BLOG

Key Challenges for Effective Procurement Negotiation

Andres Lares

0

The art of negotiation is not rocket science, but it’s not a breeze either—at least not with every supplier you’ll sit across. Some are sharks and the only secret to winning against them is having negotiation skills twice as good as the strongest shark you’ll ever encounter.

Mastering procurement negotiation might be a process but you’ve probably heard the saying ‘train hard, fight easy’.

Good thing is, it’s not always like that… The best-case scenario for a procurement negotiation is concluding with two smiles—yours and the supplier’s, having sealed a deal that favors both parties.

Knowing how to negotiate when decks are stacked against you and when factors are constant, is important. For an effective procurement negotiation, avoid these pitfalls:

 

1. Rushing

You need enough time to negotiate effectively. Sealing a deal in a hurry is a cardinal sin in procurement. Analyze the product and its value, hear the supplier out, make an offer and justify it to the supplier’s satisfaction. Never rush to buy or to seal a deal.

 

2. Lack of information and proper planning

You win half the battle in the preparation stage. Conduct thorough background research on the product and the supplier, have all important details at your fingertips including the supplier’s operational facilities, company history, management profile, their major clients, development plans, and history of performance; and prepare answers for all hard questions the supplier might have.

Suppliers do their homework. Don’t be caught flatfooted. Like Abraham Lincoln, if you have eight hours to chop down a tree, spend six sharpening your ax.

 

3. Closed mind

Remembering both of you want a favorable deal is key in effective procurement negotiation. Flexibility begets the same. Have your non-negotiable demands but don’t be so rigid with other things that you’re only looking at the extra dollar a product will cost, without paying attention to any unique properties or value the product might have or a special deal that’s tied to it. Listen, think, and ask questions.

 

4. Poor communication

Communication is a three-step process: encoding, decoding, reply. You speak, supplier understands, and then responds, and the wheel keeps rolling. If either of you does not listen, or understand, negotiation will stall.

You might have little to no control over how the supplier communicates, but be clear on your end to save the situation.

 

5. Overthinking the power dynamics

As a rule of thumb, never be in awe of the supplier, however big they are. You have what they want however small it is. You might not even know what’s important to them—it might NOT be money. If they didn’t want to have you on their list of clients, they would not be at the negotiating table with you.

Be well versed with the product, understand the market, and stick to your non-negotiable demands, your company’s bottom line, and the walk-away figure. Ask questions too and shoot for the best deal. If the offer on the table doesn’t work for you, it is what it is. Move on.

 

6. Using short-term negotiation tactics with long-term suppliers

It is one thing to want a product real fast and cheap, and another to want the same—great—product for a long-term supply, at the same price. Giving a supplier a thin margin when you have to, is okay, but if you’re looking to establish a cordial long-term relationship, make better offers. Your supplier will stay in business and you’ll be on the priority list.

 

Bottom line

A procurement negotiation is like a tug of war. The savvy supplier is pulling from one end, to squeeze the best deal out of you, and you are on the other side pulling harder to save your company every dollar possible. Avoid these pitfalls and you’ll not be the one crossing the line in defeat.

 

Top 5 Essential Negotiation Skills for Salespeople

Jeff Cochran

0

Successful sales are what makes businesses grow. But every so often, a customer will want to discuss the details of your contract with them before signing. Regardless of how well the sales process appears to have gone, your one-one-one interaction with the customer can always make or break the deal.

This is where effective negotiation skills come in. For a deal to survive past the negotiation table, certain skills come handy. So, here are five negotiation sills that a salesperson must possess to succeed in closing deals with customers.

 

Active listening

People want to feel that your product or service is going to solve their problem or satisfy their need. Oftentimes, the prospect wants to see how this is going to happen, and will ask questions that directly link your solution to their need(s).

It is only through active listening that you’ll be able to understand what the customer really wants. Don’t just fix your mind on closing the sale, pay attention to the customer – listen to both their spoken and unspoken messages and provide them with the answers.

When the customer is speaking, allow them to finish. Then, take a brief moment to evaluate the response in your head before you speak it out. The pause not only lets you refine your response but also shows the customer that you truly are thoughtful and interested in what they are saying.

It helps to speak slowly in a composed manner, articulating your words clearly to get the message across.

Whether it’s a face to face or phone conversation, you should be able to get the non-verbal cues that tell you more than the person says. Pay attention to these emotions and respond to them.

This way, you will create an atmosphere of trust and easily build a rapport with your leads. You’ll overcome the assumption that you are simply after the person’s money, and create the indication that you care for their needs.

Active listening enables you to properly address your prospect’s questions and match their focus. This makes it much easier to close sales.

 

Quick decision making

Negotiation is always about give and take. A customer will come with a set of demands, or the acceptable minimums. And you need to know just what concessions you can make and which ones you cannot take without hurting your business.

Since you won’t always know all the angles to expect before reaching the negotiation table, you should be able to make a proper decision in the heat of the moment.

It could be a huge discount that the customer is proposing, or even some extra support. A prospect could ask for premium features or even a bigger package. In any case, being able to evaluate the proposition and making up your mind quickly will be instrumental in letting you close sales before the prospect withdraws their business.

 

Knowledge of the product or service

Persuasion is inherent to any sales negotiation. Unless you are truly knowledgeable about the brand, product or service you are representing, you can easily lose a lead.

