Posts Tagged ‘partnership’

Does your customer really want a partnership – or a Partnerschaft?

December 3, 2013

Inside views from three global procurement directors

The business world is awash with jargon: strategic partnerships; strategic sourcing; strategic intent… but what does it all really mean for B2B sales people today?

I interviewed three global Chief Procurement Officers (CPOs) from Fortune 500 companies to find out.

In the words of one CPO: “The only way I would want a partnership is if I cannot achieve the business result via RFP or competitive procurement activity.”

Another CPO suggests, “If you are a strategic supplier then that means you will give me more discount.”  Another confirms, “When we hear the seller say ‘partnership’ we start to think, ‘What do they want?’  This is another way to leverage us.”  I was then playfully reminded of the German term for Partnership… Partnerschaft.

So, in the eyes of Procurement, what really is a strategic partnership?  One Fortune 500 Bank estimates they have nearly 18,000 suppliers across the globe, but they have just 35 relationships that are considered strategic (under 0.2%). However, these 35 suppliers account for >56% of all money invested (see accompanying model).

Supply base analysisThe real test of a partnership

If that supplier went away, would the customer be harmed more than the supplier? Is there joint investment between the two companies to generate increased revenue; reduce risk or reduce costs to both parties? One CPO claims “unless you have invested, it’s not a partnership.”

So what our panel of procurement leaders suggest is that for many sales people today, a term that they could consider using is “effective commercial relationship”. Customers don’t want a partnership… and they certainly don’t just want a friendship or merely a ‘good relationship’. Develop effective commercial relationships with your customers and save the Partnerschaft conversations for the lucky few.

Andrew's Photo (blog)Andrew@bluesky

www.blue-sky.co.uk