It’s no secret that as the economy recovers, more and more businesses are looking to procurement professionals to help reduce costs, improve profitability, build better supplier relationships, and streamline new product development. And today’s procurement professionals are up to the job. In an article written by Susan Avery, she highlighted some statistics showing the positive changes that have occurred in the industry in the past 10 years. Overall, she showed that procurement professionals are more educated, bring a wider diversity of experience to the role, have a greater financial responsibility, and a big percentage of them now report directly to the company’s CFO.
But along with these positive changes in the industry come some challenges. Many salespeople resist the idea of dealing with procurement departments because they’d prefer to rely on their relationships with business unit managers. And unfortunately, this has led to some sales traps that unknowing procurement professionals fall into.
Here’s a rundown of some of the key sales traps you should look for next time you’re in negotiations with a vendor.
Currying Favor with Business Unit Managers in an Attempt to Influence You
As a procurement professional, it’s your job to ignore the bells and whistles of products and instead compare the bottom line prices of bidding vendors in order to get the best deal for your company. It’s called commoditizing a product, and if you can achieve it, you will realize significant cost savings for your business.
Salespeople have entirely different goals from procurement professional. They go by the rule that “people buy from people they like,” and once they realize you’re only interested in the numbers, they may try to go around you. For instance, if they can convince other influencers that you’re not giving enough weight to their solution’s differentiation, they may join with other forces to try to subvert your decision.
One way to prevent this from happening is to act as a gatekeeper for the salespeople who are submitting proposals. Do this by preventing access to the rest of your team by not divulging who they are, or the roles they play in the process.
Ignoring the Details of Your RFP
When salespeople believe they understand your needs better than you do, or are unable to comply with your RFP, some of them will purposefully submit a noncompliant proposal in an attempt to put the focus on what they can provide you with. They hope to convince you that the value of their product is so great, you will reconsider your needs. And in their minds, all you have to do is question them about why their proposal isn’t compliant so they can begin a conversation with you to sell you on their product.
You can react to this type of sales trap in two ways. If you find merit in their assessment of your needs, you may decide to slow down the procurement process while you reevaluate the situation. And if you decide they have a point, you can either grant the bid to them or release an updated RFP to all the bidders, so everyone has a chance to rebid according to the new requirements.
Using Discovery to Make Future Negotiations Impossible
When you’re negotiating online with vendors, you likely have a few tricks up your sleeve; such as bringing in more decision makers later in the process to force vendors to renegotiate their proposals. And you know that by keeping as many vendors in the process as you can, it will force vendors to compete with one another.
Some salespeople work hard to prevent you from being able to use this tactic. To accomplish this, they ask you to cooperate in outlining the decision process in advance. They may inquire about who the major players are and what your timeline is for the process. If they can convince you to provide this information, they will call foul when you introduce another decision maker you haven’t disclosed in the outline. This is a great way for salespeople to attempt to control the process.
Your best response to this type of request is to refuse to grant the salesperson this type of control. There is no reason to commit to a timeline or reveal the other decision makers before you’re ready to.
Taking Away Your Negotiating Powers with Disclosure
An important part of your role is to research and identify areas in a vendor’s history that can be used later in negotiations to reduce the cost. Many procurement professionals hold on to this information and pull it out at just the right time in order to get the best possible deal. But some salespeople are on to this tactic and try to reduce the impact of the information by preemptively disclosing it before the negotiation begins. They believe if they address your concerns at the beginning of the process, they will take away your control of the situation and get the conversation back to the value they can offer your business. For example, if they know their performance level is points below your desired range, they may disclose this fact up front and agree to a slight cost reduction; so you won’t be able to use the company’s performance level to further drive down the costs later.
If a salesperson tries to take control of the negotiations in this way, you don’t have to buy into their belief that because the information is on the table in the beginning, it can’t be used later in negotiations. The information is still valid, and if you choose to, there is no reason why you can’t use it to leverage the vendor against their competition.
Selling to an Individual Instead of the Business
Another tactic some salespeople use is to focus on an individual’s needs, rather than the good of the company in order to make the sale. For example, if a vendor builds a relationship with a business unit manager and sells him on their services, the business unit manager may come to you and ask you to give that vendor the bid.
In order to prevent scenarios like this from happening, company policy should state that vendors and all other salespeople are required to deal exclusively with you, and business unit manager are not allowed to entertain bids and proposals.
Refusing to Allow You to Commoditize Their Solution
Your role is to take apart each bid, piece by piece, and compare them to find the best value for your business. While not all vendors are the same, if they’re responding correctly to your RFP, their proposals should include certain elements that allow you to compare them with other bidders.
Some salespeople make it a point not to allow you to commoditize their solutions. Instead, they present you with a total solution that makes it impossible for you to break it down into pieces. Unfortunately, that prevents you from being able to compare their bid to other vendor’s. On one hand, this is a sign of a salesperson who truly believes their solution will add total value to your business, but on the other hand, it makes it impossible to conduct a fair analysis of their proposal.
If a vendor won’t comply with your proposal requests, you have two options. You can either consider the proposal as a total solution, and do your best to compare it to the other compliant bids, or you can use their noncompliance as a reason to eliminate them from the bidding process.
Salespeople have one goal in mind: to win your business. Your goal is to do what’s financially and strategically best for your business. Most procurement professionals agree that a win-win is a more desirable outcome than reducing the process to harsh negotiations where only one side wins. When you’re armed with the most common sales traps, you’re more likely to make that a reality.