Market Trends Impacting B2B Business Negotiations
There are a few relentless market trends impacting how B2B companies do business. These market trends are long-term and impact the top and bottom lines of B2B companies around the world.
1. Customer Consolidation
The big are getting bigger through mergers and acquisitions and geographic expansion. For you, this means more revenue from fewer customers and greater risk.
2. Centralisation of Decision Making
Big customers leverage their buying power and tightly control supplier selection. Meaning you are now negotiating with head office; existing relationships are less influential.
3. Different Decision Makers
In a post-GFC environment, every decision is scrutinised. Procurement is involved in buying decisions where they weren’t before. Senior executives are reviewing even small details. If you can’t get your value message across to procurement and senior decision makers, you will compete on price and be forced to discount to win and keep business.
4. Increasing Competition
Competition does not stand still. Large traditional competitors want more market share. New, nimble competitors, are chipping away at parts of your business. New business models mean cheaper prices that your customers can’t ignore.
All of these market trends are making it harder to keep, win and grow customers profitably. Many companies are reacting not responding: by discounting to keep and win business. Gross margins are shrinking creating extreme pressure to cut costs, making it even harder to compete and grow.
The trends are common across industries, sectors and countries and are of critical importance to negotiators because there are two key themes out of those trends that will require you to rethink your approach to the market.
Trends translate into themes
Account Managers will negotiate more often now with procurement in critical accounts, in many parts of the world. Their negotiating ability is a critical lever for B2B customer value in a rapidly changing environment.
The emerging themes are:
- Procurement – undervaluing suppliers
- Global Negotiations – understanding culture
We will explore each of these themes in future blogs. For now, consider: can you explain your value to a major customer and then prove it?