Position on the Buy-Sell Hierarchy

About the Buy-Sell Hierarchy

The Buy-Sell Hierarchy is a visual method of assessing the current situation and where you want it to be within three years from now.  It provides reliable benchmarks to measure not only how you see the account, but, far more importantly, how the account, right now sees you and your company.

It's not you, but your customer, rather, the key individuals your Field of Play, who decide at what level of the hierarchy you're positioned, and each Field of Play Strategic Players may have a different view of the matter.  Moving up the hierarchy means earning the right to be perceived as an "upper-level" supplier, and that is why the descriptions at each level of the hierarchy refer to the Field of Play's assessment of your company's position.

Additionally, although in the diagram the levels of the Buy-Sell Hierarchy look like steps, more accurately think of them in terms as positions along a continuum.  Your customers will probably have a pretty solid sense of where you're positioned, but it may not be quantifiable.

Finally, the hierarchy isn't as stable as it looks in the diagram.  It is more relative to an escalator that moves unpredictably and in both directions.  Which means that even though you may be positioned at Level 3 today, unless you're vigilant you may find yourself at Level 2 tomorrow.

Fig. 37, Showing editing levels in the Buy-Sell Hierarchy
 

Buy-Sell Hierarchy Levels

Level 1 - The Commodity Corner

Level 1 - The Commodity Corner is the lowest level of business relationship.  You are seen as the supplier of a commodity.  It's easy to get positioned at this level, but there isn't much leverage here for establishing long-term relationships.  In this position, the customer does not have the ability to differentiate that defines a product or service as a commodity.  When there's no perceived difference, and all vendors meet minimum specifications, it doesn't matter what you are selling.  There is nothing wrong with this position if that is where you would like to stay, but in targeting Large Accounts, it's usually a precarious position.  When customers see you as a commodity supplier, you have virtually no control over what happens in there account and almost no chance of growing a long-term relationship because of commodity trading rules-"Buy cheap, sell dear."  In other words, if your customer sees you are merely pushing a product rather than developing a relationship, then your only bargaining chips are availability and low price.  This is not a very secure position.

Level 2 - Providing "Good" Products

Level 2 moves you up on the Hierarchy in that the customer sees you as a supplier that is above a commodity.  Any product or service feature that sets you apart from the competition, that gets you recognized by your customers as an innovator, can help you establish second-level business relationships.  But to be seen as providing "good product" is still a tenuous relationship position because of competition.  You can establish a competitive  position with bells and whistles, but you can't maintain it.  Unless you've got a patent lock on your distinctive feature or benefit, eventually the competition not only catches up, but leapfrogs over you and you're back to selling commodity-style again.  If you want to stay at this level, you have to give more and better service to stay at the level.

Level 3 - Dedicated Service

Level 3 means you've earned the right to be seen not just as the provider of excellent products, services, or solutions, but as a company that makes a special effort on the customer's behalf.  In Level 3 the Field of Play's understanding is that it's getting something more than your other customers are getting.  For example, at Level 2 you install bug-free computer systems on time, for all your customers Level 3, you provide a system training program that is tailored to a specific customer's skill sets.  At Level 2 you provide everyone with 24/7 technical support; at Level 3 you give one Field of Play a dedicated help line.  The differentiating  factor is going above and beyond all other Level 2 requirements for a specific customer.

Level 4 - Crossing the Chasm to Business Issues

Level 4 is taking a major leap to Level 4 of the Buy-Sell Hierarchy  over the  Level 3 relationship areas "the high quantity of competitors and customer's sensitivity to product price".  A customer at Level 4 perceives your company as providing not just good products and extra service, but help in the understanding of their business issue.  When you're positioned here, you understand each account's business problems and objectives almost as well as you do your own.  You generate ideas for addressing not just customer's day-to-day operational needs, but their ongoing concerns about things like profit, productivity, and go-to-market strategies. You may provide a wide range of ancillary supports that may have virtually nothing to do with your product or service on top of products and services that address those concerns. As you cross the chasm into a Level 4 relationship, you're contributing something that few competitors even think about providing, and you can begin to sell up to value, not down to price, meaning your conversations with the account are less likely to be price sensitive, because you're perceived as delivering value that includes your product and service offerings, but also goes beyond them.  Delivering bottom-line value will get you positioned as a Level 4 supplier only if people in the Large Account see a clear and explicit connection between your contribution and the added value to their firm.  Organizations that are most successful at managing high-level relationships invest considerable energy in "merchandising" their success in showing key account players in ever instance, how their business concerns have been directly impacted by the supplier's activities.

Level 5 - Becoming the Account's "External Asset"

Level 5 is a mutual business relationship to goes both ways.  At Level 5 you've become an ex officio member of the customer's team.  You're no longer a competing vendor, but a trusted advisor.  In this facet of business relationships, you go beyond providing your customers with good products or exceptional service and even beyond giving them help with short-term business concerns, instead you become a consulting partner rather than a mere provider.  You contribute to their ongoing organizational productivity, and are therefore rightly perceived, by people up and down the scale of their organization, as helping them run their business.  When it comes to "unfair competitive advantage," this is a good as it gets.

Points to Consider

 
  • As you move up the hierarchy, competition decreases, simply because so few companies know how to present themselves as addressing their Large Accounts organizational and business concerns.

  • There is less sensitivity about price.  If you are recognized by key players in the account as offering not merely good products and services, but true added value, they will not want to jeopardize that value by shaving percentage points from the price.

  • The importance of features decreases, because the contribution you're seen as making to your clients' businesses outweighs the significance of anybody's bells and whistles, so you're less likely to have to "cram product" and more likely to be delivering solutions rather than promises.

To edit the Buy-Sell Heirarchy:

Click on the (Please select) text in the view you want choose the level.

Fig. 37a, Buy-Sell Heirarchy editing

Select the radio button corresponding to the level you want to select:

Fig. 37b, Buy-Sell Hierarchy level selection

Click off the section when you are done making your selections.

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