Tag Archives: buyers and suppliers

Why “Free Help” With Buying Decisions Costs More

As consumers, we’re wary of so-called “free” products and services as there’s always a hidden cost. Why, then, are procurement teams willing to accept free help with supplier selection?

Businesses often seek help with their buying decisions, especially in complicated categories such as telco or energy. Preparing an RFP requires a willingness to trudge through data swamps, while analysing supplier responses requires more than a strong coffee to do properly.

When a third-party broker says that they’ll help – for free – the temptation is to say yes, if only to avoid data swamps and caffeine addiction. However, you need to keep in mind that the people who help “for free” are still going to get paid, just not directly by you. They’ll collect their pay from your suppliers who are willing to pay a commission to get the opportunity to service your organisation. In turn, those suppliers recover commissions from their customers (you), either as a line item on the bill or through higher prices. In the end, you’re still paying for the service, just not up-front.

For large businesses with lots of cost centres, this can be a good way to share the cost of getting help. Branch stores pay their bills and, without realising it, pay for the help you received through higher prices. Procurement managers who use this approach can look like heroes because they claim savings and a successful outcome without having to win broad company endorsement for using expensive 3rd-party assistance.

Selecting suppliers for the wrong reasons

The danger of commission payments is that different suppliers pay different amounts. Some commissions contain a ratchet mechanism with longer contract terms, while higher contract values generate higher commissions.

Unfortunately, brokers who offer their services for free are incentivised to select the suppliers who pay them the most, rather than those who deliver the greatest value to the customer. The usual outcome is long-dated contracts with a single source supplier. At least the billing is easy, but your business will end up paying more in the long-term due to lack of value.

Up-front payments

Paying brokers up-front changes their incentives. Instead of focusing on supplier commissions, they now focus on demonstrating their value to you in a bid to win further business from your organisation. “Brokers” go upmarket and call themselves “consultants”, working harder to realise the greatest-possible savings and service levels. Customer and consultant incentives align.

The positive consequences of fee-for-service payments are shorter contract terms and more suppliers. Shorter contracts reflect a balance between testing market prices with the logistics of changing suppliers. Having more suppliers means you are able to split your requirements across the lowest priced suppliers to get the best possible price for your portfolio of demand, rather than being herded toward a single-source supplier.

“Free” services in IT

For software companies, “free” represents a gateway product, or a way of demonstrating the value of a software product to the customer. It means the software provider doesn’t have to employ a slick-suited sales person and can scale the work of their t-shirt clad developers. Salesforce, one of the leading dealers of enterprise SaaS, costs their customers on average $45,000 per annum. The entry level CRM package is $5 per user but customers quickly pay more to satisfy their needs, getting more value from the base CRM product as they buy additional features and capability.

Our approach at Kansoly is the same. We’re a cloud-based telco procurement platform for businesses running RFPs and reverse auctions. Our base product is free, where we offer to run a telco RFP for you for nothing. What’s in it for us? We gain customer insights and supplier engagement, both vital for making our product better and delivering more value to our larger, fee-paying customers. Our free customers get competition for their services and cost analysis that they would otherwise have to invest in.

Brokers and consultants have always been part of the procurement landscape, but their incentives are defined by the way they’re paid. However, the development of Saas procurement platforms increasingly means that free offers aren’t always related to low-value outcomes.

Bruce Macfarlane is the founder of Kansoly, a telco procurement platform for business. Kansoly runs RFPs and reverse auctions for data, mobile, or fixed line.

Selling While Shy: Introverts in Sales

While it sounds counter-intuitive to declare introverts make the best salespeople, their characteristics may truly make them a perfect fit for a sales job.

introverts1

Last month, Procurious looked at the work of Susan Cain, and assessed whether introverts could thrive in procurement. Now, on the other side of the coin, with help from College Match Up, we look at why introverts actually might be the best sellers too.

Best Sellers

Introverts make up 50.7 per cent of the personality types in the United States. An illustrated chart of the introverted personality types shows the percentage of different introverts in the general public.

Sales jobs are expected to increase by 5 per cent in the next decade, and by 2024 there are a projected 778,000 new jobs to be created. As these jobs are created, new people will be searched for to fill them, and industry specialists will be looking for a particular skill set for a good salesperson.

Traditionally, the most defined skills for people in a sales role have included:

  • Assertiveness,
  • Self-awareness,
  • Empathy,
  • Problem-solving skills,
  • Optimism.

Not exactly a set of attributes that you would associate with introverts or introverted people. So why would introverts be useful, and potentially better, in these roles?

Key Attributes

Well, introverts are often quiet and thoughtful which works well in a sales setting, because customers are often put off by the high-energy assertive employees.

Introverts themselves prefer to be helped by other introverts, and at the same time, introverts communicate best one-on-one, which is great for a sales role, because they can really connect with their customers.

Introverts are known to form few deep attachments rather than many, shallow friendships. In a sales environment, this works because they can form deeper relationships with their customers than extroverts, leading to people trusting them more.

Finally, introverts are known for being reflective. This again ties into the sales environment, as they will be looking back on their performance and working out how they can do things better next time.

Need Convincing?

So, what kind of career options are there for introverts who want to try working in sales? Introverts might try out being advertising agents, real estate brokers, sales engineers, or travel agents to name a few.

If you still need convincing, you can check out this infographic from College Match Up:

Introverts in Sales

So what do you think? Do you think that introverts would make better sales people? Could there be a way to leverage an introvert relationship between buyers and suppliers? Tell us your thoughts in the comments below.