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.

The Rise of The RFX - Unforseen Consequences for Buyers and Sellers

RFX Mania Takes Hold

As concern about the spread of Swine Flue mounts, buyers and sellers are being afflicted by their very own pandemic – that of the RFP (Request for Proposal).

How serious is the pandemic? Well, it is demonstrated by the fact that 63 companies recently responded to two public sector tenders valued at just 90k in total.

The RFP process, which is designed to treat all vendors equally and to keep them at arm’s length, is failing to take advantage of valuable vendor knowledge and expertise.

Problems for buyers and sellers
The present economic climate has resulted in mounting budgetary pressure, and a heightened aversion to risk on the part of buyers. That has led to an increase in the use of the formalized RFX buying processes. However, there is evidence that this trend is giving rise to unanticipated problems for both buyers and sellers.

The Advantages of the RFX Process:

Understandably buyers in an increasingly price competitive marketplace are looking to pit suppliers against each other in order to negotiate the best possible deal.

Buyers have greater access to information and a desire for greater independence and control. That means they are delaying talking to vendors until their needs are established, the requirements set and the business case has been developed.

Past experiences with pushy, arrogant, or unhelpful salespeople have resulted in many buyers keeping the seller at arms length until it is absolutely necessary. All these factors point to the advantages of the RFX process for buyers.

Downsides to the RFX.

However, there are downsides to the RFX process. Principal among these is the fact that the buyer seller relationship has being sidelined. The RFP process reduces the role of the supplier in matching needs to solutions to a mere form filling exercise.

In this way the RFP process fails to take full advantage of valuable vendor knowledge and expertise. Instead, vendors must take requirements and needs purely on face value, and where there are gaps replace fact finding with guesswork.

The RFP process is designed to treat all vendors equally - the good and the bad - and let's be honest to keep them at arm’s length. But, some vendors are worth working with before the contract is awarded. They can indeed help buyers to make better buying decisions.

When RFPs Increase Buyer Risk:

The fear of making poor buying decisions, can perversely lead to bad buying processes which often have the RFP at their core. Here are just two public sector examples, we have come across recently:

- 27 companies responded to an RFP valued at in the region of 50k Euro

- 36 companies responded to another RFP with a project value of approx 40k Euro

A key factor worth noting is the rise in administration associated with formal buying processes.

On the buyer’s side there is the volume of paperwork and administration associated with 27 RFPs and the review of some 1300 pages of documentation. A rough calculation would put the cost of that buying process at up to 60% of the actual project cost itself.

Of course that does not take into account the seller’s costs that are direct, as well as the opportunity cost associated with 27 plus organization’s spending an average of 5 to 10 days on the preparation of the RFP – what a dreadful waste of resources.

It is important to point out in both these cases that a publicly advertised tender was not mandatory - falling below the 50k threshold.

Clearly buyers need to be more careful about how they implement RFP processes. This is something that buyers in North America may be ahead of the curve on, compared to there European counterparts.

In particular publishing clear and unambitious pre-selection criteria, or requiring a pre-screening questionnaire to prevent organizing preparing full RFP submissions for which they clearly have no chance of being selected.

'Buyer Beware' Becomes 'Seller Beware'.

In a tight market, with pipelines under pressure it is hard to say no to an RFP. However, we really admire those managers that can and will say 'no' to an RFP that they don't feel they can win.

Certainly, the criteria for determining when an RFP should be prepared will vary between times when the market is up and down, however, in the last few weeks we have seen several organisations who have failed to consciously evaluate their sales process with respect to RFPs:

— One salesperson told me recently of a 400 page tender submitted and lost, without any direct contact with the organisation either prior to, or during the RFP process.

— Another manager indicated that his team are presently preparing responses to RFPs for markets as diverse as Portugal and Australia - markets for which the company has no previous experience.

— The level of innovation and creativity in the typical RFPs is often limited to copying and pasting from a variety of different documents. It is not surprising therefore that many fail to communicate a clear and compelling reason to buy in the mist of volumes of company and product related data.

— One manager estimated the cost of RFP preparations at 150,000 in one year alone, a year in which sales and marketing budgets were under tremendous pressure.

