Sellers Beware: The Procurement Gap
There is often a gap between how the buying decision should be made and how it is actually going to be made. That is between the buyers internal procedures, or external view of buying best practice and the everyday reality of rushed, or messy decisions. We call it the Procurement Gap. Helping the buyer to bridge that Gap can be a real source of opportunity for sales teams.
The Best Practice Illusion
We are dedicated to tracking the latest trends in corporate buying and sharing them with sales managers and their teams. That inevitably means most of our research is focused on best practice with respect to procurement.
In particular we are keen to share what the leaders in respect of procurement and supply chain management, such as the Garner Top 20, are doing. That is because they provide an insight into the future trends that will inevitably become standard practice industry wide.
Do you know what best practice for buying your solution is?
However as excited as we get about best practice, we know that there can be a considerable gap between best practice buying and the every day buying scenarios faced by sellers in the field.
There is good and bad buying just as there is good and bad selling. There is the idealized notion of best practice and the day to day reality of buying in the average organization.
Indeed studies such as that by Roland Berger suggest that the gap between best practice and common practice in buying is surprisingly large. It suggests that only 16% of companies achieve procurement excellence.
It is worth looking for the relevant figure for your specific industry. For example, if you are selling ERP technology a recent Danish study suggested that three out of five companies do not a business case before buying such a solution.
Warning: ‘Mind The Gap!’
“Mind the gap” is the message continually repeated to passengers on subways and metros as they get on and off trains. When it comes to the Procurement Gap the same warning applies to sellers, as well as buyers.
Are any of your key prospects falling into the Procurement Gap?
Both the buyer and the seller need to take care not to be blinded by an idealized notion of the buying process.
In particular for the seller operating in the Procurement Gap can provide a real advantage. So, much so that spreading the word about best practice buying is now part of the sellers responsibilities!
Reasons For The Gap
There are many factors that can result in the Procurement Gap, including; politics, urgency, or lack of leadership.
Here are some questions to help you understand if your prospect is at risk of falling into the Procurement Gap:
- Is the decision getting enough time and attention?
- Is the timeframe for a decision by the buyer realistic?
- Are their numbers being worked out carefully and a proper cost-benefit analysis completed?
- Are the longer term implications being fully considered?
- Have the people involved in making the decision got the required experience/skill?
- Have stakeholders been consulted and requirements validated?
- Are there issues of culture and politics that are interfering with the decision?
- Is there enough paperwork and procedure involved, or perhaps too much?
- Have all the risk been considered and due attention paid to implementation success?
- Has procurement been consulted or involved, and procurement rules and procedures followed?
The Procurement Gap can be examined along the 3 Dimensions of the buying decision, that is the buying process, the buying logic and the buying team.
Buyers are not as logical – analytical as their procurement rules and procedures would suggest. After all decisions are made by humans not computers. That means prejudices, emotion and impulse will inevitably play a role. The seller needs to be concerned with what the buyer is thinking as well as feeling.
Are any of the above gaps evident in your top sales opportunities for this quarter?
Indeed, look beyond the straight lines and square boxes and the black and white of the buyers buying process and you will find that buying decisions are complicated by a wide range of what we call ‘messiness factors‘, including conflicting requirements, internal politics and changing strategies, or priorities.
Bridging The Gap
The seller has to accept the buyer’s process as it is (unless it is grounds for deciding not to pursue the opportunity). But he, or she must not stop there.
In this the age of stalled deals, the seller must help the buyer to expedite the buying process as it is, while at the same time helping the buyer to improve it. That is at the core of what we call ‘helping the buyer to buy’.
The new role of the seller is to help the buyer to bridge the gap between the buying decision ‘as is and the buying decision ‘as it should be’.
Do you help the buyer to buy and to buy better?
It is in the seller’s interest to show the buyer a better way to buy – one that has the credibility of others in their industry. That is a unique way for the seller to demonstrate his, or her unique value, as well as preventing a stalled deal.
Deals Get Stalled In The Gap
It is in the seller’s interests to ensure that the buying process being employed by the prospect is sufficiently robust as to ensure that the buying decision will get signed off internally, even in the face of competing projects and purchases.
That means the seller must anticipate problems that are likely to be faced by the buying team, the sponsor, or ultimate signatory in respect of the buying decision.
The Procurement Gap is a major cause of stalled buying decisions. Recognizing this the seller must help the buyer to guard against the potential causes of a deal not getting sanctioned, including:
- Gaps in terms of compliance with internal buying procedures.
- Gaps or weaknesses in the logic or justification for the decision.
- Gaps in terms of information, paperwork, or analysis.
- Gaps in terms of insufficient stakeholder buy-in.
- Gaps in terms of the involvement of procurement.
A Word Of Caution For The Salesperson
Sellers must be seen as trustworthy advisor or expert’s if they are to be in a position to shape the buying process and to remedy any of its gaps.
The seller cannot be seen to be trying to subvert the buyer, or to change the rules in their own favour. Improving the buying process means a better way of making the decision, irrespective of whether the outcome is the selection of the seller.
Sellers must be cautious in idealizing the buying approach that the buyer should follow – as buyers repeatedly remind us there is a layer of complexity in respect of many buying decisions that the seller cannot see.
Do you have full visibility of the buying decision in respect of key sales opportunities at this time?
What the seller may see as a gap may simply be misunderstanding of how the decision is actually going to be made. This can easily happen given that much of the buying decision happens behind closed doors, or at least when the seller is not in the room.
by Ray Collis
Ray Collis is author of 4 books on accelerating growth, His articles are just a sample of the research underpinning the Growth Pitstop - a powerful formula for accelerating growth. Ray is available to speak at conferences and events internationally.
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