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Sales; Value Quantification; and the Power of Procurement
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Sales; Value Quantification; and the Power of Procurement

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A summary of what's happening in the world of selling and what leading organisations do differently to influence procurement

A summary of what's happening in the world of selling and what leading organisations do differently to influence procurement

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  • Finding resources can be difficult but volatile markets offer great opportunities to achieve exponential changes in market share. As this quote from JFK says, be aware of dangers but recognize opportunities. When we work with companies we recognise that you understand your business in great detail…but that sometimes means that you get too close to the detail and don’t spot wider opportunities or find you are able to take a different view. This is how having a different perspective or trying different approach can help. So let’s look at my first recommendation.
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  • The old models of selling are dead. Methodologies developed in the 1970s and 1980s are no longer effective in today’s environment. Let’s look at what has fundamentally happened Purchasing has become a very sophisticated operation: buyers are far more commercially focused and astute. Processes such as strategic sourcing and category management have transformed the purchasing function from a back office role into a core driver of bottom line profitability. The world of selling has changed significantly within a very short timescale.
  • Key Points Sellers that merely communicate information are redundant Buyers evaluate their options long before sellers know they are being considered The internet has revolutionised how companies identify potential suppliers. Today, buyers evaluate their options long before the seller even knows they are being considered. The purchasing department and executive decision-makers are better informed, better prepared and more demanding than ever before. Sales representatives are engaged later than ever in the buying process and their first point of contact with the customer is often the competitive bidding and request for proposal (RFP) stage. Compounding the seller’s fate, access to executive decision makers is often blocked at this point of the process. This lack of engagement and insight into the customer organisation has a massive impact.
  • Information technology research firm IDC suggests that 90% of all buying decisions now require a formal Return on Investment (ROI) business case. Without an ROI approach, soon you will have no business . Customers are becoming more sophisticated so a sophisticated sales person is needed to manage the change.
  • Traditional question-based sales techniques are no longer sufficient for success. Sales people that merely uncover customer problems and then communicate features and benefits are effectively redundant. Most organisations have invested in traditional sales training but, with the rise in the power and influence of purchasing and the economic buyer, traditional question-based sales techniques are no longer sufficient in driving sales performance. The leading organisations are transforming their sales teams to understand the new world of purchasing, to sit in buyers’ shoes and truly understand what value means to the customer. ========================================================== Almost everybody in selling has been taught about the difference between open and closed questions – these classic questions may work in small sales but not in major sales. Giving benefits – show how the features of your product or service have no link to success in large sales. Objection handling – you’ll all know about some standard objection handling techniques – such as clarifying or rewording the objection – but contribute very little to sales effectiveness in large sales – successful sellers focus on objection prevention. Closing techniques – closing techniques will lose you business in major sales. The traditional selling models work best in small sales – small = sales that can be completed in a single call. But this doesn’t work when selling one of these. High-level major sales – I’m going to briefly run through what makes a difference:
  • The sales challenges uncovered Over a three-month period in 2011, we asked 212 sales leaders from the Global 2000 about the biggest sales challenges they face. Research participants spanned 22 industry sectors: from Oil Super-Majors; to global Pharma and Magic Circle law firms. This research was then followed up to build in-depth case studies from three of the most successful companies, to identify and share what these successful companies are doing differently to address those challenges.
