The development of the business landscape in the 20th century resulted in significantly slimmer and rationalized companies. Previously, product development, marketing, sales, delivery, support and operations were carried out in silos that didn’t need to talk to each other. Now, work flows, processes and functions are integrated and streamlined from beginning to end. Companies simply cannot afford to let their different functions and departments work without being integrated. Many efficiency gains that have been created have arisen through integration of different functions, departments, various hard- and software, systems, databases, people and competencies in new processes and value chains.
This increased need for internal collaboration to achieve customer value is one of the most important trends in purchasing today,1 and it involves a big challenge: all elements in a process involving different functions must be able to communicate with each other. This increases a company’s interdependence, i.e., the mutual dependencies between different parts of the company. Replacing one element in a given process is, therefore, not an easy maneuver. Will the new element integrate with the other elements in the chain? Let’s look at an example:
A production company in the textile industry includes brochures with every order it sends. The number of brochures and the content of every order varies. Therefore, their business system communicates with one of their printers. As soon as an order is placed, a printing instruction goes to the printer. In that way, the brochures are ready when the order is packaged. The company saved lots of time when they implemented this process. At the same time, interdependence increased: they cannot replace either the printer or the business system without risking that the process will fail. The value of the printer cannot be evaluated without taking into account the processes that the printer is part of. The same applies to the business system.
This type of interdependency has multiple consequences. The first is that the client’s decision-making processes take more time when the complexity of the purchasing process increases. According to the analysis company SiriusDecisions, the length of the average sales cycle has increased by 24 percent in only a few years.2
In addition, several studies indicate that more stakeholders are involved in the decision-making process over time. That is one of the other consequences. According to CEB/Gartner, in the past two years the number of people that are involved in the purchase of B2B-solutions has increased from an average of 5.4 to 6.8, while at the same time these stakeholders represent more roles, functions and geographies.3 In some cases it is significantly more than this. Even in relatively “simple” deals. In the technology sector, 20,000 US dollars is not a particularly large sum in financial terms. Nevertheless, a study of this industry shows that, if you sell to a company with more than a thousand employees, on average 21 people would be involved a purchasing decision of that magnitude.4 How many do you think the sales representative talks to?
Individual buyers are not usually involved in B2B purchases. They are made by teams. Therefore, individual personalities are not as important. It is the team as a whole that must be assessed. | Lori Wizdo, Vice President, Forrester
The third, and perhaps most important, consequence is that sales in many cases becomes a question of business development. This can be seen as a mirror image of the customers’ development. Purchases take on a more business-developing role where the focus is on creating a functioning supply chain and getting that chain to function from start to finish with the help of different partners and suppliers. The sales rep must understand how she can help the customer achieve its goals. A traditional sales rep that is used to communicating the value of a product but not much more would, in the example of the printer, quickly end up in over her head. Instead, one must become accustomed to revising one’s way of working to meet the customer’s increasingly complex questions, such as, “How is your product going to effect our work flows?” or “How can your product be integrated into our work flows?” When the customer value of a supplier’s product varies not only depending on which other products, functions or systems the customer has, the sales rep must have a business-development and advisory role. Increasingly, the product’s value becomes entirely dependent on its integration with other elements.
For those suppliers and sales people that have a consultative disposition, this opens up an entirely new playing field in relation to the customer. When customers become increasingly careful to choose suppliers that can improve their businesses, one must recognize that one no longer sells products that have an inherent value. Value is created first when the product is used and integrated with other parts of a chain of activities. The more the different elements in the chain are dependent on each other, the more important the links become, and it becomes all the more important for the sales rep to understand the complete picture. The sales people that succeed the most are, therefore, those that already at an early stage can: comprehend and understand the customer’s interdependencies; see how what they offer fits into the business, and; discover if the customer will not feel that the solution is worth the effort.
1 SILF (2018). Trendrapport 2018 – 10 aktuella trender inom inköp och supply chain management för privat och offentlig sektor – intervjuer med 260 inköpschefer i Sverige. Stockholm: SILF.
2 Sirius Decisions (2014). Sales Enablement Market and Trends Survey Revealed.
3 Toman, N, Adamson, B., och Gomez, C. (2017). The New Sales Imperative. Harvard Business Review Mar–Apr 2017.
4 Marketing Sherpa (2007). Business Technology Marketing Benchmark Guide Excerpt.