In a recent column I pointed out the need for salespeople to constantly ask themselves three basic questions about any opportunity:
Should I pursue it? Can I win it? Will it be good business for my company? The criteria I offered focused more on the first two questions.
This month’s topic – whether or not a particular large account prospect will, in the end, be a good customer – falls under the framework of “philosophical alignment.”
If you think the term is just academic fluff, consider the story of Matthew, a salesman for a technology-based company and client of my firm. Matthew suggested he had an account that would be perfect for a “partnership” relationship with his firm: “Alpha Corp.,” a major manufacturer of hand tools and hardware, that had been a prospect of his for more than a year.
Matthew had an excellent contact at Alpha, a true “coach” named Sean, on whom the two of us made a Knowledge Call. But when Sean greeted us in the lobby and took us to a nearby vendor-meeting room rather than to his office, I became a little suspicious.
Meanwhile, Matthew positioned our Knowledge Call with all the right sound bites: “Sean, it’s our philosophy that the better we understand your business, the more value we can bring to you,” he said. “We’re on a homework mission here.”
“That sounds fine,” Sean replied.
One of my first steps in a Knowledge Call is to get a thorough understanding of both the formal and informal organizational structure of the customer. As I often do, I put a copy of our hand-drawn organization chart in front of Sean and solicited his help in filling it in.
Sean froze up. Rather than dodge the issue, I asked him if he was comfortable with the direction in which we were going.
“Well, I guess I’d be comfortable with it,” he replied. “But we have a corporate policy against sharing information about our company with suppliers, including information about who reports to whom.”
This call lasted all of 15 minutes, including 10 minutes of warm-up. In the car after the call, Matthew looked at me both embarrassed and puzzled. “What the heck was that all about?” he asked.
Welcome to the world of philosophical alignment. It was an especially useful lesson for Matthew. When I introduced the term at our kick-off seminar with this client’s sales force, it was Matthew who responded, “It sounds like you’re saying that if our customer’s building is brown, we should be saying to the customer, ‘Gosh, your building is brown Mr. Customer, and so is ours, therefore, our two companies should do business together and have a partnership.'”
Of course, that’s not what it is at all. Philosophical alignment is a way of measuring the quality of a potential relationship between two companies – in short, whether this opportunity is going to be good business.
To establish how philosophically aligned a particular prospect is with your own company, consider the following characteristics:
Information Sharing: How openly does this company share strategic information about itself with suppliers? This, of course, was at the heart of the philosophical misalignment between Alpha and Matthew’s company. You’d be surprised at how many companies talk about partnerships with suppliers, yet refuse to share information. For them “partnership” is just a euphemism for getting the lowest price.
Core Competency Focus: Is this company attempting to focus only on what it does best, or does it try to do everything internally? How much is it currently outsourcing? One very large and successful Wisconsin company – a favorite target for salespeople – is philosophically misaligned for partnerships with almost any prospective supplier. It has a “company store” mentality. This manufacturer has its own doctors and nurses and pharmacists, even its own interior design department for designing office layouts. Those aren’t the trademarks of a company looking for true supplier partnerships.
Purchasing Philosophy: Does the company focus on unit price or total value? A unit price company simply compares the cost of Red Widgets from several suppliers, figuring that all Red Widgets are created equal. At the other end of the spectrum are companies that measure the total value of supplier relationships. They understand that the purchasing process itself costs money. So does maintaining relationships with several suppliers. Thus, I also look at whether the prospect is attempting to reduce its supplier base – an increasingly popular trend in corporate America. On a Knowledge Call a client and I learned that a very large corporation was cutting down from more than 30,000 suppliers to a stunning 1,900. That’s a pretty partnerable company.
Senior Management Involvement: If a target account’s senior executives never meet with suppliers, they probably view them simply as vendors – not partners. Companies whose senior executives take the time to meet with suppliers send a message that they value supplier relationships.
Centralized Structure: Partnering with suppliers is a relatively new concept, yet the practice is most successful when the customer company has a more traditional, centralized structure instead of one of those newfangled “matrix” organizations – most likely because it takes clear lines of authority to transmit the cultural change that partnering requires.
Technology Leadership: Companies that attempt to be leaders in adopting new technology seem to be more interested in partnerships. Evidently they’ve developed a greater willingness to trust suppliers. So look among your prospects for companies that adopt new technology quickly.
Customer Philosophy: A prospective customer that’s a prime candidate for partnership with suppliers is attempting and successfully establishing partnerships with its own customers. If it isn’t, that’s a red flag.
One word of caution: As you try to assess philosophical alignment, make sure you’re getting the perspective of the company and its senior management – not just that of your own contact.
Chasing bad relationships is just too expensive. Ask your salespeople to explain the philosophical alignment between your own company and the target. If you get a blank stare, explain these criteria and ask them to assess how the account measures up. It’s a quick test that could save your company a fortune in money and time.
Jerry Stapleton is president of The IBS Group, based in Brookfield.
April 1998 Small Business Times, Milwaukee