  • The biggest capability gaps Judging by the challenges identified in our global survey, a large proportion of Global 2000 companies are not engaged early enough in the decision making process. They are struggling to transform their sales reps from information providers to value creators. There is a clear lack of understanding of what value means through the customer’s eyes. Sellers do not attempt to engage with, and influence, procurement. From our interviews, it is clear that most sellers generally avoid procurement at all costs. There is also a real level of discomfort in creating meaningful sales conversations with economic decision-makers. While sales professionals do their best to get involved earlier in the sale; hold ROI discussions and use value quantification tools, addressing the capability gaps and implementing the right tools cannot take place at an individual level. [F1] . Sales coaching needs to be addressed at a management level and bid/no bid processes need to be refined. Looking at the upper right quadrant, what is startling is that most companies claim to have already achieved trusted advisor status; they speak the language of the C-suite and are experts in cross-selling. If this is true, then organisations must leverage these existing skills and capabilities. The data points – marked with – indicate the three worst performing areas: Developing a ‘value calculator’ tool to document actual value created; Building a financial case (ROI) for the decision-maker; Using a ‘lifetime cost of ownership’ sales strategy. Ironically, these are the three key areas that require the most attention to build a persuasive case for the new economic decision-maker. To be future fit, sales leaders must address these gaps. Failing at this stage will lose the entire deal. In the words of Paula Gildert, Procurement Director at Pharma giant Novartis: “If you can’t quantify your value – don’t be surprised at the failure of the buyer to recognise it.”   [F1] This sentence is a bit difficult to understand. I think ‘they’ needs to be explained
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  • It is clear that many sellers today simply do not possess the skills and commercial acumen to manage the necessary financial conversations. No longer able to rely solely on relationships, sellers must influence a new-breed of economic decision-maker. Organisational change is tough. A Fortune 500 medical company that supplies Pacemakers and Implantable Cardiac Devices knows they must influence the procurement teams and heads of finance, yet 98% of the marketing budget is still spent targeting traditional physician customers. It is a whole new world for sellers and many organisations are struggling to adapt.
  • .
  • “ Recession has positive effect on procurement’s profile” Every£1 saved is £1 to the bottom line – what’s wrong with concentrating on price? If you have an unsophisticated team of Rottweiler, all about price. Some Procurement make career on cost savings. When procurement is more informed – more sophisticated more interested in value proposition Its survey of 220 CPOs and global procurement executives found that 63 per cent felt the recession had had a positive effect on the role of procurement. Ninety-one per cent of respondents put cutting costs in their top three priorities for 2009; a higher figure than at any time since the survey started a decade ago. top three priorities over the next two years, however, there was less of an emphasis on reducing costs, with 45 per cent seeing enhancing the skills of those working in procurement as a priority. But 35 per cent thought improving operating efficiency would be a key focus while 32 per cent pointed to increasing the amount of spend under management. If you have an unsophisticated team of Rottweiler, all about price. When procurement is more informed – more sophisticated more interested in value proposition
  • “ Recession has positive effect on procurement’s profile” Every£1 saved is £1 to the bottom line – what’s wrong with concentrating on price? If you have an unsophisticated team of Rottweiler, all about price. Some Procurement make career on cost savings. When procurement is more informed – more sophisticated more interested in value proposition Its survey of 220 CPOs and global procurement executives found that 63 per cent felt the recession had had a positive effect on the role of procurement. Ninety-one per cent of respondents put cutting costs in their top three priorities for 2009; a higher figure than at any time since the survey started a decade ago. top three priorities over the next two years, however, there was less of an emphasis on reducing costs, with 45 per cent seeing enhancing the skills of those working in procurement as a priority. But 35 per cent thought improving operating efficiency would be a key focus while 32 per cent pointed to increasing the amount of spend under management. If you have an unsophisticated team of Rottweiler, all about price. When procurement is more informed – more sophisticated more interested in value proposition
  • “ Recession has positive effect on procurement’s profile” Every£1 saved is £1 to the bottom line – what’s wrong with concentrating on price? If you have an unsophisticated team of Rottweiler, all about price. Some Procurement make career on cost savings. When procurement is more informed – more sophisticated more interested in value proposition Its survey of 220 CPOs and global procurement executives found that 63 per cent felt the recession had had a positive effect on the role of procurement. Ninety-one per cent of respondents put cutting costs in their top three priorities for 2009; a higher figure than at any time since the survey started a decade ago. top three priorities over the next two years, however, there was less of an emphasis on reducing costs, with 45 per cent seeing enhancing the skills of those working in procurement as a priority. But 35 per cent thought improving operating efficiency would be a key focus while 32 per cent pointed to increasing the amount of spend under management. If you have an unsophisticated team of Rottweiler, all about price. When procurement is more informed – more sophisticated more interested in value proposition