— We need another sales resource, but cannot afford it at the present exclaimed another manager. However, this company had made an expensive sales hire last year, with that person almost totally dedicated to RFP preparation at present. It is clear that the person hired is ideally suited to document preparation, but less suited to other sales related tasks.

— A multinational client recently made the decision to only respond to RFP's when they get to interact with at least one member of the buying team with an understanding of the business issues the RFP response is meant to address.

— A review of public sector tenders by a professional engineering body suggests that the tender criteria publicised and applied are not always consistent. For example, although quality related criteria were weighted at 80% and price related variables rates at 20%, 32 out of 34 tenders awarded went to the lowest cost supplier - in a manner that seemed unrelated to price.

Some Conclusions:

The RFX is a unique sales challenge. Clearly, the increased sophistication applied to other aspects of selling must be applied to RFX preparation too.

In many cases managers are missing key information - that is the cost (including opportunity cost) of preparing an RFX response, as well as the chances of success based on historical win rates. This information is essential to determining how and when RFXs will and will not be prepared.

It is important to note that many managers express concern regarding the quality of the RFX replies they prepare, with the quality going down as the number of documents prepared goes up. The more responses are prepared the more it becomes a copy and past exercise and the less individual attention is payed to each request. Another factor is that fatigue appears to set in as the RFX nears completion, resulting in a ''we cannot spend any more time on it, send it in the way it is mentality.'

Transforming The Buyer-Seller Relationship - 'Let’s Get Real, or Let’s Not Play'

Relationships between buyers and sellers can be dysfunctional and are often motivated by fear. For the buyer that is the fear of being talked into buying the wrong solution. For the salesperson it is the fear of missing target. The result is that rather than working together for a win-win outcome, buyers and sellers can end up pulling against each other.

Mahan Khalsa and Randy Illig, in their book aptly titled 'LET'S GET REAL, OR LET'S NOT PLAY', provide the antidote - a means of transforming the buyer-selling relationship. This is a must read book for every person who has a role in selling high value B2B solutions.

The authors make it clear that

bad buying is as common as bad selling. It is not just the salesperson who is at fault. They point out that when buyers don’t trust sellers, dysfunctional buying practices result, such as:

· RFP practices that hide and protect vital information, and restrict personal contact.

· Sellers having no alternative but to guess what their customers want

· Buyers expecting sellers to make large upfront commitments of time and energy

· Sellers being expected to reveal proprietary knowledge and to present an immediate solution to problems that may have existed for years.

Although both sides own the problem, it is up to the salesperson to strive for a solution say the authors. That is to create a mutually beneficial dialogue that is value based, integrity driven and consultative in approach.

What is the starting point?
Well, salespeople must act in the role of consultants (as opposed to salespeople) looking to satisfy client needs as the means to achieving their own goals. This has to be a genuine motivation, say the authors. They emphasise that such a genuine intention is more important than any sales methodology, or process. Elaborating further on this point they point out there is no one size fits all sales methodology, or one way of selling to the customer.

Time for a structured and systematic approach:

The authors do advocate a structured and systematic approach to the management of the sales opportunity, one that helps the buyer to buy and seller to sell. It is aimed at progressively qualifying the opportunity by resolving a logical sequence of questions:
QUESTION 1: Should we be talking, should we keep talking?
QUESTION 2: Should they buy?
QUESTION 3: Can they buy?
QUESTION 4: How will they buy?

QUESTION 1: Should we be talking, should we keep talking? – Starting the dialogue requires that that the salesperson has something interesting to say, a reason for the client to invest time talking with him, or her.

It is most important to determine in the early stages if there is a mutually beneficial reason for both sides to be talking and to engage in a number of next steps together at this time. The first encounter presents the opportunity to exit low probability opportunities early, as well as to get high probability opportunities off to a good start.

QUESTION 2: Should they buy? The dialogue starts with the sales person working from an educated guess, or hypothesis regarding the customer's needs, or interests. But does the customer have a real need? Mastering this stage requires:

· Getting out and prioritising all the issues (including the unspoken, or inherent ones)

· Moving beyond the initial preconception of the solution to address the full, or underlying needs of the prospect

· Gathering evidence of and quantifying the impact of the problem

· Understanding the organisational context of the problem,

· Recognising why the need has not been resolved to date (i.e. constraints).

