This post comes from Michelle Richardson, Vice President for Sales Performance Research at the Sales Performance Research Center.
More and more organizations are shifting to procurement as a central driver, not simply to cut costs and source supplies, but to streamline operations and even uncover new sources of revenue.
The increased presence of procurement is typically unwelcomed by salespeople who have traditionally viewed procurement as the adversary—there only to identify the lowest cost provider and squeeze profit margin even further.
Research conducted by the Sales Performance Research Center has uncovered the keys to working successfully with procurement to achieve a win-win outcome for both parties involved. In this post we’ll reveal 3 myths about procurement that have been debunked by our findings.
Myth #1 – Procurement is only concerned with price
The conventional stereotype of procurement professionals as “number-crunchers” is becoming less relevant as organizations begin to rely more heavily on them to create value rather than respond to cost pressures.
Our research revealed that a mere 7% of respondents indicated that price is their only consideration. What the surveyed procurement professionals value over price is:
- On-time delivery
- Availability of products and services when needed
- The ability to meet required specifications
The bottom line is that while price is certainly a factor for procurement professionals, it is rarely the only consideration when making purchasing decisions. Price-cutting is avoidable as long as a salesperson is able to deliver on time, and in alignment with expectations for quality and value.
Myth #2 – Salespeople must give into price pressure from procurement
In our experience working with hundreds of sales organizations around the world, we’ve found that salespeople commonly lack the negotiation skills needed stand firm on price and achieve a successful outcome for both parties.
There is a myth that when procurement asks for a discount, the salesperson must give in, or risk being undersold by another supplier.
In our research, 70% of respondents indicated that they typically ask for a discount or price concession only 1–2 times before receiving one.
High-performing sales professionals are skilled at building value and negotiating strategically to avoid lowering price and sacrificing profit margin. They recognize procurement negotiation tactics and avoid the common mistakes that invite procurement to ask for discounts.
Myth #3 – Procurement professionals are secretive about their process
To salespeople, approaching procurement can feel like playing a game of poker.
There is a myth that all procurement professionals do everything they can to mask their buying criteria in order to weaken a salesperson’s strategy and force them to cave to discount requests.
In our survey we asked procurement professionals “What is one thing that a vendor salesperson could do to improve their interactions with you?” The most common response received was transparency within the partnership.
Historically salespeople have considered procurement as the adversary. In reality, procurement professionals often appreciate vendors who are open and upfront—this transparency helps to establish trust and remove barriers of communication. With the majority of our survey respondents entering the buying process in the early stages, open communication between sales and procurement is especially important.
The use of strategic questioning encourages procurement to open up about their purchasing process. Procurement professionals will appreciate the effort of the salesperson to understand his or her business needs—and then deliver to fulfill them.
The key to working successfully with procurement is understanding the process they execute, their goals, and what they expect from a vendor relationship.
Sales professionals must enter the buying process early, develop a deep understanding of an organization’s purchasing process, and sell and negotiate with transparency in order to come out on top.
To discover additional insights, visit the Sales Performance Research Center to download the full whitepaper and subscribe for future updates.
We surveyed 138 procurement professionals to understand their purchasing process and expectations they have when dealing with vendors.
In this research paper we reveal our findings and the 5 strategies sellers must execute to succeed and get to the yes faster when dealing with procurement.