The customer simply isn’t looking to hear some unfounded justifications supporting the deal. Rather, they want to know how they’re going to benefit from buying what you are offering. This way, knowledge of the product is an essential sales skill. Demonstrate clear understanding of the products’ features so you can accurately present their benefits to the customer – that’s what persuades the customer to buy.

Also, even though most customers are likely to ask the same questions, there are cases where a customer will ask something particularly new or different. As long as you know your product in and out, you should have no problem navigating your way through any question that arises.

 

Assertiveness

Clear confidence in your brand can go a long way in assuring the potential customer about the value of your solution.

Customers generally respond well to enthusiastic reps who are passionate about their offerings, especially when they’re eager to clearly articulate the benefits.

What this means is, be willing and able to quantify the value of your product or service and share it with the prospect. A prospective client will be much likely willing to pay what a solution is worth if they clearly understand the value of that solution.

It is your job as a sales rep to establish that value and show confidence in your solution in terms of how it will benefit the customer. You will need to be assertive to be able to instil that confidence in the customer and give them a reason to buy.

 

Eloquence

You could have all the great ideas about your solution, but unless you can articulate it, you’ll have difficulty communicating it to the customer.

Though they usually need the solution, most prospects are often undecided whether or not to buy (from you). As a salesperson, it is your role to drive the prospect from their state of indecision to decision and be able to close the sale. Sometimes all you have is only few minutes with the customer. This is where some eloquence, coupled with sufficient knowledge of the product will guarantee a successful pitch.

Use a clear voice to explain the product detail by detail, enunciating all the useful features and linking them to the needs of the customer.  Done correctly, closing a sale will be a near guarantee.

 

Bottom line

Sales negotiations can feel intimidating to salespeople as no one wants to lose a well-qualified prospect. Nonetheless, while every negotiation can go in any number of directions, sales reps with these negotiation skills will be well-equipped to roll with the punches.

The Ultimate Guide to Sales Management: 6 Ways to Manage Sales Leads Better

Josh Jenkins

0

The major function of the sales management department is conducting sales operations; planning, and implementing sales techniques.

Without proper sales management, you will not meet your sales targets, but with better sales management, you will exceed your set targets. A thin line lies between good and bad management. A small oversight might cost you and sometimes—you’ll be shocked to find out how much.

The sales management department holds the destiny of a company in its hands. It’s critical to the growth and development of any business because the bottom line is everything. The bigger the returns, the further you will go.

 

Effective Sales Management

Astute business people will tell you: there’s nothing in the sales management department that is too small for your attention. From building a team with diverse talents and skills, to arming it with effective sales tools, keeping everyone’s eyes on the bigger goal, projecting future performance, helping every team member tap into their power to achieve set objectives through analyzing past performance, visualizing future goals, proper planning, and smart goal-setting…the sales management team can’t afford to drop any ball.

Even as more attention is on market research, pricing of new products, marketing, promotion, advertising, and distribution to maximize profits… the above functions cannot be neglected. They play a big role in realizing a company’s sales management goals.

 

The Leader

Any sales team is as good as the sales manager. As Alexander the Great said, “An army of sheep led by a lion is better than an army of lions led by a sheep.”

A lion sales manager is keen on managing the processes, invested in both short-term and long-term sales goals, selling to customers’ needs, great at sales planning, and possesses these key skills: people management, motivation and coaching, building lasting relationships, and negotiation.

With a great team and a lion sales manager, these SIX surefire techniques will help you better manage sales leads:

1.Define ‘lead’ as a team – you need to agree on the point at which the sales team takes over the process, ensure it’s done at the right time, and that the client lands in the right hands first (which is only possible if their need is understood).

2. Understand your target – if you pay close attention, you’ll notice a trend with your leads. Maybe they share interests, they appeal to the same market or audience, they have the same fears or desires, etc. Understanding your lead will help you connect—and that right there is what people buy. They can get the same product or service elsewhere, but they would rather get it from someone who understands their needs better.

 3. Effective Customer Relationship Manager (CRM) systems – according to Tech Target, “[effective] CRM systems compile customer data across different channels, or points of contact between the customer and the company, which could include the company’s website, telephone, live chat, direct mail, marketing materials, and social media. CRM systems can also give customer-facing staff detailed information on customers’ personal information, purchase history, buying preferences and concerns.”

4. Track the source of your leads – understanding what is working for your company and what is not will help you focus on your best campaigns and, or lead generation platforms, and inform your decisions on improving the others that are not as effective in filling the pipeline.

5. Effective communication – sometimes the difference between closing a deal and being passed over is communication. A client could urgently need your service or product. Moving in fast ensures you seal the deal and move on swiftly. All players in the ever fast-paced business world frown upon sluggish sales processes. Keep tabs on your communication channels to keep business opportunities from slipping through your fingers! It’s a good idea to know everything you can about effective communication—in spoken words, writing, and the unspoken (body language).

6. Touch base with the team – nothing beats a team that works together. Meet every once in a while, to ask the pertinent questions relating to your sales management position: Where are we? Where do we want to be? What are we doing right? Where do we need to improve? Who needs help? How are our systems and processes? How’s the quality of our leads? How fast are we converting? As you reward individual efforts, remember a team is as strong as its weakest link.

 

Wrap up.

Effective sales lead management is pegged on a great sales manager, effective sales management systems, and a team that understands the procedures, processes, the dos, and the don’ts. You stand a good chance of breaking even or breaking barriers if you check these.