One of the main points made by the authors is that world class inquiry precedes world class advocacy. In other words the salesperson needs to fully understand the problem, before being able to sell his or her solution.

All of these points sound obvious, however completing them requires some considerable skill on the part of the salesperson who must:

· Second guess and interrogate any information that is provided

· Earn the right to ask certain questions, or raise certain issues

· Avoid being deflected by the buyer who wants to get to a solution without first exploring the problem

· Apply a more thorough and forensic approach to questioning

· Demonstrate the tact and diplomacy of a counsellor and mentor

· Arrive at the explicit and quantifiable, but with egos and sensitivities intact

· Bring the customer along on the journey of discovery, or needs analysis

· Avoid any guesswork and look beyond the obvious

· Understand any challenges, or solutions in the context of organisational goals, strategies and politics, including priorities, constraints and trade offs.

One of my favorite take away quotes from the book is "as long as the solution is the topic of discussion, clients can put all the pressure on you, they can sit back and watch you sing and dance". Most sales people I know will have fallen into the sing and dance routine at least once over the past few months.

QUESTION 3: Can they buy? Pre-qualification does present challenges for salespeople, particularly in an environment where opportunities (genuine or not) are scarce. In this context however the authors again remind us that buyer and seller must adopt a 'get real or let's not play' mindset.

The authors remind us that ‘intent counts more than technique' and that the intent is to figure out if the salesperson and the prospect are headed in the same direction and should keep on going. If not then 'let’s find out now, so we do not waste each other’s time…’.

Most sales people will agree its better to walk early or be excluded early than to invest lots of time and resources in a sales cycle that will result in a second place finish. As we all know there is no cheque for coming second in sales!

Put in this context it makes sense to bring issues of budget and price range up front. So, qualifying the resources available to the client for the solution in terms of time, people and money is essential.

Qualifying requires getting information and to get information we need to ask questions. If you have built trust (a topic we have written a lot about lately) by showing intent and expertise, you should be able to talk about timing, people and money matters.

The salesperson must be constantly looking out for signs, or signals that indicate their chances of success (yellow or red lights). But the authors argue that a yellow, or even a red light is, in itself, not a problem.

A red light or flag is only a problem if it is received too late to be addressed, or after too much time has been invested on both sides.

So, the advice for the salesperson - if you feel something is off, or needs to be said; slow down, raise your concerns/thoughts and address them fully and explicitly.

An important caveat is that the salesperson has to be prepared to walk away if both parties cannot achieve a win-win dialog, or deal, after all that is the title of the book ‘let’s get real, or let’s not play.’

QUESTION 4: How will they buy? Often salespeople don’t ask about how the buying decision is going to be made. That is because they are afraid of the answer. For example, it is uncomfortable to find out that:

- the decision is going to be made by a committee of 6 people, when he, or she has only had contact with 2 of them

- the time frame is not quarter 2 as suggested by your cash flow, but based on the buyers rate of progress will be quarter 4 at the earliest.

This is not helped by the fact that buyers often play their cards close to their chest. Buyer’s rarely tell salespeople about how they are going to make their purchasing decision (at least not without being asked).

Again, the authors reinforce the notion ‘let’s get real, or let’s not play’- so if the buying organisation is restricting access to key information, or key stakeholders that is a flashing Yellow light and one that requires a carefully structured approach by the salesperson. They recommend reiterating your intent to find the right solution and then ask for the information or access you need.

The authors point out that coy buyers have learned that the easiest way to get rid of a salesperson is to give them something to do i.e. prepare a proposal. In the ‘let’s get real or let’s not play’ world the buyer can and should be asked to do something in return. It is after all a two way commitment.

Conclusion:

The authors suggest that 80% of lost deals are the result of an inadequate, or nonexistent pre-qualification process and the lack of an effective sales planning process. This book goes a long way to addressing both. It is a must for every sales professional and the best sales book we have read this year to date.

Other areas this book addresses that we think you might be interested in:

• How to gain access when you have been told you can't
• How to avoid the guessing game
• Introducing money and timing questions
• How to handle the "just give me a proposal request"
• How to discuss the decision process with your prospect

We hope you take the time to buy this book, it is a great read.