizations. He is also the author of the Amazon #1 best seller "Account Planning in Salesforce" and the recently released "Tomorrow Today: How AI Impacts How We Work, Live, and Think."
Altify recently opened the response period for the 2017 Business Performance Benchmark Study and Buyers Meeting Point is one of a carefully chosen group of partners working to encourage participation, as well as learning from the study's results. The study, which is now open through December 21st, will examine revenue considerations, top priorities, and the metrics that we can use to gauge progress. All participants will receive a copy of the report, including results, analysis, and insights. It only takes 10 minutes to share your opinion, and I will make sure to share a participation link on today's Blog Talk Radio episode page. So, Donal, first of all, thank you so much for joining me today.
Donal: Hi Kelly. Nice to be here. Thanks for having me.
Kelly: So, before we actually start discussing the study that is open now, one of the things that I think is important for my particular listening audience, which is primarily made up of procurement and supply chain professionals, is to know that you have studied buyer-seller relationships in the past. So, if you could just start us off by sharing a few thoughts about why that is such an important relationship for us to understand in today's business world.
Donal: Well, I think that any relationship, personal or professional, works well when there is a mutual understanding from both sides as to what the other side is trying to achieve. And I think sometimes the stereotype of buyers battling sellers and sellers battling buyers gets in the way of that. And the reality is that when buyers and sellers sit at the same side of the table with shared goals and shared objectives, the buyer gets more value. The seller, by extension, gets more value, and there's lots less friction and wasted effort. And as we looked at that, it's interesting that the audience that we want to care about, because we care about both, but that we mostly serve, are the sellers.
And we think that's part of our role is to help the sellers understand. The buyers aren't really bad people. Buyers are good people, and all they're trying to do is solve business problems. If the seller can help the buyer solve the business problem, then everyone wins. And from the buyer's point of view, we think it's important that, in truth, most sellers actually care about the value that their customer gets and cares about the long term relationship and understands that if they do a good job, then they're likely to get invited again. And that's part of the long term mutually beneficial relationship, so that's why we went and looked at both of those sides.
Kelly: And I think it actually makes a lot of sense. Especially then as we transition to the study that's open now because it is aimed at a wide range of respondents. One of the first things you ask is, "What function are you in?" So it doesn't presume that everyone participating is in sales. It includes a range of organizations: operations, marketing, finance, IT, so other people are certainly participating in this. Because corporate objectives are corporate objectives, and although we all have our part to play, at the end of the day, we are more aligned, or, in fact, should be more aligned than perhaps we have thought we were in the past. And there are a couple of questions in my reading of the survey that I actually think will be of particular interest to the supply chain community.
So, for example, you ask about the disruptions that companies expect in their businesses in the coming year, and the list of options includes political change, global terrorism, Brexit, currency volatility, and digital transformation. So, to me, these are all very hot button issues within the supply chain community. Given your perspective in sales and business development, where did these choices come from, and do you, personally, have sort of any expectations around which of these are going to come back as being of the most concern in 2017?
Donal: So, to answer the first part of the question, these are things that I hear from my customers. They're worried about instability. Everyone's worried about instability. Currency is a huge issue. You know, the euro dollar today is about $1.06 to the Euro, and if you're a sales person working for a U.S. company selling into Europe, then your targets just went up by 10% in the last 3 months. If you're a buyer, depending on which currency you're buying in, your goods just got more expensive. So, how do you think about that 10% change, which in many businesses, that's your margin, right? So, how do you think about that, and these are things that people are worried about.
So, our customers have said, "We're going to have currency issues." So what does that mean for our pricing plans? Do we do price increases? If we're on the other side of the divide, do we do price decreases? How does that work? These are things we hear from the customers. I think currency volatility is a huge issue for any global company. I think that digital transformation, and I suppose I'd pair that maybe with the second one that's on that, which is AI and other automation technologies. They're fundamentally changing how all knowledge workers work, whether they're sellers, or buyers, or customer service people, or marketing people.
They've fundamentally changed the dynamics of business, and things happen much more differently, so both the market side of the business and those in the back office who are buying have to be conscious of what's happening in that space, and what they might be able to do to mitigate risk or to take advantage of any opportunities that those changes bring.
Kelly: It’s interesting that you talk about digital transformation and AI as being among the most disruptive factors in the coming year partially because one, or I should say several, of the following questions actually go on to talk about trust. So, in a world where we're looking at more and more smart machines, automation, and other non-human elements, you've asked several questions about the role of trust. So, why is trust, in today's environment, something that individuals and organizations, some of which might mistakenly dismiss it as a soft issue, why is it so critical to study from a business growth perspective?
Donal: So, I think that any business relationship, fundamentally, is based on trust. Whether that trust is garnered physically or virtually doesn't really matter, but I think that you're inclined to want to do business with people that you trust, with companies that you trust. And the challenge in the digital transformation world is that, in many cases, you have far less transparency than you would have had before. The machine will give you an answer, and you don't really know why, and there's no one to ask.
So, I think it's incumbent on people who are embarking on digital transformation strategies or leveraging technology to be cognizant of the fact that if the machine gives an answer or points in a direction, that you need to bring your customer. And if you're a buyer your customer might be your internal stakeholder, if you're a seller your customer might be the buyer. You need to bring them on the journey and assure that the technology doesn't say, "Here's the answer, and I'm not going to explain it." Or it's not going to make a commitment that the human side of the equation can't deliver on, and I think trust is the essence of the value equation that happens between any two parties. And we have a view that that's just increasingly important and much easier to ignore in an automated world.
Kelly: Now, given that the focus of the study is on performance benchmarking, and granted I'm saying this as someone who's not in the sales world. My perspective on sales is that it's very straightforward. Performance benchmarking is about growing your addressable market. It's about hitting your sales targets. It's about retaining your existing customers and leveraging those relationships into increased business with them, as well as with other companies in the same space.
