5 TOP TIPS TO MAKE PROCUREMENT RELATIONSHIPS WORK FOR YOU
Lots of salespeople, be they junior or very senior, shy away from engaging with procurement. Maybe they view them as some sort of ogre. They aren’t, they are human beings. However, their agenda is very different to that of the salesperson.
When I wrote that I reflected and thought that cannot be true in 2020. But we think it is. We think salespeople still view procurement with suspicion and resist truly engaging. That way might (just) work for a few but for the vast majority it will not work. So how do you go about building procurement relationships that work?
1. Get ready for the right conversation
How procurement professionals are measured and rewarded can make for challenging conversations. Those procurement professionals are trained to be highly analytical so building a procurement relationships can be difficult. And in some cases, have more data than those trying to sell to them. We recall one case where the procurement professional had accurate data on all the competition, their prices and their infrastructure strengths and weaknesses and maybe more worryingly the procurement professional had more data about the company trying to sell to them than the salesperson working for that company!
Clearly, that can make it a challenge if you are a large organisation and your systems do not allow rapid sharing of data.
So, a big plea, make sure your systems can cope and do use a decent CRM. And maybe more importantly make sure your CRM is up to date.
We’ve come across a great company called Introhive who have created a brilliant AI tool that takes a lot of the mundane work out of using CRM and best for me is that it enhances the understanding of relationships and how strong (or weak) they are across the whole account – again using AI. If you want to know more here is a white paper: Whitepaper: Using Relationship Mapping
Tip 1 – get your CRM up to date and keep it up to date
2. How important are you to procurement?
All procurement professionals work to a system. What they call the system will vary depending on their organisation, who they have trained with etc. Fundamental to it will be some sort of category management. A key part of that will be some sort of analysis of each category or subcategory – basically they will be deciding how important you are to them. Of course, their view is likely to be very different to yours. Almost every time we ask senior salespeople what they think the customer really thinks of them and their organisation they get it wrong.
If you have a genuinely unique product or service then maybe, just maybe, procurement might view you as critical or strategic. In practice, your customer organisation is going to have very few suppliers in those categories. The other key factor in your favour is the market conditions – if there are only a few (2-4) suppliers in the market then you are in a better position.
Final point here is about the nature of the procurement organisation you are or might be dealing with. In some sectors, procurement have massive influence, in others substantially less. Working that out can make big difference to what your strategy should be.
Tip 2 – ask yourself some tough questions about how important you are to the whole customer organisation and what you want procurement relationships to be like. This document How important are you to Procurement can help you be more analytical.
3. What is the value to procurement of what you have on offer?
My procurement guru friends keep telling me that procurement is interested in value. And when I talk to account managers they say that’s very rare. Their response is the only thing procurement care about is price and funnily enough they always want it cheaper! We have been teasing away at this for years. There is a challenge – working out what value means is difficult. And that is for sales and for procurement. No wonder building procurement relationships is tricky.
For procurement they often get targeted on cost reduction and the easiest way to measure that simplistically is through price reductions. Taking a much more holistic view takes time and effort. For salespeople they struggle to build a measurable picture of the value they create. They will wax lyrical about the value of brand, reliability, reputation etc. But they seldom put numbers against those things.
Again, it is not easy, but most B2B organisations we have worked with have some data that enables some quantification of those sorts of things. What we find in practice is those examples are seldom shared and sit in specific silos. The other key factor is that the value articulation needs a lot of detail. The procurement professionals are adept at finding and capturing the detail. Most salespeople are not. The fundamental message here is if you do not give procurement other ways to measure you they will use price. That’s fine if you are the cheapest in the market. It is disaster if you are not the cheapest.
Tip 3 – build some models that quantify the value you can create.
4. Let’s talk about power
Almost every account manager we have ever worked with thinks that the customer holds all (or at least most) of the power in the relationship. In practice what we find is a more complex situation. The power assets each party has are often interrelated. We noticed that account managers tend to underplay power assets they have, whereas procurement are trained and very effective at both analysing their power assets and making sure they apply maximum positive leverage.
Do you notice a theme here? – As account managers we need to take an objective view. That needs some deep and, ideally, neutral analysis. Good example: we did this recently with a group of account managers. First time around they struggled to come up with more than 7 power assets in their favour. Challenged (and maybe cajoled a bit) we got that up over 40. Of course, not all of them were of equal strength. Doing the same from the procurement view helped the account managers realise they could alter the power balance in procurement relationships. It takes analysis and time.
Tip 4 – list out the power assets you have – test yourself to get to at least twenty. Then do the same for procurement – compare and contrast and think about how you minimise the impact of their assets and maximise the impact of yours. Here is a simple template to get you started: Power asset – simple check list
5. Influencing across the whole account
Let’s talk about the whole influencing strategy. The big challenge here is that most people just don’t think early enough or broadly enough about what their messages are, who needs to hear them and the best ways to get them over. If they do any thinking, then it is when the RFP (or similar arrives) and that is far too late. So, early on pull together a map of all the stakeholders at the account. (Literally draw a picture), work out who in your organisations needs to talk to whom and then do the difficult bit work out what they key messages are. And then keep repasting those messages.
Tip 5 – this is a long-term play – you can’t suddenly do it three days before you send in the tender response.
And a final thought – Dealing with procurement is challenging – in this blog we can only say a little about what can be done. What is clear is that the traditional approach salespeople take can be refined adapted and added to improve chances of success. If you want to know more click here and let’s have a conversation.
Hoping you find this helpful; keep safe and well
About John Moss – John’s extensive background in sales, marketing and general management has been followed by three decades in management consultancy. John is fiercely committed to helping individuals and businesses grow and succeed; his talent for spotting what needs to be done, his tenacity for making sure things then happen, his commitment to growing long-term business relationships and his ability to impart that knowledge to other people make him an inspirational consultant, leader and coach.
At JA Consulting we help businesses and individuals take the theory of selling and put it into practice. We’re here to help you learn how to spot and grow business opportunities, how to develop strong and transferable selling skills and how to generate robust account management.
If you have any questions, our team can assist you as usual via phone or email.
Look out for more hints and tips coming soon.