What is the link between marketing and procurement?
Marketing works with product to design a good or a service that will appeal intensely to a specific group of people, to identify those individuals, and to get them interested. Ideally, this creates a pipeline of opportunities for sales to follow up. The first task of the salesperson is to assess the degree to which the targets identified by marketing are interested.
This is called qualifying a sales prospect: determining whether they really might buy the thing you sell at a price you could accept if sales invested in a series of conversations with them about what their problems are and how they could and should solve them. Sales needs to optimize their time and resources, focusing on the customers who will create the most value for the supplier, ideally over the longest period of time.
In a sense, the salesperson is a consultant to the prospect, albeit with a skewed set of incentives. The salesperson advises exclusively on the good or service they are looking to convince the prospect to buy. Their compensation depends on whether and how much of it the customer ends up purchasing.
The relationship between sales and customer is natively adversarial. But this isn’t necessarily bad. If the salesperson is offering something that creates value for the buyer in the solution of the core problem, then the adversarial aspect of the relationship boils down to negotiating the division of the pie. How will they share the value that is created?
It can be a problem if the supplier is trying to stuff the buyer with a product that doesn’t address the problem, or at least not as completely as some of the supplier’s competitors do.
It can be a problem if the supplier is trying to take all the created value off the table for themselves.
The objective of the purchasing (or procurement) process is to find the right solution provided by the right supplier at the right price. This is a search problem.
Buyers are doing much more of their research independently before speaking with a supplier.
In the same way that suppliers seek to qualify potential customers for their likelihood to spend, buyers are qualifying their suppliers for fit, too. This is the link between marketing and procurement.
“More than 70 percent of B2B buyers fully define their needs before engaging with a sales representative, and almost half identify specific solutions before reaching out, according to a new report from CSO Insights, the research division of Miller Heiman Group.”
In contrast, supplier marketing wants to short-circuit the buyer’s discovery process and pull forward the sales conversation in a way that makes the buyer’s decision-making process more likely to favor the marketer’s firm.
The most valuable thing someone in marketing can obtain today is information about a buyer’s intent to purchase something like what the marketing person’s firm sells. That’s why there are so many tools for identifying when someone reads your email or visits your website or downloads a page or requests a white paper. It’s called inbound marketing. These tools alert the supplier’s sales team to launch an active campaign to contact, engage, and acquire the customer.
The earlier a supplier can establish when a buyer is in the market for what they sell, the easier it is to shape the buyer’s thinking. If the marketer sees that a potential customer is downloading content related to specific products, then marketing can deliver pre-qualified customers to sales. These tools blur the lines between marketing and sales, in a sense.
Purchasers know that the longer they can delay signaling their buying intent to potential suppliers, the more unbiased and complete their search will be, ideally leading them to the optimal solution at the end of the day. A buyer should want to keep an open mind for as long as possible, considering multiple solutions.
One consequence of this is that smart buyers forbid their employees from visiting supplier websites to avoid setting off the marketing tripwires built into these online resources. This may lead to the exclusion of a supplier from the buyer’s analysis.
Suppliers need to adjust how they market themselves to the shifts in how buyers research category markets.
Sophisticated buyers want to do everything possible to level the playing field for suppliers and to give themselves the right resources for this adversarial game. Get it right and they can reduce competition with the suppliers even as they increase competition among suppliers to deliver the best product-solution fit at the right price.
Ironically, marketing wants potential customers to see their content now more than ever, even as marketing tools chase the most interesting and seasoned customers away.
Ironically, when buyers really do their homework, the contracts that result create long-lived, more valuable customer relationships for the supplier.
EdgeworthBox addresses this shift in how buyers purchase by enabling marketing to include their product content on their EdgeworthBox supplier profile page, but without the encumbrance of the now-mandatory tools that identify consumers of these useful resources. We make it easier for buyers to discover suppliers.
We are a hedge for suppliers against the counter-productive aspects of inbound marketing. We are a tool for buyers to obtain intelligence about category markets.
Once the buyers have done their initial reconnaissance of the market, they can use our social networking to collaboratively interact with suppliers, fully using sales as a consulting channel to assess the differentiation of the supplier’s product, the risk of purchasing (including switching costs), the complexity, and the problem-solution fit.
EdgeworthBox is a platform for buyers and suppliers that sits as a layer in the procurement technology stack to lower these search and transactions costs. We work with your existing system to help you get the most out of it, whether it’s legacy software, an ERP module, or the latest cloud-based source-to-pay system.
We make it easy to generate competition by accelerating the time to onboard new suppliers, so that buyers can solicit vendors with whom they have no pre-existing vendor-of-record relationship. We enable easy access to market research with databases of live and historic RFP activity in structured format. And we connect buyers and suppliers to one another for the collaborative sharing of intelligence about the markets in individual vertical categories. Check out this short video for a quick overview. Give us a shout.