We need to talk about procurement: tips to negotiate better deals
In this new column, Mike Lander takes us behind the scenes into the world of procurement – as an ex-procurement director, he has a lot to share – and provides practical tips on how to level the playing field and get fired up about negotiating a deal.
Picture this – you’re in the midst of pitching to your dream client and the following exchange happens:
You: “So, based on our discussions, it looks like we’ve agreed that we’re a great fit to deliver your brief and hit your targets. What’s next?”
Mike Lander, CEO of Piscari gives us some valuable insight on how to better negotiate our deals
Client Marketing Director: “Yes, we’d love to work with you, you just need to get this past Procurement and we’re all good I think.”
You: [heart sinking] Ah, right, yes...
The last time this happened, 6 months of sales effort went down the tubes.
The word ‘procurement’ sends shivers down the spine of most agency leaders, but it doesn’t have to. I’m here to let you in on a few secrets that will take that sinking feeling and turn it into excitement, possibly even enjoyment. (Trust me!)
Who are they?
Firstly, procurement people are just that – people. If we think about a typical procurement professional, they’re usually:
Rationalists, highly numerate, analytical and tough minded.
Action oriented, they need to get a deal done on attractive commercial terms that delivers tangible business value.
They are almost always professionally trained negotiators, it’s a core part of their job.
Quick tip: Look at their LinkedIn profile and start to understand the language they use and their job titles. They will have titles like “Marketing Category Lead” or “Marketing Procurement Lead”. Watch out if they have been a “Buyer” for a retailer in their previous life, they will be formidable negotiators.
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What do they want?
Let’s start by understanding their priorities:
Savings have been one of the top 3 priorities for over 10 years. Understand that there are typically 3 types of savings; Cost saving, Cost Avoidance and Value Add. I will cover this in more depth in another column.
They’re also tasked around risk management, sustainability, innovation, quality and reliability.
Always remember - they’re not just being difficult, a big part of their role is to protect their organisation and deliver value-for-money.
So how do you negotiate with them?
You need a framework to think through the negotiation in logical steps. This will help you stay focused, reduce anxiety/emotion and get you a better deal:
Start with writing down the context of this deal; the goals (yours and theirs) and the criteria by which you propose a negotiated deal is agreed.
Work out the stages of this negotiation and ideal timelines (it’s simply a starting point).
Decide on your negotiation variables and the acceptable upper and lower limits.
Make sure you keep track of issues as they come up and how you’re going to resolve them.
Practical steps for a positive negotiation with procurement:
Research them on LinkedIn, find out which categories of procurement spend they’ve dealt with and read any of their posts/comments.
Be on your guard if they’ve worked in direct procurement or have had a job-title of “Buyer”, e.g. if they’ve been a fruit and veg buyer for a big retailer they will be formidable negotiators.
Given that “savings” will be on the agenda, prepare for the “negotiation chip” (have a look at this quick video on how to deal with “The Chipper”). Start with the tangible value that you will be creating, then compare that to the price and hence the ROI. When procurement start demanding 20% off, respond initially by reducing the scope as opposed to simply caving-in.
Prepare your negotiation strategy using a process, templates and checklists. They will have prepared their negotiation strategy, you must do the same.
Introduce the other areas they are prioritised on as negotiation variables. It will enable you to negotiate a more balanced deal than simply haggling on price.
In conclusion, procurement professionals are just like any other stakeholder you’ll deal with during the sales cycle. They have a particular persona, understandable needs and ways of working. Tune into them and prepare in advance; you will not only win more profitable deals, it will be a lot more enjoyable too.
Mike Lander is the chief executive and founder of Piscari, which empowers agency leaders with better negotiation skills and insights into how procurement professionals work.
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Everything you need to know about how to win more deals and make more money by successfully negotiating with procurement professionals.Find out more