Article authored by Invigorate Advisor and Procurement Strategy expert, Hannah Tilston.
Successfully navigating the sales process into large companies can make the difference between a mediocre year and a game-changing one. Those hours spent honing sales pitches, getting the branding just right and building relationships ready for when the time comes to close the deal.
Today I want to offer you a different perspective. That of your customer – a Head of Procurement. In my 9 years working for a global business with thousands of employees I worked with plenty of suppliers, so I want to give you a peek behind the curtain to help you next time you’re selling into a large customer.
In this article I’ll share:
Large businesses want to get the most appropriate product/service for their needs. This boils down to a trade-off between 4 factors:
There’s another factor too… driven by human nature.
Large businesses with thousands of suppliers have to be as efficient as possible in managing their supply chains. Therefore they standardise processes as much as possible. Procurement departments are measured on their cost of procurement. In other words, for every £ or $ paid to suppliers, how many cents or pennies are spent paying for the procurement team to manage that supplier relationship?
Therefore, the easier you make it for procurement teams to do business with you, the cheaper their cost of procurement and the more likely you are to be considered on a shortlist of potential suppliers.
Individually, each Procurement Manager in a large business may be managing many contracts, all at different stages, from negotiating through the delivery phase to closing the contract. Whilst trying to negotiate a deal with you they may be dealing with a problematic current supplier defaulting on their deliveries due to Covid shutdowns and another with cashflow issues.
On both a business and a human level, the easier you make it for large businesses to work with you, the more favourable the potential outcome.
The procurement process typically consists of 3 stages.
Firstly, in-house there’s a decision about what goods/services need to be bought. Typically they’ll scope out a set of requirements or needs. This is when the balance between cost/quality/time and risk is usually set. Internal budgets and delivery schedules will be major influences – procurement teams often have multiple internal customers they must satisfy. Consider buying automotive components – the procurement lead must buy them for the predictable demand of the production line, and the more unpredictable demand of the service centres.
Secondly, potential suppliers who could deliver the goods/services need to be sourced, often by releasing a request for proposal, quotation or information. These documents usually lay out the requirements in a specific structure. Pay attention to the structure, as it will give an indication about how submissions will be assessed!
Thirdly, the suppliers need to be assessed and down-selected. For important contracts, this might be staged as a long-list and shortlisting process. It will include 2 elements – assessing how well your proposal fits their requirements (and comparing to other potential suppliers), and also carrying out due diligence on your company to understand any risks in doing business with you. Assessment usually involves completing a scoring matrix – assessing different elements of your proposal against the requirements. Note that different stakeholders may assess different parts of your proposal – it’s unlikely to be just the procurement lead. For example – if you’re selling HR software it might be HR assessing the user experience, IT assessing the cyber security performance and legal assessing any GDPR implications, with procurement assessing the terms and delivery schedule. Procurement may not own the budget either – in this case it might be HR, so the assessment of cost would be jointly between HR and procurement.
As you can see, the second and third stages can be particularly resource-intensive if there are lots of potential suppliers bidding and a complex stakeholder landscape, hence large businesses often make use of preferred supplier lists (PSLs). These are lists of pre-qualified potential suppliers, avoiding the need to conduct new due diligence for each contract placed. If you’re looking to build a long-term relationship with a large customer, you should aim to be on their PSL.
If you’re selling to a new customer, it’s likely that the earliest you can be involved is stage 2.
Following these tips can help remove friction in your buying process:
At the end of the day, selection decisions are made on both hard facts and human behaviour. You may have a contract in black and white, but it will be delivered through human relationships with your customer. Bear in mind both of these as you prepare your sales approach.
I hope this article empowers you with the insight to ease the process to the negotiating table and start a long and fruitful relationship. I look forward to hearing about your success.
If this article was helpful and you’d like to discuss your specific business situation with Hannah, please reach out to her via the Invigorate Platform.
Invigorate members just go here.
Non-members can apply to join the platform here.
By clicking “Keep me updated” you are agreeing to receive Invigorate’s insight emails.