Reed Holden wrote an interesting piece for Harvard Business Review Blogs in which he reports that corporate buyers are playing a “high-stakes poker game” with their suppliers – and are winning. He suggests that corporations are changing their patterns from being “relationship buyers” to “economic buyers”.
Relationship Buyers focus on procuring products, services and savvy business advice from their suppliers in order to drive business value through improved customer relationships. Trust between buyer and supplier is implicit.
Economic Buyers focus on price and value of a product or service only. They’re cutthroat in their negotiating tactics and don’t see value beyond the fast product turnover. There’s no inherent trust between the players.
In our experiences, this game is played in both B2B and B2C industries and the battle to reverse the trend is akin to pushing a boulder-filled cart uphill. Suppliers are trying in vain to demonstrate that end-customer value is not generated by the lowest price but the greatest experience, which sometimes requires a more costly product. Or a buyer-supplier relationship that is strong enough – and profitable enough – to allow adequate margins to support customer-focused strategies.
Customer Experience, Courage and the Real Victim
As I’ve often argued within this blog…this requires courage. In recessionary times especially, customer experience design requires courage. Courage on the part of the supplier to stick to their guns and not play the game and courage on the part of the buyer to operate based on the long-term needs of the customer, not the short-term needs of shareholders.
Holden calls suppliers the victims and categorizes them as either Rabbits or Advantaged Players. Rabbits are the competing suppliers that corporate buyers have no intention of purchasing from, but use competitive bids as a means of reducing the price of their preferred vendor’s quotes. Advantaged Players are the incumbent suppliers who are made to sweat for every order and constantly threatened to have their contracts canceled based on competing bids.
I disagree. The real victims are the shareholders whose businesses are continuing to fail as a result of operating practices that fail to build strong customer experiences in favor of short-term, gross revenue-driving tactics. Have we learned nothing from what put us in this economic mess in the first place?
What is your experience with the games corporate buyers play? Is this a modern reality or a cyclical trend in response to the poor economy? Join the debate by sharing your opinions and thoughts below.
Sam Fiorella – Sensei
Feed Your Community, Not Your Ego
