In this blog, I would like to continue the discussion of how technology can play a much greater role in actually facilitating the right conversations between buyers and sellers. Previously, we explored collaboration and in this blog we’ll explore the second of three attributes essential to any software and technology solution and that is facilitating transparency between the buyer and the seller.
Transparency: From the English / Oxford Dictionary
- the condition of clearness (synonym – clarity).
In researching the definition, I was surprised to find that the usage of “transparency” has more than tripled in the past 25 years relative to the previous 200 years and I am left wondering why. Given the above definition, just what exactly should both sides work on to produce clearness or clarity? I believe there are three key opportunities for transparency during the sale: creating the potential for value, capturing that value in the right deal, and finally delivering the value after the sale.
This is the most important step in selling (some would argue it is the definition of selling) as it involves determining the expected outcomes if the seller’s products and/or services are purchased. Everything else in the ongoing relationship logically flows from a common understanding of these expected outcomes. How the outcomes are measured is simply how value is measured. Are we trying to increase something, decrease something, do something faster or do it at a lower cost? Ultimately, this can’t be determined in a vacuum by one side or the other. The buyer needs to be transparent with the outcomes to be achieved – because he/she must live with the results! And the seller must be transparent about the outcomes they are comfortable delivering – because they are now on the hook for producing those results!
It is truly amazing how often this critical step is missed and, as previously stated, the current state of technology in sales does not help the situation. For instance, buyers will issue an RFP and then argue they have been very “transparent” on what they want to buy. However, I’ve yet to read an RFP that told the seller why they wanted to buy it – meaning the outcomes this purchase should deliver. This lack of transparency means the buying organizations does not get the benefit of the expertise of the supplier organization. Thus another opportunity to create even more value is missed.
Sellers will argue they are being very transparent about what they want to sell the buyer and when they want to close the deal (usually driven buy their fiscal calendar). However, they too often fail to understand why the buyer needs to buy their products and/or services and why they need to buy them now. What if the seller could actually produce better outcomes and deliver them faster if only they understood what those expected outcomes were? Would that create value for both parties? This lack of transparency also hinders the development of trust between the two parties.
Closing the “Right Deal”:
I believe one of the keys to building trust in any long term business relationship is the sense that each party has towards the sincerity and transparency of the other. As I’ve previously stated, the goal of the negotiation should be to identify the “right deal” that should be closed. By “right”, I mean a deal that is acceptable to the buyer as well as the seller but also a deal that has the right mix of products and services (as well as volumes, pricing, close date, lead times, terms and conditions, etc.) to deliver the outcomes. This can’t be done in a vacuum by one side or the other – especially when neither side is inclined to be transparent.
I believe it is long past the time we shed the shackles of unwarranted secrecy and “holding your cards close to the vest” that has been part of our culture when negotiating B2B business deals. My experience on both sides of the deal tells me it is a waste of time and actually delays the closing of deals and often results in poor quality deals being closed. Furthermore, I see one party or both forgetting the real goal is not to simply “win” the negotiation and close a deal, but rather to ultimately deliver the outcomes.
I constantly hear the biggest fear in being transparent is that the other side will use what they learn against you in the negotiation. As you’ve most likely heard me say ad nauseum, this is an unfounded fear. Power and leverage are derived from alternatives to doing a deal – not what is important to each side. By being transparent, you actually empower the other side to help you get the right value out of a deal. The key to transparency is for the seller to clearly “connect the dots” between the products and/or services they intend to offer and how they relate to delivering the final outcomes. This helps the buyer see that the seller is not simply adding unwarranted items to pad the deal size, but rather is clearly focused on the outcomes.
By providing options, the seller is also being transparent that they are flexible and want to close the right deal given buyer’s current situation. Likewise, buyers should not be playing the role of Caesar giving the thumbs up and thumbs down to various aspects to the seller’s offer – which often sends mixed signals to the seller and results in poor deals. Does technology today facilitate transparency when trying to negotiate the right deal? The answer is not to my knowledge, but I believe it should and it is possible to design a system to do so.
Delivering the Value:
It doesn’t take much imagination to see that if both sides have not been transparent on the desired outcomes or the right elements in a deal to achieve those outcomes, the odds of actually delivering the value will be near zero. And yet I find this to be the norm for too many B2B relationships. It is little wonder customers are routinely price shopping and sellers are struggling with anemic sales pipelines (especially from their install base) and high customer churn! It’s baked into the way they have been doing business and the lack of transparency.
To recap, the essential elements of a value delivery plan should be:
- Mutually defined outcomes with agreed upon success metrics
- Clearly defined steps for getting from here to the outcomes by a certain timeframe with mutually assigned responsibilities
- A transparent scorecard for reporting and measuring progress
- A communications plan for meeting regularly to discuss progress and the past value delivered (PVD)
None of these steps can be done alone by the seller nor can the buyer tackle them alone, but too often that is exactly what is happening. If the results or progress are not transparent to both parties (24/7), then there is always room for doubt about the actual state of affairs. Furthermore, both parties lack the ability to quickly identify issues and tackle them in a timely fashion. Complete transparency is called for and that very transparency can be facilitated by technology. Designed correctly, the data is both populated by the buyer and the seller and fully accessible to both parties at any time. This will build trust between both parties and facilitate the long term business relationship.
Next time we’ll explore the much misunderstood concept of value and how it should be the central focus to any platform that facilitates collaboration and transparency.
Until then, good selling!