  • “ Recession has positive effect on procurement’s profile” Every£1 saved is £1 to the bottom line – what’s wrong with concentrating on price? If you have an unsophisticated team of Rottweiler, all about price. Some Procurement make career on cost savings. When procurement is more informed – more sophisticated more interested in value proposition Its survey of 220 CPOs and global procurement executives found that 63 per cent felt the recession had had a positive effect on the role of procurement. Ninety-one per cent of respondents put cutting costs in their top three priorities for 2009; a higher figure than at any time since the survey started a decade ago. top three priorities over the next two years, however, there was less of an emphasis on reducing costs, with 45 per cent seeing enhancing the skills of those working in procurement as a priority. But 35 per cent thought improving operating efficiency would be a key focus while 32 per cent pointed to increasing the amount of spend under management. If you have an unsophisticated team of Rottweiler, all about price. When procurement is more informed – more sophisticated more interested in value proposition
  • “ Recession has positive effect on procurement’s profile” Every£1 saved is £1 to the bottom line – what’s wrong with concentrating on price? If you have an unsophisticated team of Rottweiler, all about price. Some Procurement make career on cost savings. When procurement is more informed – more sophisticated more interested in value proposition Its survey of 220 CPOs and global procurement executives found that 63 per cent felt the recession had had a positive effect on the role of procurement. Ninety-one per cent of respondents put cutting costs in their top three priorities for 2009; a higher figure than at any time since the survey started a decade ago. top three priorities over the next two years, however, there was less of an emphasis on reducing costs, with 45 per cent seeing enhancing the skills of those working in procurement as a priority. But 35 per cent thought improving operating efficiency would be a key focus while 32 per cent pointed to increasing the amount of spend under management. If you have an unsophisticated team of Rottweiler, all about price. When procurement is more informed – more sophisticated more interested in value proposition
  • “ Recession has positive effect on procurement’s profile” Every£1 saved is £1 to the bottom line – what’s wrong with concentrating on price? If you have an unsophisticated team of Rottweiler, all about price. Some Procurement make career on cost savings. When procurement is more informed – more sophisticated more interested in value proposition Its survey of 220 CPOs and global procurement executives found that 63 per cent felt the recession had had a positive effect on the role of procurement. Ninety-one per cent of respondents put cutting costs in their top three priorities for 2009; a higher figure than at any time since the survey started a decade ago. top three priorities over the next two years, however, there was less of an emphasis on reducing costs, with 45 per cent seeing enhancing the skills of those working in procurement as a priority. But 35 per cent thought improving operating efficiency would be a key focus while 32 per cent pointed to increasing the amount of spend under management. If you have an unsophisticated team of Rottweiler, all about price. When procurement is more informed – more sophisticated more interested in value proposition
  • “ Recession has positive effect on procurement’s profile” Every£1 saved is £1 to the bottom line – what’s wrong with concentrating on price? If you have an unsophisticated team of Rottweiler, all about price. Some Procurement make career on cost savings. When procurement is more informed – more sophisticated more interested in value proposition Its survey of 220 CPOs and global procurement executives found that 63 per cent felt the recession had had a positive effect on the role of procurement. Ninety-one per cent of respondents put cutting costs in their top three priorities for 2009; a higher figure than at any time since the survey started a decade ago. top three priorities over the next two years, however, there was less of an emphasis on reducing costs, with 45 per cent seeing enhancing the skills of those working in procurement as a priority. But 35 per cent thought improving operating efficiency would be a key focus while 32 per cent pointed to increasing the amount of spend under management. If you have an unsophisticated team of Rottweiler, all about price. When procurement is more informed – more sophisticated more interested in value proposition

Sales; Value Quantification; and the Power of Procurement Presentation Transcript

  • 1. Andrew Moorhouse 18 November 2011 Sales and Procurement SLA Discussion Slides
  • 2. Your current state?
  • 3. In a crisis be aware of the danger – but recognize the opportunity. John F. Kennedy
  • 4. B2B sales people are not hitting targets
    • “ Underlying performance challenges persist for the sales teams at many large enterprises.
