David Freedman: Selling to Procurement on value, not price

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Any business today that isn’t exercising a tight grip on its budgets is either very lucky or very foolish. Buyers and procurement specialists are under increasing pressure to achieve more with less. So what happens? Companies making purchases develop a single-minded focus on cost, with products and services commoditised as a buying tactic designed to drive down the seller’s price. Not good news for salespeople of any kind; particularly those who like to think that they have a highly differentiated offering, bursting with value.

So it’s an uphill struggle to get purchasers to look beyond the cost and make purchasing decisions based on the real benefits of the product or service. “Would an extended warranty ease the customer’s worries about uncontrolled service and repair costs?” “How desirable are flexible service options geared to support specific customer needs?” The challenge is to ensure that your company’s profile in the sales engagement – as much as in the advertising or PR battle – stands out among the rest.

One of the fundamental starting points to make any new partnership successful is to get as close as you can to the buying organisation. And part of that is all about finding out what will tick the right boxes for both the business and the purchasing individual you are dealing with. It’s likely that the procurement professional will have a different agenda to their colleague on the shop floor – perhaps an engineer or operations manager – whose job may be made easier by the particular purchase. As well as building key relationships, you can often establish an elevated view point if you can relate to current and past business trends for the organisation.

On the other side of the table, at both the sales and negotiating stages, the purchasing professional needs to understand that there are risks involved by agreeing to a deal based on price alone. It would be nice to think that no matter how big the financial pressure, it is more than likely that the buyer will have to prove the long-term, not just the immediate payoffs of the investment. Some might consider what might happen if the computer application they had installed across the company has a glitch and they have no (chargeable) helpline agreement in place. But many procurement professionals are measured only on top-line, current year, easily demonstrated cost savings. The task facing the seller is to get them to see – and to argue on your behalf to their colleagues – the value of lowering the total cost of ownership.

If the seller has built a close relationship with the buyer, he will be able to identify areas that directly relate to the decision-making process, both on cost and value. Crucially, this can also be used to gain an enviable advantage point over competitors who are being viewed on cost alone. Part of establishing that relationship is finding out what drives him or her, and finding ways to make that individual procurement professional look good to his or her peers and bosses.

It doesn’t matter which side of the table you sit on, effective communication will increase the likelihood that the solution you both agree on will deliver a real and measurable benefit to you and your customer, now and in the longer term.

So perhaps it’s time to go back to the classroom to learn what drives your buyer’s business. This way you can make absolutely certain that you can identify the proposition that’s going to hit the spot.

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About David Freedman

David Freedman, Sales Director, Huthwaite International

David joined the board at the end of 2009 as Sales Director.

He joined Huthwaite in 2002 as Business Director for the information and communications technology industry, overseeing the acquisition of clients and growth of business in the sector from companies across the software, services, solutions and hardware segments. These are the types of companies David served for many years as managing director of Hill Murray Public Relations, and before that as head of marketing services consultancy The Business Works.

Before founding The Business Works in 1989, he worked in Paris for three years, at IBM's European headquarters, and before that worked in the engineering secretariat of the UK National Economic Development Office.

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