How Procurement Professionals Can Support Sales Success
Procurement (buyer) is simply the opposite of sales (seller). They are on the opposite side of a transaction. The buyer typically has a goal to procure a good or service at the lowest price. On the other side, the seller’s goal is to sell at the highest possible price. There are other factors that come into play such as quality, service and other intangibles. However, I have long been fascinated by (what I call) the “learning space” between procurement and sales.
During my tenure as a corporate procurement executive, I developed great relationships with many of my sales colleagues. I would informally tap them for insights, intelligence and practice as my team and I prepared for important negotiations. In turn, my procurement team returned the favor and became an internal sales resource for procurement insight as the sales team prepared to close deals. It was never anything formal, but something that developed based on relationships.
I was reminded of these valuable knowledge exchanges a couple weeks ago when my friend and former colleague called and asked for a favor. He is now the Senior Vice President of Sales of a global manufacturer, and is bringing his entire global sales team to Cincinnati for an annual meeting, and he wanted to provide a unique experience for his team. The idea was to get inside the head of a former chief procurement officer (AKA me) to enable his sales team to gain insight and learnings for improvement. I agreed to be interviewed in a fireside chat format by a few members of his sales leadership team. The interview would then be shared with the global sales team during this annual sales meeting.
In preparation, I was sent 25 questions, some of which read:
- Please tell us about yourself and your career in purchasing.
- What makes the life of a purchasing agent easier?
- What makes the life of a purchasing agent harder?
- What criteria do you use to evaluate a supplier?
- What are the most common mistakes a sales person makes when presenting their product/project?
- What do sales people do that really piss you off?
- How can a sales person make your life easier?
- ROI Calculations:
- How do you treat ROI calculations created externally vs internally? Does it make a difference who completes them?
- What ROI payback period is ideal? Given a good ROI, what determines which projects get funded and which do not?
- Do different departments have more credibility than others when asking for a purchase (ex. – engineering, maintenance, quality, etc.)?
- If purchasing a competitively priced piece of equipment that increased production, reduced down-time, and cut labor cost, how can a purchase approval still be denied?
- Competitive Bids
- When do you use the competitive bid process vs. just purchasing what you need?
- When requiring competitive bids, what information are you looking to compare? Do you only consider price, or do features and benefits matter?
- When considering a request for purchase, how much weight does the product/brand preference of the requester carry?
- How can a sales person selling a premium priced product separate themselves from other vendors offering cheaper pricing?
- Price Negotiation
- What is the best way to get a sales person to lower their price?
- If you ask a sales person to provide their best price first, how can you expect an additional discount at the order fulfillment stage? How do you negotiate that?
- How effective are time sensitive financial incentives? What other incentives are effective? Sales terms?
- What is the best way to structure a multiple unit discount?
- How can you tell when you have reached the lowest price a sales person is willing to sell you their product/service?
While I am certain that we did not get through every single question, the first few questions led to a free flowing discussion about my perspective on the key characteristics of an ideal sales person. My responses could easily be summed up in five key messages for sales professionals.
Relationships are Important
Never underestimate the value of relationships in business. People prefer to do business with people they know and trust. As I reflect back on my key supplier relationships, I placed high value on those suppliers that reached out to build a relationship prior to a particular business need. I know this is not always possible, but it is possible to emphasize the relationship more than the transaction.
Don’t be Annoying
This is probably one area that makes a sales persons’ job most difficult. It is often necessary to strike the perfect balance between being persistent and being annoying. I have learned that some sales people are just naturals at striking the perfect balance and others are just flat out annoying. My favorite sales people were all very good at asking when they should follow or asking if it was okay if they followed-up within a specific time frame. In a few cases, I ended up following up before they did.
Talk Less and Listen More
Nothing angered more than a salesperson who spent the first half of a meeting pitching their product or service prior to gaining a real understanding of my needs. The fact that we are having the meeting is indicative of a general need, but listening more could open the door to product and/or market expansion opportunities. I am seeing the benefit of this characteristic with our sales team when I was the CEO of ConnXus. We launched four new products by simply listening and understanding our customers’ needs.
It’s Not Always About Price
In my experience, sales people are often too quick to give price concessions. There are certainly times when it is necessary, but I have been involved in several instances where it was not. There were many times where I was simply slow to respond to a sales person on a pending contract award. Unbeknownst to the sales person, the delay was due to competing priorities. They offered an unsolicited price concession. I took it. Thank you very much!
Be Proactive with Innovative Solutions
I always appreciated sales people who proactively introduced new ideas on how we could reduce costs without sacrificing quality. This included improving internal processes, modifying specifications or sourcing substitute MRO-related products. While this often resulted in lower volume or margins for the suppliers, it greatly enhanced our relationship. As a sales person, wouldn’t you rather be the hero that introduced these value-added ideas, or would you rather it come from someone else?
I was pleased to learn that the video interview went over well with the global sales team. In fact, my friend sent me this message (along with the photo above) “You did great man, it was a hit. Thanks again! I hope you don’t mind but I gave 84 sales people your cell number. I told them to call you to practice their pitch!” I hope he was joking.
It was also a hit for me—it provided me with another opportunity to share yet another way that procurement can add value to an organization. Perhaps this will inspire other organizations to leverage internal or external procurement resources to improve their sales process and performance.