You know how valuable your solutions are. You know how they will save your clients time and money and/or help them become more profitable. Unfortunately, Procurement doesn’t! They just want to know “How much?” And while you prepare your answer, you both know that they can buy the same product two cents cheaper from a competitor down the road. When you’re not allowed to differentiate your value and you are forced to compete solely on price, it can be difficult to close a sale, and if you do close the sale, you know it might not have been worth the effort. This often results in your organization not being able to deliver the value you knew it could have delivered if you were paid fairly, which in turn, reinforces the buyer’s behavior to try to get the solution even cheaper the next time. This vicious cycle is typically the result of procurement departments believing their value to their organization is to find ways to drive prices down.
Here are four tips on how to effectively deal with procurement departments:
1. Understand their goals
Procurement departments are often tasked with reducing costs. However, it’s important to understand that they also value other factors such as quality, reliability, and customer service. They also want to please their clients, which are often business unit leaders. Goals are the root of emotion. By understanding their goals, you can better align your value proposition with those goals and create emotional engagement.
2. Highlight your expertise
Procurement departments are often looking for suppliers who are experts in their field. Years ago, a procurement officer sat in one of my strategic selling courses. He said he wanted to understand how his sales team was being trained. It was a welcomed surprise when he spoke up on the course to tell the sales team that he would love it if salespeople approached him the way I was training his team. He said even though he treats most suppliers as vendors, he actively looks for vendors that can become strategic partners. By highlighting your expertise and industry knowledge, you can position yourself as a valuable partner rather than just a vendor. This can include sharing insights on industry trends, offering advice and guidance, and providing thought leadership. Business Unit Leaders will gladly advocate for you with Procurement if they understand your strategic value.
3. Expand your offering
In addition to your core product or service (which can often be commoditized), consider offering additional resources or support that can help your customer, and more specifically, procurement departments achieve their goals. This can include training, consulting, and ongoing support. By expanding your offering, you can differentiate your solution and demonstrate your commitment to their success and build a stronger relationship.
I like to use the acronym SOCKET to ensure that an offering is whole and full.
S – Strategic. Is your solution going to impact your customer in a strategic way? And more specifically, how will it help them create value for their customers?
O – Over time. Will your solution be implemented over time? Or is it just a quick transactional project? Real Solutions take time to implement it’s a relationship – a multi year relationship. Look at your solution and see what you’re promising to deliver. Will it be delivered over time?
C – Combined Capabilities. And this is really what I mean by expand your offering – it’s to look at your solutions as Lego pieces that you can snap together and configure to provide value in a unique way to your customer.
K – KPIs. Are you able to show how your solution will move the customer’s KPIs in the right direction?
E – Embedded. Is your solution going to be embedded in the customer’s workflow so that in order to create value for their customers, they have to work with you? Then the switching cost becomes very high to remove you. And finally,
T -Transformation. Is your solution truly going to transform your client’s organization?
After one of my clients closed a $60 million deal, I had the opportunity to interview the procurement officer. He made it clear that he was not looking to make a commodity purchase. He said the organization had a real problem and, rather than dictate to the vendors to respond to an RFP articulating how they should solve it, he said he wanted to benefit from the vendor’s expertise (Tip #2). This enabled my client to offer a full spectrum solution that put them in a category of one!
4. Provide case studies and testimonials
Procurement departments often need to justify their purchasing decisions to other stakeholders within the organization. By nature, they are risk averse. Providing case studies and testimonials from other satisfied customers can give them the confidence to work with you to make a more compelling case. This should include metrics such as cost savings, increased efficiency, and improved customer satisfaction.
By following these four tips, you can effectively deal with procurement departments, differentiate your value, and close more sale.