Elements of A Sales Pitch Strategy: How to Negotiate With Cost-Cutting Procurement Teams ✂️
As we think about refining key elements of sales pitch strategy for 2021, we may tell ourselves, our sales and pricing teams that we need to sharpen our pencils on pricing and refine our negotiation skills with procurement teams.
It is certainly the case that procurement teams are growing in importance in Australian organisations. Many procurement officers are actively seeking to increase their skills and knowledge of sales and pricing to generate better outcomes for their businesses.
Without a doubt, many procurement teams are across the detail and looking for their customers to demonstrate value. However, there are a lot of procurement teams out there who are quite happy to be “uninformed buyers.” They’re completely disinterested in the value that suppliers are offering the business and only focus on costs.
Now, as a lot of sales directors know, it’s incredibly difficult to introduce value-based selling as key elements of sales strategy when your teams are faced daily with cost-cutting procurement officers only interested in cherry-picking prices at line item.
Sometimes, no matter hard you try to demonstrate the value of a deal, some procurement teams won’t listen and say that “Your prices and margins are too high. We’ve got a fixed budget. So, come back with a price X% lower than your competitor X and we’ll think about doing business with you.”
So much for demonstrating the price-value equation with this sort of procurement officer…
In this article, I wanted to discuss how the standard procurement approach of just ‘buying’ from suppliers for the lowest prices possible is not only destroying value for the business and its shareholders. Actually, it’s putting the suppliers and the procurement teams’ businesses at risk. Namely, risk of increasing costs, product failure, and serious risk of supply chain failure. That’s apart from zero innovation and technical support.
Let me share a humorous and real case example that an old colleague once shared with me. This case study shows a funnier, more undeveloped but realistic side to procurement whereby price management and value are not even on the agenda.
I will argue that sales teams should not lose hope with value-based selling and pricing (even when dealing with cost-cutting procurement). As procurement continues to grow in importance within the organisation, they’ll be required to prove that they’ve generated more value for the business (beyond reducing spend). They’re also required to show how they’ve worked productively with sales to drive innovative growth initiatives for the business.
In simple terms, procurement teams really need your help now to show their businesses how valuable they are at creating shareholder value.
The main contention here is how a large amount of “savings” procurement teams have made in the past often were corrections of past failures in managing supplier relationships.
In fact, a key element of sales strategy in 2021, therefore, should be helping procurement explain the total economic value of your deals to their businesses. This is really the only common ground between you both and the best way for procurement to drive value creation in the business.
Pricing Sales Pitch Strategy: an example of a real-world procurement meeting
Here’s a procurement story told to me by a pricing manager from a large food manufacturing company in Sydney.
“I arrived at the meeting having been provided with no agenda by the account manager. I realised this was a major error from the get-go. As a rule, a pricing manager should only attend a meeting with a clear agenda in place and an understanding that the meeting will describe more value-adding strategic discussions.
The meeting did not start well as the client kept us waiting for 40mins (eating into a scheduled 2-hour meeting). I would usually walk away from a meeting if a client is 15 mins or more late. But in this instance, I stayed against my better judgment and passed a message to the client that we had to leave on time and so the delay was eating into the time for any productive discussion.
The client procurement team arrived and had no understanding of our category or our briefing. The procurement manager even stated they did not know the detail (as if it was a matter of pride!) and then launched personal attacks.
We were accused of being liars and rip-off merchants despite no examples given, (even after admitting our services were excellent). It was weirder when he accused me of looking at my watch too often as I was keen to leave the meeting. I pointed out that I was not wearing a watch!
He also admonished us for not taking enough notes as he was talking!
The strangest thing was that he never once asked for a discount, a change in service or increased value. It seemed as if he just wanted to bully us.
We left the meeting saying – “this contract seems more secure than when we went in”. He also seemed surprised when we defended our company’s offering and value proposition. But of course, he did not know the detail so could not comment on that. ”
The key takeaway for a successful sales pitch:
I. Do not always think procurement is better armed or informed than sales pricing strategy going in. Often, they think the same of sales in reverse.
