The challenge of dealing with professional procurement is complex and regularly negotiating contracts is a skill that Sales Account Managers must be competent in.
I often get asked how modern-day procurement category managers think, and what is it about their practices that create such tension in customer-supplier relationships.
My answer goes like this:
The role of Procurement is to extract the maximum and sustainable value from external business relationships, appropriating value from the supplier (and supply chain) so that his or her organisation gains and sustains its own competitive advantage.
This requires that products and services are ideally sourced at the lowest cost and price, at the highest quality, fastest response and maximum flexibility possible, and with a better functional specification than available to competitors.
If you’re a Sales Account Manager this can be a tricky path to navigate with constant challenges from customers, competitors and the risk of contracts not being renewed.
Here are some tips to help Sales Account Managers to manage the negotiations in the right direction and secure more successful outcomes.
Identify the unmet and underlying needs of your customer
Knowing the underlying and unmet needs of customers is core to the activities of account managers responsible for strategic customer relationships, and sales people generally. The range of possible needs and expectations of customers can be vast (and varied amongst the range of stakeholders in the customer company), making every B2B sales situation different, and therefore requiring tailored responses from the supplier.
By consistently adding value and assisting your customer in a meaningful and effective way, this can add weight to the business case of Procurement for continuing to use your company as a supplier.
Provide excellent customer service
Excellent customer service should already be a key component in your account management practice. If it’s not, then this urgently needs to be addressed. Without the provision of outstanding customer service, then it’s only a matter of time before the business is transferred to a competitor.
Through consistently nurturing customer relationships and developing an atmosphere of determined collaboration, successful account management teams can deflect the desire for Procurement to investigate alternatives or start to build relationships with the competition.
Understand the buyer’s perspective
When in discussion with Procurement about the terms of the contract, good Sales Account Managers have a clear understanding of how the buyer positions their service or product in context of its overall Procurement Strategy and business.
Understanding the customer’s perspective, that is what they buy, how they categorise their spend, and their method of sourcing and supplier management, will give the Sales Account Manager a 360-degree view of the relationship and an advantage over their competition.
By putting their product or service in context, Sales Account Managers are able to respond appropriately and offer more useful collaborations that add real value to the customer, and help cement the supplier’s position with the customer.
Layout your plan for the relationship
Presenting a clear and detailed plan to Procurement in terms of costs, delivery and recommended relationship management protocols helps to build confidence in you and your company. Account Managers ideally need to speak in quantifiable terms that can be measured and tracked. It makes your value propositions more compelling, and will signal professionalism.
Be specific about how the relationship will be governed and managed, with an outline of reviews and check-ins to assure the buyer that there will be no hidden surprises, which will help signpost your collaborative intentions.
Perhaps my most important advice here is to prepare, prepare and prepare some more. Time invested by Account Managers in developing their negotiation strategy is crucial in creating a competitive advantage.
Paying lip service to preparation and ‘hoping for the best’ will usually mean missed opportunities for your business and could be the difference between success or missing out on the contract this time, or even for all time.
By really doing your homework in terms of identifying what your customer needs, how your offering is perceived and where you can tangibly add value, you have the best chance of being successful and being considered as a valuable supplier; even a trusted partner to the buyer.
If you’d like to find out more about our ‘Selling to Procurement’ programme or to learn more about negotiation and key account management skills, get in touch.