    • Composing a high performance sales function, requires a deeper transformation of the fundamentals—from strategy and process to systems and talent.”
    2010 CSO Insights Percentage of sales representatives hitting or exceeding their quotas
  • 5. Recruitment and performance concerns
    • 25.1% - attrition rate of B2B reps
    • 71 % take at least six months to gain the skills they need when newly hired
    • 20% of sellers bring in 62% of the revenue
    • 25% do not generate enough profit to cover their expenses
    2009 Sales Benchmark Index
  • 6. Getting it right
    • World class organisations significantly outperform their competitors:
    • 42.52% 5-yr revenue growth
    • 24.95% 5-yr net income improvement
    • 41% higher market value (EV/EBITDA)
  • 7.  
  • 8.
    • The world of selling has hugely changed. What used to work ten years ago, is no longer working today.
    Neil Rackham. Professor and Author of SPIN Selling
  • 9. The internet revolution
    • Buyers can access 20x more information about you today than five years ago
  • 10. The shift in buyer behaviour 2010 IDC Research
  • 11. Traditional techniques are no longer sufficient
    • I can’t just uncover problems. My customers want me to tell them how to improve their business”
    • If I asked my purchasing customer: ‘What keeps you awake at night?’ They would say…
    • ‘Screw you kid, I’ve got 1,000 people knocking at my door and I don’t have time to tell you about my business’
    Todd Snelgrove, Global Value Manager at SKF
  • 12.
    • “ It is not the strongest species that survive, nor the most intelligent, but the ones who are most responsive to change ”
    • Credited to Charles Darwin
  • 13. Global Sales Challenges Survey
    • The results identify
    • The most important sales development areas
    • The biggest capability gaps
    • What the successful companies do differently
    212 participants, including:
  • 14. The priority development areas
  • 15.  
  • 16.  
  • 17.  
  • 18. World Class Sales Force (2007) 2007 HR Chally & Mercer Report – World Class Selling 4,000 B2B Participants
  • 19.
    • Adapt to the fundamental shift in buyer behaviour
    • sit in the buyer’s shoes and truly understand how their customers measure value
    • establish a deep understanding of the procurement department and the tools and methodologies being used
    • Transform sales reps from information providers into value creators
    • identify ways to improve the customer’s efficiency, productivity and ultimately financial performance; and
    • lead ROI conversations and the practice of value quantification.
    What successful organisations do differently
  • 20.  
  • 21. What is your view of Procurement?
  • 22. Diagnosing the Power of Procurement “ Our internal stakeholders hate us – they view us as inefficient administrators.” Maturity / sophistication Intra-company Value
  • 23. Diagnosing the Power of Procurement “ We use lawyers trained in procurement to manage all global legal spend” Maturity / sophistication Intra-company Value
  • 24. Diagnosing the Power of Procurement “ We have the tools but still feel like the Procurement Police” Maturity / sophistication Intra-company Value
  • 25. Diagnosing the Power of Procurement “ We’re measured on unit price reduction and deliver year on year ‘price’ savings” Maturity / sophistication Intra-company Value
  • 26. Diagnosing the Power of Procurement “ Our internal stakeholders hate us – they view us as inefficient administrators.” “ We use lawyers trained in procurement to manage all global legal spend” “ We have the tools but still feel like the Procurement Police” “ We’re measured on unit price reduction and deliver year on year ‘price’ savings” Maturity / sophistication Intra-company Value
  • 27. Diagnosing the Power of Procurement Maturity / sophistication Intra-company Value Disempowered Powerful Tactical / Administrative Immature and dangerous
  • 28. Diagnosing the Power of Procurement Maturity / sophistication Intra-company Value Disempowered Help them make an impact internally Powerful Value led / productivity discussions Tactical / Administrative Marginalise? Assess risk Immature and dangerous Play the game
  • 29. Thank You
  • 30. Contact details
    • Andrew Moorhouse
    • Principal Consultant
    • [email_address]
    • 07584 178 568
    Robin Mar Client Services Director [email_address] 07827 891 023