The global financial crisis in 2008 and the subsequent economic downturn accelerated the adoption by many companies of a formalized Purchasing or Procurement function to reduce supplier spend. And it often worked amazingly well, as between 40-60% of company total costs can come from outside purchases of goods and services. A 10% reduction on such a cost base in one year could wildly improve the company’s performance, and certainly better than any realistic sales improvement could hope to do.
Now eight years on, the early adopters of Procurement are taking advantage of the knowledge of their company’s value chain and are expected to move beyond ‘mere’ cost savings. These strategic Procurement organizations are looking for good supplier partners who offer good value, but who can also help the company develop and innovate.
Yet sales, and surprisingly, Key Account Management have often not kept up with this development. A 2014 straw poll we held amongst Purchasing managers in a number of industries in Europe revealed that up to 90% of KAMs were considered inadequately prepared for first sales meetings with Procurement. This reportedly led to a greater focus on price in subsequent meetings.
Despite an ever-greater investment in sales trainings, Key Account Managers appear to be missing the boat with Procurement, whose influence in their companies can range from minor advisory to final decision-making. It appears as if sales have a fundamental difficulty to understand who these professional buyers are and what they need.
To address this, in 2014 we launched the QuarterMaster™ program for Key Account Managers and senior sales professionals. The main objective of this program is to help key account sales teams know how to prepare for Procurement meetings, so as to get into the golden ‘10%’ of good initial meetings and subsequently turn Purchasing into a commercial ally!
Our experience has been that, without targeted preparation for Procurement meetings, a company’s strategic Buyer can often out-class even excellent KAMs through a winning combination of greater negotiation experience with the ability to decide what the negotiation agenda is.
Of course there are exceptions to this rule. One example is the working practice of GAM/KAMs in the express logistics industry. As they are selling complex logistics services, which are literally end-to-end in scope, they need to know their customers’ business inside out to be able to propose the right solutions in the first place! This clearly requires significant preparation and deep engagement with all stakeholders in the customer organization.
This example could be a hint to the many other KAMs about what they are not taking enough time and making sufficient effort for: preparing for success with non traditional, but key customer stakeholders such as Procurement.