II. Procurement teams can also have no clear approach. In fact, we often overstate their strategic thinking. That’s why your opening statement has to spark interest and capture their attention immediately. it’ll be easier for you to support your argument about how you can solve their problems.
III. Never attend a meeting without a clear agenda and sales pricing strategy. Leave a meeting if a client is unreasonably late without a valid reason.
IV. Stay focused and delegate account management meetings to the account manager. Pricing and commercial managers should implement strategy, define economic value and discuss deal mechanics. Day-to-day account management is not your main focus.
V. Emphasise that the partner basis of the relationship is based on shared value and long-term financial gains for both parties (price management). It should never be a master-slave relationship. In fact, customers value you more when you challenge them with insight that will grow their business.
Elements of A Sales Pitch Strategy
Simply understanding your customer’s needs is not enough. You need to articulate the risk of them not buying from you as well. You want to build on your marketing and sales plans, and then turn theory into profits.
A sales strategy is more than a sales pitch. It’s an opportunity to show a procurement officer why your product or service’s going to create value for their business. They may not listen straight away. But eventually, when you’ve discussed their business in enough detail and have uncovered their pain points, they’ll come round and actually listen to how you are going to help them.
A good sales pursuit and pitch strategy will help identify and take advantage of the best opportunities for you and your customers.
Price is one of the most important elements of a sales strategy that influences customer’s purchase decisions. In fact, the very best professional buyers understand their first task is to fully understand what they’re being asked to address before they even attempt to source the lowest priced solution.
Procurement has to care about more than just price. That’s if they want to be effective in sourcing solutions to the business problems that their internal customers want to resolve. It’s your job to find out what else is driving the business negotiation strategy. So, you have to uncover personal interests behind procurement’s requirements to close a deal.
The issue of credibility is another important element that influences buyer’s decisions. In fact, a business’s good reputation is one of its most important assets. So, do thorough research on your audience and stay consistent with your solutions. Throughout your argument, you must not be fazed with questions or objections from the procurement team.
Showcase your company’s growth, improvement, and progress over the years. Obviously, procurement teams prefer businesses that have proven experience in overcoming challenges and pursuing expansion. Apart from that, financial literacy plays a huge part in showing the team that your organisation is capable of staying competitive in the industry for a long time.
Be prepared to explain the required capabilities and positive business outcomes to procurement. To close a successful sales pursuit strategy deal, you have to understand what the required capabilities are and the positive business outcomes for a specific timeline.
Traditional discovery questions are only going to get you so far. That’s because procurement managers often lack the subject matter expertise necessary to understand the complexities associated with the purchases. So, you must persuade with a proposal that exudes professionalism.
Remember, procurement managers, are seldom experts in cloud integration, the software development lifecycle, or your products. That’s even if they know how to help an organization make wise purchases. Most importantly, close with a statement that appeals to the audience’s emotions.
1. If you know what the business is trying to achieve; then leverage that information with the procurement in a way that helps them understand how buying from you will alleviate risk and help them avoid future mistakes.
2. Educating procurement teams on risk during your sales pitch strategy will make you a trusted resource. It’s a surefire way to establish yourself as a business advisor that seeks to be part of their business with their best interest in your mind.
3. Value-based pricing and selling expertise can help you create a deal that generates value for both businesses. Making people look like the hero in their organisation boost their trust, loyalty, and confidence in your company.
Prepare your sales and pricing teams for the future by finding people with value-based pricing and selling skills. The best sales pursuit strategy asks:
What are the problems they face?
How are they dealing with the current problem?
What are their goals and objectives?
Who are other possible vendors that they’re considering?
Procurement teams know that getting a great price on a mistake most likely creates a much more expensive problem. But they need great sales and pricing executives to help them see the real value that a successful sales pursuit deal or strategy will bring.
For a comprehensive view on maximizing growth in your company,
Are you a business in need of help to align your pricing strategy, people and operations to deliver an immediate impact on profit?
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