Firms exist to serve other firms and individuals. In a B2B scenario firms serve other firms. Let me consider the requirements that are visible and expressed by Firms to procure new goods and services. It is what is available in structured RFPs and RFQs. Vendor Firms bid for it and at most times the one with the right connections – (Which knows the CEO, Knows the Project Manager, Knows the user) wins. The win is attributed to good connections.
When I really think, what is it, that my good connection gave, which helped me close my deal and I come back to the very fundamentals of Marketing.
The terms NEEDS, WANTS and DEMANDS.
An RFP is a demand by a Firm (Firm A) which it will like to be fulfilled, because it has an approval to spend so much on a project/product for fulfilling a specific requirement. The RFP is a globally available expression of such desires backed by a financial willingness to buy from the most qualified seller. DEMANDS are important as they have a strategic connotation, where a firm that is floating the RFP adds a cloak around the specific requirement, that make the solution to the requirement unique to the firm.
Then comes the WANT. It is a desire, which need not always have a justifiable correlation with the cost at which this desire could be fulfilled. WANTS are generally posted by middle level managers who wish well for Firm and who collect best practices (Processes/Features/Specifications/User Interface models etc.) from within organizations and from outside (including competing firms/products). These WANTS could give a One-up-manship to the product/project for which the Firm A is floating the RFP.
Then finally at the root of all this is the NEED
The NEED is a basic requirement at the center of WANTS and DEMANDS. It is as basic as a Human Being’s need for food or shelter. The Firm needs a solution to a specific problem. For example, a software developer in a geographically distributed project team NEEDs to be able to interact simultaneously with multiple of his peers. The basic NEED is to be able to have a crisp and clear multi-location conference like discussion among team members.
The basic NEED gets transformed to a WANT with frills like, Video Presence, File Sharing, meeting reminders, automatic call routers, mute and record options etc. etc. And what translated to the RFP as DEMAND are the basic NEED + half of those frill features (WANTS). The trimming of WANTS happened due to cost, infrastructure, security and other strategic considerations.
Coming back to why Firm X won the deal, is because through its connections, it was able to understand the basic NEED of the Firm A and never lost sight of the basic NEED while proposing its product/service/solution.
The Firm with the connections, picked up the DEMANDed features, met the project managers and negotiated alternate and toned down version of their original WANTS (all of which no longer reflected in the RFP), and made sure it addressed the basic NEED and all this at a cost that suited the bidding Firm. Mind you, the NEED could be something that is not related to the product at all and could possibly be a legal, security related, or simply a long term commitment like warranty and support related NEED.
This knowledge of the NEEDS and WANTS and respect for the various levels of the Firm A, won Firm X the deal, though visibly it was because the Sales guy golfed with the CEO and dined with the Project Manager of Firm A.
** Of course I am not considering the deals where favoritism in return for other favors swing the deals. I am also considering that the pricing or a perceptible price for the same product or service by all bidding firms was similar. (I have more to say on perceptible ROI, which I will, on another blog)