This week on The Winning Zone, Mike Lander, procurement expert and CEO of Piscari, joins Hilmon Sorey to help us understand the procurement buying process and which elements of it you are able to control.
What is a Procurement Director?
Mike has built and scaled several of his own companies for many years, but he has also been a procurement director, or a buyer. He has sold and purchased a lot of companies on behalf of clients. Procurement buyers exist as corporate guardians. They are buyers of services and products. They are trained negotiators. Continue listening at 02:01 to learn more.
A Winning Mindset
According to Mike, mindset and confidence both play a massive part in procurement negotiation. Oftentimes, at the end of a sales cycle, it becomes more important to the salesperson to close the deal than to get the right terms, causing the salesperson to be emotionally invested in the outcome. In this case, the procurement negotiator can sense this immediately, which gives them all the power since the salesperson cares more about closing than the terms involved. In order to avoid this as a salesperson, it is important to mentally check yourself and “...never spend the check until the ink is dry.”
“Mindset and confidence play a massive part in negotiation. One of the best things you can do is improve your confidence and reduce your anxiety at the negotiating table.”
It is also important to have a battener- a really strong pipeline to back you up- so that walking away from a deal with the wrong terms isn’t going to hurt you. Having a strong battener will also prevent you from becoming emotionally wedded to the current deal because you know that you have other strong possibilities in your pipeline. Learn more at 08:04.
Who Holds the Power?
Procurement’s job is to take marketing’s budget and negotiate the terms for the organization to keep them on the right side of safe and innovative with a high-quality provider. Mike gives an example of a sales person and procurement buyer where the salesperson had already negotiated a deal with marketing, and then the procurement buyer enters the picture and is suddenly re-negotiating (in unreasonable terms) everything that had previously been discussed, so the salesperson decided to walk away from the deal. Because procurement was too aggressive in their negotiations, they lost the deal for marketing, and now everything falls on them. So, while it may be portrayed that procurement always holds all the power, this is simply not true. Listen at 12:35 to learn more.
Over the years Mike has learned that there are many different negotiation frameworks available, but the problem becomes, how do you make them practical? Mike took it upon himself to break these frameworks down into four simple steps that make applying them to real negotiations much easier and help you prepare in advance for a bilateral negotiation. Continue listening at 15:53 to hear these four steps and how they can be applied to a real negotiation situation.
Mike has used all of his procurement knowledge to create an RFP Qualification scorecard to help decide which RFPs should qualify. He explains that once the RFP lands on your desk, it is important to take a step back, no matter how good the deal looks, and take some time to really qualify it. Mike’s sales RFP calculator asks you a series of questions, scores them, and then gives you an answer about whether or not you should go for the deal or reject it. One of the questions the calculator asks is “Will the RFP process allow you to talk to the budget holder and procurement at the same time?” Mike explains that if the answer is “No,” then he would not go for that deal at all. Continue listening at 26:58 to learn the explanation behind this and find out more about how the RFP calculator works to remove any emotional investment from the process.
To sum it up, when dealing with procurement, it is important to have a process and a pipeline. Anyone in a sales environment should get in contact with Mike via Mike@piscari.com and can also visit higgle.piscari.com to get the workbook.
02:01 What is a Procurement Director?
08:04 A Winning Mindset
12:35 Who Holds the Power?
15:53 Negotiation Framework
26:58 RFP Qualification