The Audible-Ready Sales Podcast
The Audible-Ready Sales Podcast

Episode · 2 years ago

34. Finding Success with Procurement w/ Tim Caito


How do you work with procurement to ensure you close a great deal? How can you make that conversation easier on yourself and the professional buyers you’re working with?


Tim Caito, Force Management Senior Partner and resident negotiation expert, joins us to chat through what your sales teams can do to win more when they’re up against professional buyers. He’ll cover:


- How to help procurement minimize the risk of choosing your solutions


- How getting to procurement early can help differentiate your solutions and improve your ability to win


- The common mistakes and misconceptions reps have about procurement, and how to circumvent them


Check out this and other episodes of The Audible-Ready Podcast at Apple Podcasts, Spotify, or our website.


Here are some additional resources on the Finding Success with Procurement: 


- Five Essential Questions That Drive Success with Professional Buyers

- Change Your Conversation With Procurement [Webinar]

- Selling and Negotiating on Value [Webinar]

- Value Negotiation Resource Page

Help them see all sides of what's going to be required for them to achieve the outcomes they're being asked to procure. You're listening to the audible ready podcast, the show that helps you and your team's sell more faster. Will feat your sales leader sharing their best insights on how to create a sales engine that helps you fuel repeatable revenue growth, presented by the team at force management, a leader in BB sales effectiveness. Let's get started. Thank you for joining us for the audible ready podcast. I'm Rachel Clap Miller, joined today by Tim Kato. Hello Tim, Hello Rachel, how are you? I am doing well and I hope you are. As many of you know, tim is our resident expert at force management in negotiation. He has worked with some of the largest companies in the world on both the buyer and the sellar side, and today we're going to tackle a topic that many of us struggle with, and that's dealing with procurement. How do you find success with procurement? It is the most frequently asked question we have any time we have tim on a Webinar or on a podcast. So we're going to tackle it today and there are a lot of misconceptions about procurement and to I know you say, if you understand procurement, where they're coming from, they can be a lot easier to deal with, to manage in your negotiation process. Yeah, and you know the key words you said there, Rachel, are misconceptions, yes, and the misperceptions that go along with those. In the key to working more effectively with buying professionals is to understand where they're coming from and understand their role in the organization and, frankly, break through these misconceptions that actually get in the way of effectively negotiating with them and through them. So, you know, let me just lay a couple of things for foundation out. First...

...of all, Rachel, in today's complex organizations that most of our customers are, if there is a formal procurement process and formal procurement organization, the thing we all need to understand is they are nothing more than another key influencer in US doing business with that customer. Right. They're not a necessary evil, they're not a road block, they're, you know, not the last step I have to do. When they are key influencers. Well, what do they influence? Think about a Rachel, they're the only ones in their organization that have the formal responsibility to manage the buying process. That's their job. So you know, their internal customers go to them for guidance on how is this supposed to get done. We got a lot of sellers that try and figure out the decision process and try and do that independent of talking to the people whose job it is to manage the whole thing. So if you just look at them as key influencers in that buying process, right, they not necessarily influencing what gets bought. What they influence and what they it is their job to control how it gets done. So if you have that in mind, then there's two miss perceptions that you have got to step up to. Misperception number one, procurement or professional buyers. There the enemy, you know, contrary to popular belief, you know, procurement is not where good deals go to die. It is not their job to cause us to lose our deal. That's not what they do. Yes, a lot of them have a lot of experience in buying all the time. They are professionals at what they do, but understand what their job is. Their job is to secure something that would be of value to their organization right and as a result,... version of something that would be valuable their organization would be to get it for the best price. But that's just one interest. Miss Perception number two, Rachel. All they care about is price. Know, what they care about is not buying a mistake. Now, paying too much for something that's a version of a mistake, but so is buying it in complete solution. So is buying something where we haven't thought through the downstream integration challenges or the downstream service rent support requirements. So there's a lot that goes into them not buying a mistake and our two miss perceptions of their the enemy and they only care about price. Those are getting get into the way of working with them most effectively. Yeah, and I know you've said before, a lot of sales organization to make it easy for them to drive the conversation down to price. So if you're doing your job, you can circumvent that. So let's walk through a few tips here. The first one, like anything with negotiation tim you always say to bring in procurement, a professional buyers in early in the process. Yeah, absolutely, and there this has so many benefits, Rachel. You know, the problem is frequently, if we see procurement or professional buyers the enemy, we want to hold off interaction with them till the end. So we've got some kind of a structured deal that we're going to be now working through the final parts of the agreement on. The problem with that approach is missed opportunity to engage with them early, not to position our solution. That's not what we do. Early we want to understand that process that they believe they're managing. Believe it or not, Rachel, a lot of times are in user customers are our context that we've been working on, you know, to shape how we can respond to their needs. Don't always...

