Alan Day, founder and chairman of State of Flux, a global procurement consultancy and SRM software company, discusses how Procurement could learn a thing or two from Sales.
You often hear sales and procurement referred to as two sides to the same coin, perhaps this is because when you look at them closely, the skills required for supplier relationship management (SRM) versus key account management (KAM) are very similar.
Our global 2015 SRM research has shown that it's behavioural skills that are the most necessary for SRM and these are the same for KAM.
However this is usually where the similarities between the two functions end. But on closer reflection there are many areas where procurement could do well to learn from sales:
1) Valuing the length of the relationship
Sales teams respect and celebrate a long customer relationship. And rightly so, it’s difficult for two parties to work together for a long time (just look at any marriage with their silver, golden and diamond jubilees). Procurement on the other hand tends to take a sceptical view of lengthy relationships as something that needs to be reviewed.
2) Focusing resource on key accounts
A junior in sales is given lots of accounts to focus on in the beginning and then they will work their way up to becoming a key account manager with just one account. In procurement we often do the opposite with more senior procurement professionals being responsible for more and more spend or categories (and by default more and more suppliers).
3) Investing in training
Sales teams train their staff, procurement teams often do not. From our SRM research we’ve seen that investment in training has actually gone down, despite there being a direct correlation between those organisations that train staff and being a SRM leader organisation.
4) Training behaviour-based skills
The behaviour art of selling and human behaviour are important parts of sales team training. Procurement teams are far more likely to train their teams on process or technical aspects of their role. From our research we’ve seen that the only skill that gets more training in procurement than is required is negotiation. There are large gaps in the behavioural-based skills.
5) Practicing and measuring the effectiveness of the behavioural skills
A sales manager will often join the salesperson at a client meeting to review how they performed with the customer. The manager is trained on how to recognise and coach staff and both individuals have elements of their performance measure tied to this. In procurement our overachieving driver is savings, so coaching and measurement are predominately focused on driving savings and the technical skills required to achieve this rather than the behavioural skills required to maintain a good supplier relationship.
6) Using technology
For many years now it has been commonplace for many sales teams to use a CRM system to track their sales leads and relationships, whereas, most organisations would not question the need to invest often millions in a CRM system. Our research shows only 9% of organisations are using a SRM system with 79% of organisations preferring to use MS Excel. Let me repeat that again, the large majority of organisations are managing their most strategic, most critical, most risky supplier relationships on a spreadsheet.
7) Measuring the quality of the relationship
Sales regularly use customer satisfaction surveys (CSAT) to measure the quality of their relationship with a customer. It’s an annual measure and both sales teams and customers are encouraged to participate. They use this to focus on aspects of the relationship that need improvement and often part of the salesperson’s bonus is linked to the CSAT score. On the other hand, approximately 30% of the time procurement uses a 360 degree assessment survey to understand the quality of their supplier relationships. Procurement often has a reluctance to measure the quality of relationships and a generalisation of ‘we know what our suppliers think of us, we don’t need to measure it’. Remember - what gets measured gets done.
8) Involving executives in the relationship
Sales teams want their executives involved in the relationship, they recognise the signal it sends to the buying organisation (you’re important to us). They will spend time briefing and coaching the executive on what they need from them within the relationship. 46% of SRM leaders have direct support from their CEO, yet we know procurement still has trouble articulating to executives why they need to be involved in a supplier relationship and what value will be gained from doing so. Because of this the challenge is getting executives actively involved or involved as part of a coordinated approach (rather than just responding because there is a problem or meeting the supplier on their own, at the suppliers request).
Procurement can learn a lot from our friends ‘across the table’, not least the art of selling. Selling procurement's value, selling the need for investment, selling the need for the business to change and collaborate with suppliers more. For success in 2016, be sure to factor in these skills when forming your SRM teams. Carry out an annual skills assessment, so if like many procurement teams, sales skills need bolstering, allocate a percentage of your L&D budget towards specialist SRM skills training. The payoff could be significant!
If you would like more details, Alan can be contacted at firstname.lastname@example.org or +44 207 8420600.