Marketing departments and salespeople should be experts in working with and serving people. The marketers and salespeople who work in business-to-business sales not only need those skills, they must have an understanding of organizations and of how organizational decisions are made.
In past columns we have spent a good amount of time discussing the dynamics of what we call the “Buying Center” which is that group of people within a company who are affected by, and take part in, the purchase decision. Relying on buying center sales techniques has become the norm. At the strategic planning level, where the manager spends a good deal of time, the growing importance of buying centers is not the only thing to keep in mind about organizational selling.
Organizations have been changing over the last few years, due to environmental factors like the economy, rising use of information technology, an increase in mergers, and corporate downsizing. To make certain our marketing strategies remain up-to-date and sales at their peak, we should regularly review what is happening to organizations in general in the marketplace.
Purchasing Departments: At one time purchasing departments were at the low end of the corporate totem pole. Now they’re a major corporate function; after all they’re often times responsible for more than half of the firm’s cash outlays.
Purchasing professionals are into creating strategic relationships with suppliers, seeking to build long term savings through careful planning and reduction of time and labor in the purchasing cycle. Years ago, company buyers were often young management trainees right out of school. Today they are more likely to be older business people with MBA’s and decades of experience.
Companies have learned that their purchasing departments are key in keeping down costs and those department heads are now commonly serving as a part of the executive management team. This change in dynamic is both a threat and an opportunity for suppliers.
Sales persons that concentrate on “getting the deal” no matter what the future consequences, will likely hurt their companies in the long run. Quick and dirty closing techniques are not going to cut the mustard in this environment. The purchasing department puts up roadblocks that make it difficult, if not impossible, for such methods to be effective.
A sales professional who prepares a formal, and more time consuming, sales approach and presentation will find the opportunity to sign long-term contracts. Recognizing which prospects must now be approached differently is the first step. Long-term purchase agreements are becoming more the norm, and they’re good for both parties.
Corporate Downsizing: Just as some firms are making purchasing departments more important and more professional, other companies are releasing employees and concentrating more buying functions into the hands of a few managers. These managers will have to not only do their old jobs, but will have to handle purchasing as well.
The opportunity; make the purchasing function easier for them and you will win yourself a customer who will be around for a while. Supply this person with the details and information necessary to make a quick and easy buying decision. Then help them out by setting up an automatic re-ordering system. Try to create a situation that will free them from making routine buying decisions while supplying their company with what they need. If you do it right, and don’t take advantage of it to oversell, you should create a long lasting customer relationship.
Slow Economic Times: An economic slowdown means more of your prospects will be looking for ways to cut costs. They will not normally be hot to buy the latest and greatest you have to offer, unless you can present a really compelling case.
How can your products be used to help your prospect save money over the long term? How can you help them stretch out the costs of your product until those savings kick in? Think about your offerings from their point of view. If someone is trying to “batten down the hatches” and keep their corporate ship from leaking, how can you help them do that?
Build a story and presentation that clearly shows how your products will make or save them money and resources. You will have a far better chance of getting them signed on the bottom line.
Mergers and Acquisitions: As companies combine their resources, buying centers are becoming more centralized. You may find a firm you have been selling to for years has suddenly been swallowed up in a merger and their purchasing function is now being handled in a national office in another state. The products you were selling them may now be supplied by their national office. That office may be buying directly from another distributor or directly from the manufacturer.
Merger activity is increasing and the results are hurting small and more regionalized suppliers most of all. This creates opportunity for larger distributors, or for those willing to go after the larger, now national, accounts. For other firms, this is a tough trend to fight and sometimes the only way is to seek out new customers to replace the old. So when you sense a current customer is about to be bought out, talk to them about the future of their buying functions and see if there is a way in that door.
Information Technology: As the internet becomes a more accepted part of our daily work lives, distributors are having to adapt in innovative ways. Expect to do more so in the years to come. In fact, as service becomes a more important aspect of the product line, expect customers to place orders, track orders, make returns and adjustments, and do other business functions online without even speaking to one of your staff. Many of them will choose their suppliers according to how easy it is to communicate directly with those suppliers’ in-house functions. If you are not already working on integrating such functions into your website, today is a good time to start. Yesterday would have been better, but you can catch up.
The threat to doing business in this way lies in losing a lot of personal contact over time. The value of relationship building doesn’t go out the window, but the ways in which it will be done are certainly going to change. The opportunity is to be the first on your block, so to speak, to take these steps, to do them right, and to capture market share as a result.
These are just some of the changes distributors should be ready for. Some of you may have already seen them taking place in your customer’s organizations. Others you will be seeing soon. Change is inevitable, and not something to be feared. Indeed, by taking change into account and being prepared you can stay one step ahead of your competition on the road to the future.
(next article in series)