...understand their own internal processes. We see this all the time. Rachel won, one of our champions, moves from company A to company B and they were really useful in company A and we assume they know the same thing about company B, where they've been for two weeks and and ironically, they might not know there's different protocols in place, there's different requirements in place, there's a different approval process, and getting to the procurement folks early just to understand the process they believe they're managing. They actually typically appreciate that now. They're not used to that approach, Rachel. So you call them up and say I had like to meet with you. Where at the beginning stage they're working with your organization. They think we're like everyone else and they say it's too early for me to talk to you. Is that what? Yes, about the solution, I agree, or the Negotia? I simply want to understand the decision process. I want to understand what are the things you're eventually going to have to see, and others in the approval process are going to have to see for us to move forward, and I thought I just understand that up front. What you're going to find, Rachel. They'll step back a little bit. They'll be surprised by that because they haven't seen that before. And what a great way to demonstrate to them this is what it's going to be like when you work with us. Will understand each other now. Well, I'm not agreeing to their process in this, I'm just trying to understand it. So you know, looking at that actually provides a lot of value in your interaction with them downstream, but also helps you triangulate what you've been told about the decision process. Sometimes from people that really don't know the full decision process right exactly. You always say to him there's as much differentiation and how you sell as there is in what you sell, and getting to procurement early can help differentiate you big time, big time, and with negotiation right.

We call it value negotiation because that value is so important, especially when you're working with professional buyers who are trying not to make a buying mistake. What is the value that they're going to get from from this solution? So that defining that value means you, as a sales person, need to understand what's needed for the business and triangulate, you know, all those needs that you had spoke about earlier, that to get the version of the truth to what's needed for this business so you can help procurement see the value. Yep, you know, Rachel. On the professional buyer side, they're dealing with organization sometimes as complex as arts. You know, if you put yourself in their shoes, they have a really challenging task. They have to satisfy the interest of all their internal customers, one of which might be the person we're dealing with. Are The function we're dealing with to bring in some new kind of capability right, but they're also got an internal customer known as the CFO. They also may have an internal customer known as legal, they may also have an internal customer known as operations or it. So they're trying to manage all those different interests on their side and believe me, their task is every bit as challenging as ours when we're trying to align all those interests. The thing is, we do it from a sales interest. They do it because it's their job and, as a result, you can imagine it across all those different functional groups and maybe multiple individuals within each group. There's a lot of definition of value. So one of the things we and all, by the way, all those professional buyers, procurement folks, Rachel, they have their own set of Kpis or performance, you know, indicators that they're managing to so there's a lot of fuzziness as it relates to the definition of value...

...and when there is confusion a natural human reaction is to try and drive simplicity into that. So if they don't fully understand the full scope of value because there's so much, you know, discord in their own organization, they'll typically default to the simplest version, which are their own kpis or the high level strategic priorities their chain of command has told them are important. So part of what we do and getting to them early before in the final stages of, you know, negotiating back and forth. I like to meet with them to see, first of all, how they're currently defining value, which is usually representative of their key internal customers, their own KPIS and any kind of strategic guidance they've been given. I want to see what their version of good looks like, what value looks like, and if I do that well, I typically have an opportunity to maybe expand their definition of value to say something like wow, that's really helpful. I do appreciate your share in that with me. However, I'm subprised you didn't mention anything in there about ongoing support, or you didn't mention anything in there about measuring the impact, or you didn't say anything in there about integration. And if we've figured those questions out in advance, because we know they're probably not thinking about it, what a great way to have of them say that's a good point. I'm going to bring that up to you know, the internal team I'm working with the see where those things fit in there. They might not agree to it, but what have I just done? Well, those that have been through value negotiation with us, Rachel No, I've just done some anchoring to expand the definition of value. They're much more likely consider expanding it early than they are late. When we tried to do a late they think we're trying to do some tactical...

...sales thing to them, and human reaction is to resist that. Right. And you know, as you're talking about value, you don't want to let that value creep out of the conversation because it really goes to that point that your professional buyers don't want to make a mistake. Yeah, absolutely, you know. And and remember it's their job. Once a you know, vendor or solution providers been selected by the user group, their internal customers, it's their job to mitigate the risk associated with that, you know, and it is their responsibility. And Look at how the thing, you know, the the cascade of blame when it doesn't go on. Let's say somebody did buy an mistake. The end user says, how was I to know that there was some legal term in their contract that I didn't fully understand. Isn't that your job? Procurement, and procurement looks at that and then they turn around to the selling organization. They say, how is it that you allowed me to say yes to this knowing that this one legal term was in there and it was going to be challenging in our use case? Guess what? Mistakes always flow back to the selling organization, Rachel. How many times we tell them up front. So it's my job to participate with them in that minimizing the risk. Now the better way to look at that, Rachel, is not to you know, you know, avoid the blame if something goes wrong. The better part of this is really all about how do we expand that definition of good by helping them think through things they might not have the subject matter expertise to understand, like a legal term, or they might not understand the implications to integration, or they might not understand the compliance risk they would be accepting with a different, you know, solution. So so you know,...

