Five sales negotiation tactics to use with procurement. You know,
we often hear from our clients about the challenges they have these days
negotiating with procurement and this is no surprise. Over the past few years,
procurement departments have become more powerful, more sophisticated,
and at times, they seem dead set on commoditizing every aspect
of our solution. For sales professionals, negotiating with procurement is an ongoing
struggle of dealing with third-party negotiators, blind RFPs, reverse auctions,
commodity pricing, and hardball sales negotiation tactics.
So, what can sales professionals do to avoid having their solutions commoditized?
Let's dig a little deeper into the role of procurement and understand what they're
trying to accomplish. They have a job to do.
They're trying to do the best they can to protect the organization,
to maximize the ROI, and to get the best deal possible.
By understanding their objectives, we'll be in a better position to work
with procurement to achieve a successful sales outcome. Here are five common
negotiating tactics used by procurement and their business goals together with a
corresponding counter tactic that you can use in response. The first procurement
tactic is to deflect or discredit your value proposition. Procurement's goal is
to attempt to discredit or decouple all the value you've worked so hard to build
with the business unit buyer. Procurement's goal is to demystify your
value proposition so that they can compare price among vendors.
Procurement would like to focus on discrete units instead of the overall deal
so that they can compare least common denominator pricing and get the best
deal possible. So a counter tactic here is to build a stronger relationship with the
business unit buyer in the first place, develop strong customer coaches,
and present a compelling business case for your solution. Start early, sell wide,
sell deep and within the business unit. The second procurement tactic is that they
want to commoditize or control your response. Procurement would
like to control every aspect of the sale so that they can avoid surprises and do
an apples-to-apples comparison with your competition. The problem is,
your apples are different. And you need to convince the business unit
buyer of this in the first place or you will never get past the
comparison spreadsheet. So a counter tactic is to employ a
value-based selling approach that quantifies the overall value of your
solution and presents a total solution that can't be dismantled into component
prices or commoditized. Educate the business stakeholders and
procurement on why your solution is different and restate your value
proposition often. Third procurement tactic you may run into is to limit access
to the business. As we discussed, procurement would like to control all
aspects in the deal, including who you can speak to.
They don't want to get surprised by a business unit leader making a business
decision that undermines or supersedes the procurement process.
Procurement hates surprises. So a counter tactic is to build a strong
network within the business organization. Leverage inside and outside resources
to help get the lay of the land before procurement puts a gag order
on the vendors. If you're told you can't contact anyone outside of the RFP process,
you have a business decision to make in terms of the risks and rewards
of following those rules. Most business decision makers aren't aware
of these rules and may not agree with them. If you find that you're responding
to an RFP and you don't have any other business relationships
within the organization, you should seriously consider your chances
of success in this deal. Blind RFP responses seldom produce
desirable results for the responding party. So another procurement tactic is
to use past performance and history against you. Procurement would
like to have as much ammunition as possible in their arsenal to use
against vendors in an effort to drive down prices and negotiate a commodity deal.
They're trained to research background information on each vendor to determine if
there's any information that can and will be used against the vendor.
So the counter tactic is to be proactive. Anticipate issues and concerns that may
come up and have your responses prepared. Consider a pre-emptive strike to disclose
negative information so that you are in control of the discussion.
Return the focus of the sales negotiation to the deal at hand and the overall value
proposition your solution is bringing to the business. Another tactic you may run
into is the good cop - bad cop or the mystery decision makers.
Procurement would like to keep the power and the leverage on their side and they
can do this by presenting additional decision makers or hoops to jump
through late in the process. This keeps the vendor guessing and vendors
are then often forced to renegotiate the deal late in the game when the clock is
ticking to get it done. So counter tactic is working hard
during the discovery phase to determine who all the decision makers are and how
the decision will be made. Map out a timeline for the decision
process and ask the customer to respond to the schedule. This helps to highlight any
additional steps that may need to be addressed and helps prepare you
for what's ahead. If a bad cop is introduced late in the game,
attempt to determine their position and interest and refer back to the agreement
and decisions that have already been made with the good cop. Procurement wants
to keep all of the vendors in the game as long as possible in order to provide
leverage against the competition. So, remember that they want us there.
We typically have more power in the situation than we may give ourselves
credit for. These are a few examples of negotiation tactics commonly used
by procurement. As a sales professional, you must be prepared to counter
these tactics, primarily, by planning, leveraging your relationships,
and reinforcing the shared interest and value proposition you've worked so hard
to develop with your customer. Remember, you're selling a solution that will help
your customer accomplish their business objectives. Don't let this get diminished
or commoditized by an overzealous procurement department. Thank you.