Procurement: do you sell around them, or with them?

David Freedman, associate director at behavioural change consultancy Huthwaite International, looks at how best to approach the issue of procurement and the people that pull the strings.

Selling to corporate customers was never particularly easy, unless you had first mover advantage supplying a market whose appetite for your product was obvious; or an unassailable brand; or control of the supply of a scarce resource on terms that no competitor could match.

It has always required propitious economic conditions, a credible offering and, above all, skill.

For most people, most of the time, the major selling hurdle was to persuade the people who were going to use your product or service that it would solve their problem and do so better than anything else on the market, at a price that helped both sides to capture value from the transaction.

The predominant challenge was to make a convincing case to what I call the ‘user-buyer’: the bank’s IT director who needed your e-security solution; the facilities manager who needed to know your air-conditioning is going to keep his buildings cool; the engineering director who needed your firm’s consultancy help to accelerate the market-readiness of her next generation turbine engines.
But now people in business development are increasingly agreeing that the interposition of procurement professionals between the seller and the user-buyer is making matters more complex at best, and almost impossible at worst. Procurement people can materially influence the outcome of your sales strategy and the nature of your key relationships, for good or ill.

At one end of the spectrum procurement are well trained (either through professional bodies or degree courses, or both). They are well organised – into category management teams. And they have advanced tools to segment suppliers – both at the initial purchase and during the lifetime of the relationship – placing them into boxes where they can extract the maximum value for the minimum effort and cost.

At the other extreme, they are unskilled and unsophisticated – but just as potentially damaging; steeped in what Cory Billington calls ‘attack dog’ thinking. These are the procurement staff unable to think of a supplier as anyone other than a discount ready to be extracted.

Their bonuses often rely upon this, and nothing else. Value, product appreciation, vendor performance, your strategic importance to their organisation as a whole: these are often alien concepts. And guess what? Your real user-buyers don’t much like it either when their procurement colleagues interfere to slow down or prevent a business-critical purchase they are trying to make from you.

But problematic though the rise of procurement may be, sellers cannot simply wish it away.

More on procurement:

We have carried out extensive research and spoken to many buyers over many years to find out what they are looking for from salespeople. Senior procurement professionals in the more mature organisations have a consistent message. ‘Why’, they often ask salespeople and bid managers, ‘do you always leave us till last? Why do you try and avoid us? Are you surprised that, after you have sold your ideas to your friends inside our business, that procurement then comes along and tries to take 15 per cent off all your prices? If you don’t build the value for us, why wouldn’t we seek to destroy value for you? Let us in, and let us see your value’.

In many ways they should be the first people you call on, even when there is no sale in progress. The user-buyers may be cautious about budget these days. But their colleagues in procurement never stop refining and reviewing, and amending and updating and rationalising their preferred supplier lists. If you are going to be on that list, arguably your relationship with procurement during that period before the sale really begins is the most active relationship you should have with your target customers.

So that when that user-buyer does eventually go to the procurement department and asks them to organise a competitive tender, it is your name that is at the front of their brain, and top of their list. If your competitors have been neglecting procurement, they will be nowhere.

Before or after RFP, gaining some subtle understanding of procurement’s processes, internal profile, reward systems, closeness to the heart of the business will help vendors create long-term value for all parties. Do they try and drive everything into the commodity segment? Yes, if you let them. Are their statements that you must accept onerous terms and conditions as a condition of bidding, and that you may not contact your friends inside their company after a bid has been launched, actually true? Our research says: emphatically not.

Procurement might be more visible these days, but by building your value in their minds, and demonstrating that you also have power and allies within their organisation, you can still sell successfully. What you absolutely cannot do is ignore them.

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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