...this is where their focus on minimizing risk actually aligns with ours. And you know, we got to take into account that's organizational, that's functional, it's also personal for them, all right. So you know this is a this is a big part of you know why that interaction with them is so important, to make sure that we're helping them minimize the risk associated with going with us. And you know, what better way to demonstrate our differentiation? And you know why we're that long term partner we say we're going to be. And you know this idea of value, it's so, so important, especially when you're in those late stages of your sales process, and it's really difficult to create value in those late stages. Is something that this is why we say start early, because you want to create the value before you divide it. I would you say that before too. Absolutely, and you know, like it or not, Rachel, when you look at buying theory, buying best practice, you know one of the things you try to do, if you have options across multiple splosh if what you buy on a daily basis, you've got options in the market place, what you have been taught to do is try and drive the negotiation down to points of commonality right and in doing so you may unknowingly be de emphasizing something that could represent a big risk or could represent a breakthrough opportunity for your organization, because one of those four potential suppliers actually has something that the other three don't. Well, you've been taught to drive towards common denominators, which means you exclude that one item, right, and this is where US working with them up front, expanding the definition of value. This is the idea of treating sales negotiations a two step...

...process. Create Value First, divide value second, in other words, expand that view of a value could be specially around those issues that some of our differentiators can impact that others don't. and rather than have in the interests of, you know, fairness of evaluation, in the interest of commonality of evaluation, we actually help that professional buyer understand there are some uniqueness to their situation. That requires some uniqueness to the solutions they're considering, so they don't unintentionally miss that. That's where create value comes in, Rachel, help them see all sides of what's going to be required for them to achieve the outcomes there being asked to procure. And then, once we get that on the table, it's a lot easier to figure out, you know, move the slider bar and what level of each one of these things are we going to agree to because we've got it out there early, as opposed to the end, they think we're trying to, you know, add fluff in to the deal or trying to do some kind of tactical thing to minimize their and weaken their position. Yeah, I know, tim it sounds so easy when we talk about it on a podcast. It's it's a bit more difficult when you're doing it in in real life, and we do empathize with everybody on that grind every every day, trying to make your numbers each quarter. But I think with all of this, as you've talked, there's two more major points that will make that conversation easier with procurement. First, understand the value to all parties. Right. What is it? What is the value created and how are you capturing it? And second, start early, treat negotiation as a process that's equipped with a strategy and make sure you know that strategy absolutely. And then, you know, goes back to that idea of alignment. Have...

...a plan, know what you're likely dealing with. But you know, Rachel, I go into this with a mindset as well. So it's not just the best practice of starting early and the things the focus on. Expand the value, mitigate the risk, understand their process. There's also a mindset that goes with this, and what you think about it from the perspective of this is a net new customer. We've likely been telling their organization for sometimes months, where the organization they want to partner with. Working with us as different. We care about the long term relationship right and the first chance we have to demonstrate what that relationship is going to be like when you work with us is the negotiation. Now I want you to think about this. What if we take an old school negotiating approach that's driven by tactics and misinformation? You know, we put some huge offer in knowing that we're eventually now have the ability to come down on price or scope, and we did that intentionally. Guess what we're teaching them about what that relationship is going to be like. It's going to be based on tactics, misinformation, pressure. You know, wow, that is not the kind of relationship I want to get in long term. So I want this first demonstration of what the relationship is going to be long with us to be a differentiated experience as well. So that's the other thing I would say there, Rachel. That's the mindset, and it goes back to something you said before. I can differentiate who we are when it's going to be like working with us as much by the way I interact with the customer as what I'm going to be selling them and, in this case, by the way we negotiate. And Trust me, they don't have high expectations of selling organizations in the negotiation, when we show up with a strategy, when we spend time expanding the definition of value, we highlight things...

...they hadn't thought of. We work to ununderstand their process us, we work with them to mitigate their risk or chances of buying a mistake. They'll notice that as different and wow, think about that. What that does to the subsequent negotiations will do over the life cycle of our relationship with that customer. So the mindset piece is every bit as important as the strategy piece. Rachel. Yeah, that's a great place to to leave it, Tim. Thank you so much for sharing your procurement expertise with us today. Thank you much, Rachel, and to all of you listening out their resirt check out the show notes. We have a lot of value negotiation resources that we've linked up there. There's some great stuff from Tim in there that will help you as you try to capture the value in your deals. Thank you to all of you for listening. At force management, we're focused on transforming sales organizations into elite teams. Are Proven methodologies deliver programs that build company alignment and fuel repeatable revenue growth. Give your teams the ability to execute the growth strategy at the point of sale. Our strength is our experience. The proof is in our results. Let's get started. Visit US at force MANAGEMENTCOM. You've been listening to the audible ready podcast. To not miss an episode, subscribe to the show in your favorite podcast player. Until next time,.

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