August 03, 2009

Weary Buyers Warn Sellers: The Game is Up!

How Sceptical Buyers Have Caught on to Salespeople and their Wily Ways!
Buyer beware was the dominant concept for decades. No longer, the balance of power has shifted, with the seller ceding control to a more sophisticated and cynical breed of buyer. To demonstrate this point we have taken two books that buyers told us about and examined how the attitudes they reflect impact on buyers perceptions of salespeople. Lots of food for thought below.

Just Who Has the Upper Hand?
Guth starts with a warning to all buyers, claiming that ’the odds are overwhelmingly stacked in favor of the vendor’. That is, he argues, because sellers have traditionally been more organized, better resourced and more focused than buyers. Conversely, because they have not been sufficiently organized, coordinated, or prepared, buyers fall victim to vendors and their sophisticated ploys.

The ‘sheep in wolves clothing view of salespeople’ is still very common among buyers. Guth suggests that buyers must be constantly on their guard against vendors and manipulative, self serving and opportunistic ways. He talks for example of ‘pseudo friendships’ promoted by salespeople – pointing out that they are ‘more based in dollars than actual friendship’.

Vendor Management is the Name of the Game.
‘If you don’t manage the vendor, the vendor will manage you’ that is the clear message being delivered to buyers and decision makers. The rational put forward (i.e. the objective) is to leverage the untapped value of vendors, which, given that purchases often account for over 50% of revenues, can impact significantly on the bottom line. But that requires more than just buying cheaper - the traditional role of purchasing. It entails all issues of vendor related risk and performance, focusing on the total cost of ownership, as well as the entire vendor relationship lifecycle.

Professional Buyers Are the Front Line of Defense Against Sellers.
In this vendor management approach, the professional buyer is the first line of defense against the sales organization. His, or her role is to protect the organizational customer from the vendors wily ways, and thereby to maintain the integrity of the competitive bidding process.

Guth warns that the seller will attempt to circumvent the buyer’s power by appealing directly to the internal customer (e.g. the business manager). This may involve techniques that appear innocent, such as ‘executive briefings’, but these in the author’s view are a calculated effort to distort the competitive bidding situation.

The author reminds the buyer that, at the negotiation stage, the vendor is an adversary ‘no matter how much they act like a partner, or pal’. Although a ‘win-win’ may be the desired outcome, negotiation will likely involve some contentiousness.

The RFx Is Your Shield and Your Armor.
The RFx (that is RFP, RFI, RFQ) puts the buyer back in control. It is the foundation of the competitive bidding process that will ensure the best deal for the buyer and a level playing field for the vendor.

The RFx process is the buyers shield and armor and according to Guth, must not be compromised. That includes making the almost unforgivable error of letting the vendor write, or input to the writing of the RFx document, or reducing your negotiating power by selecting a RFP winner before negotiation is complete.

He advises vendors not to take short cuts in respect of RFx preparation, arguing that low quality RFx can result in; an unreasonable burden on both buyer and seller, substandard responses and more complex evaluation. He does however suggest that it is important to look at the RFx document from a vendors’s point of view.

Defining the rules of engagement.
Key to the success of an RFx process is the definition of rules of engagement. That involves defining what contact with salespeople is appropriate at the different stages of the buying process.

For example he suggests that lunches, social events, meetings with customer executives, or demos are in most cases ‘off bounds’ prior to the contract being negotiated. Of course, he does recognize that these rules must differentiate between those vendors that are worth spending the time with and those that are not.

Beware the Seller’s Tricks & Ploys.
Guth suggests that ‘If you can thwart one vendor ploy, or successfully use one tactic that enables you to achieve a negotiation objective’ his book has achieved its objective.

I was in your neighborhood and I thought I would drop by…
· Inviting you to seminars, lunches, sporting events, etc.
· If the vendor is overly interested in you or is very attentive in an almost stalkerish way.
· Mirroring and pacing the behavior and body language of the buyer.
· Negotiation ploys such as good cop, bad cop.

However, to the cynical buyer everything could be construed as a ploy, which seems to be the case with the long list presented by Guth – it seems to include almost anything, other than posting an RFx response.

How Buyers Can Defeat Seller’s Ploys.

So, how can buyers defeat the ploys of sellers? Guth suggests the following steps:
· ‘Silence is golden’, be guarded in terms of sharing information with vendors regarding budget, timeline, criticality and your organizational chart. This information, he argues, can be used against you.
· Don’t be so grateful - ‘don’t fall for the special treatment and don’t feel indebted to the vendor for any trip, or event’.
· Don’t drink and buy – ‘No matter how much you think you can handle your alcohol, never drink with a vendor.’
· Maintain your own pace - Don’t be encouraged to speed up, or slow down your process by the vendor.
· Ensure clear written policies with respect to vendor gifts

The buyer must be constantly on his, or her guard, with Guth warning that ‘loose lips sink ships’.

How do you recognize a good vendor?
Guth is cautious and cynical. However, he does recognize that while all vendors have their bottom line forecast in their minds some do actually care about customer needs and look to a long term business relationship. He recognizes that ‘unfortunate tendency is that you may start treating all vendors in the same untrusting way as a result of the behavior of a few opportunistic vendors.’ But how do you recognize a ‘good vendor’? Well, Guth, suggests the following characteristics as the guide, the vendor:
· Is knowledgeable about their products and your needs
· Provides prompt and accurate information, resolves problems and disputes
· Will even go so far as to tell you that you shouldn’t buy something from them because it’s not a good match with your requirements.
· Does not use ploys, does not try to circumvent normal challenges of sourcing and go direct to executive decision makers without reason.

Those vendors and sales teams that are strategically important and demonstrate a commitment to helping the customer succeed are the author concedes worthy of the buyer relinquishing some control and forfeiting individual gains in favor of mutually compatible objectives. He suggests that active participation in customer advisory boards – where customers input to vendor innovation and product development by the vendor – are very important for strategic vendor relationships.

So, in addition to managing the vendor, there is an element of vendor development. That is; activity to upgrade a vendor’s capability so that it can be exploited to the benefit of the customer. It recognizes that by becoming a good customer, vendors can secure greater commitment and additional benefits. That includes new vendor orientation, and a flexible approach to vendor referral, or marketing support.

Our Conclusion
Guth’s views remind me of the movie ‘when Harry Meet Sally’ and the famous line ‘men and women can never be friends, because sex always gets in the way’. In this case it is ’buyers and sellers can never be friends, because the sales always gets in the way’.

All joking aside, salespeople have to anticipate some antipathy from professional buyers and we do have to be aware buyers are reading material and attending training courses on vendor management and negotiations. We have to distance ourselves from the stereotypical salesperson and their out of date sales techniques and adopt the characteristics noted above. Only then can we align to the buyers process and help them.

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