On the procurement side of things, performance benchmarking is less clear, and historically, we have driven for savings. And I apologize to anyone in the sales community that's listening to this because it's probably giving you a sick feeling in the pit of your stomach. But, the truth of the matter is we've been driven towards getting savings, bringing spend under management, as we say.
But as even procurement recognizes that we're going into a more collaborative, relational, trust-based business. Well, we're not just trying to get the numbers down, we're trying to get the value up. Any thoughts, from a broad business perspective - because I don't want to pigeon-hole you into having to just talk about this from a procurement perspective. But for anyone in the company that is trying to switch their performance perspective to something that's more oriented around value than raw dollars, can you offer up any thoughts or advice about how to make that shift, or how to keep your focus on the goal and not slip back into those old habits that cause us to focus more on the dollars and cents, and less on the value and the actual health and performance of the business?
Donal: Yeah, so, it's a core question, and it's kind of the long game question, and I'm going to talk about business professionals, whether it's procurement or whether it's sellers or anybody else. So, it's kind of the long game question. I think, increasingly, we're in a subscription economy, right? So, people are becoming conditioned to the fact that their supplier and in procurement, you know, if I'm a business stakeholder, you're my supplier, right? And I need to be sure that you as my supplier have, in fact, my larger interests at heart. You might be measured today by the number of points you can get in a deal, but over time when...one of the things that I'd like to say to sellers is if you think about this, that the impact on a customer of a bad buying decision is typically greater than the impact on a salesperson of a lost deal, right?
So, if you as in procurement, right, make a bad buying decision that's driven purely by the price and not by the value, the impact on your business can be very significant. So, I think that if you are allowed by your stakeholders, because that's sometimes a challenge, right, that if you're allowed by your stakeholders to partner with them on what are the business objectives they're actually trying to achieve. What's the service level agreement they need? What are the critical success factors that they're looking to see in 30 days or 60 days or 90 days from their supplier? Then sometimes the, what is in some cases a singular focus on cost, is a false dichotomy.
And the procurement folks, I think, can deliver higher value to their stakeholders and their greater value overall in the business if they think about, "Okay, so what's the business impact of what I'm doing?" And part of that, in this kind of subscription-based economy, this relationship-based economy, it goes beyond just price.
Kelly: And I appreciate the compassion. Just what the cost is of making a bad buy. But it's encouraging to hear because it's absolutely true, and I think as a professional community, it's something that we are certainly struggling with because some of those bad buys that we've made have come with three or five-year commitments, and it's very difficult to get beyond that, right? When you're trying to build positive relationships internally, so that the business can run well.
Donal: Yeah, so, it's interesting, and there was an example just recently this week that one of our customers, who I'm happy to say has derived tremendous value from solutions that we provide, their sales organization, they implemented our self-replications and their business performance has increased dramatically. This is a very major company. And we spoke to them as that, "Okay, would you like to talk to us about that? Do an interview with us." You know, because we obviously wanted to amplify that, you know, because we live on our reputation. And our customer who, the business they called her, said, "Yes. I would love to do that. How could you do it? Because the more I help you, you help me. It's a long-term synergistic partnership."
He got shut down by his procurement people. True story earlier this week, and procurement people said, "But you can't do that." And he said, "Why not?" And they said, "Because next time we negotiate a deal, you've now put on record the fact that you're getting value, so we won't be able to squeeze them on price." Right? And he says...
Kelly: And that is so frustrating.
Donal: ..."I don't care." You know, and that doesn't help anybody, you know? We fully recognize and respect the fact that in many cases it's, of course, entirely appropriate that procurement gets the best deal for their business. But the best deal doesn't just mean squeeze 'em on price, you know. So, our business stakeholder, in this case, was strong enough and successful enough in his business to say, "Sorry. I'm going to go do it anyway, you know, but that's what...that practice, unfortunately, means that then people go, "Well, all procurement people are like that. They only care about, you know, squeezing price."
And many of the procurement folks that I have met don't. They go, "Let's figure this out." I have another example just recently dealing with a procurement organization, and they said, "The business wants us to do this deal with you guys. We don't actually have that much in the budget for this year, but let me show you what our budget looks like for the next year and a half. And can you help me structure a deal that fits within our constraints, meets our business stakeholders' needs, and that you can live with?" You know, so, by contrast, it was, "Let's figure out how we can do a deal that works for everybody." So, we're more inclined to try and figure out if we can focus on the value, focus on what people are trying to do, then I think everybody can actually win.
Kelly: I absolutely agree with you, and one of the other things that I should mention as we wrap up, given the idea of people needing to do things differently and think about things differently and get a new perspective, is that everyone who completes the study gets a free download of one of your books. And I don't want to unduly sway people, but given my reading, I would highly advocate that people download and read "Tomorrow Today."
Donal: Thank you.
Kelly: I think it's a very interesting look at AI and the role that's going to play in all of our lives, both professionally and personally. It also challenges any notions that people may have about what is possible now and in the long term, and it doesn't look like we have all that long to wait for disruptive change to come to our companies.
Donal, thank you so much for joining me today and sharing your thoughts on business and sales and procurement all wrapped up together.
Donal: Thank you, Kelly, and the more opinions we get from all facets of the commercial community, the more informed we all are on each other's perspective. So that's part of the reason for the study.
Kelly: Absolutely, and so I'm first going to thank everyone who has joined us today to listen, and I am second going to remind all of you to please participate in the survey between now and December 21st. Go ahead and submit a response, and then you'll get your free book download. You can also share today's episode with anyone in your network that you feel would benefit from the information. Thank you for joining us, and please do enjoy the rest of your day.