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Sales Depend On Contracting Competence

March 4, 2010

In today’s IACCM ‘ask the expert’ call, Barry Trailer of CSO Insights revealed that almost one in four prospective deals result in no award. That is in addition to the fact that average cycle times are lengthening and the number of meetings required to reach closure is increasing.

These are significant issues, especially when you add to them the finding that sales quotas have risen strongly – despite a recession where people are chasing a smaller amount of business to earn their incentives and bonsues.

Given this shocking environment, no wonder that Sales organizations – and individual sales representatives – become desperate. No wonder there is an inclination to over-commit, especially when the biggest single reason that Sales cite as the cause of losing business is ‘the competitor’s price and terms’.

IACCM research revealed that both Procurement and Sales Contracting professionals are concerned about the increasing ‘unethical’ behavior of Sales. But maybe we should be pointing fingers in another direction. Who is it that creates the policies and sets the budgets? Who is it that demands heightened sales performance and increased closure rates, even in the midst of recession? It is not Sales, it is executive management.

So we must ask ourselves, as professionals, what ‘ethical’ position are contracts and legal experts taking? Are we collecting data about the irresponsible commitments that are being made to win business and remonstrating with executive management about the fundamental misjudgment of driving sales performance in this way? Or are we standing on the sidelines and criticizing the ‘cowboys’ in Sales? Are we working as dedicated team members to assist closure of deals on the right terms, or are we watching as Sales are forced to jump higher and higher and observing how they fail?

Every company depends upon its sales expertise. Without it, no one in Procurement, Contract Management or Legal would have their job. It is time that we make sure we are stepping up to our responsibilities and assisting the sales effort by a) ensuring executive management is given the insights it needs about the commercial and ethical impacts of its own behavior and b) extending a helping hand to the sales organization and offering a platform so that when they have to jump, they are far more likely to succeed.

And for those in Procurement, just remember that those bogus RFPs, those competitive bids that are really about squezing the incumbent, are not unique to your organization. They are also absorbing the time of YOUR sales representatives and reducing your company’s competitiveness and efficiency. So when you feel tempted to launch another deal that will result in no award, think again. And before criticizing the ethics of Sales, make sure we have shone a careful light on our own ethical standards.

4 Comments
  1. I’m sure the super-majority of contracts and legal folks work hard to help sales close business; just as the super-majority of sales reps work hard to do the right thing and NOT over promise or over commit. But you make the good point that each of us should reflect on our own actions and ask how/whether we could do more to further these ends.

    • Barry, I think you are absolutely right that few have bad intentions. But all of us have a tendency to judge and apportion blame, rather than perhaps step back and try to understnad why people behave as they do. With this understanding, we can often change behaviors or attitudes through our assistance or collaboration.

  2. Steve Deeley permalink

    You might want to glance at a recent case in the Uk causing shockwaves in the bid/tender community: EDS vs BskYB, where *interim* damages have been awarded at £270M.

    Critical to the scale of damages was that a member of the executive of EDS, acting as a high-level salesman, overrode the engineering analysis of how long the job would take.

    http://www.ft.com/cms/s/0/e2bd88fe-0ae2-11df-8a26-00144feabdc0.html

    • IACCM members may want to learn more by joining an Ask The Expert interview that features this case on March 18th (see events listing at http://www.iaccm.com). In HP’s latest results, it is also noted that further provisions have been made to cover continuing fall-out from this law suit.

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