20/07/2011

The key to winning tenders in many cases is to help Procurement improve its internal profile.

By Tony Hughes, CEO of sales enabler Huthwaite International

While the web has had the biggest impact on Procurement, with a far more informed buyer reliant far less on a savvy sales person, Procurement is becoming more strategic and has had the biggest impact on sales. Relationships have been commoditised, and the message coming out of big organisations is ‘if your service can be delivered by anyone else, then it’s just about price’. It takes power away from the supplier by ignoring the value proposition.

Huthwaite International recently conducted research into how global organisations can improve their win rates by identifying what successful companies do differently when selling to Procurement. It highlighted some very interesting findings and approaches, which are summarised below:

Challenge your assumptionsProcurement is measured in a different way to those that sell. There’s a misconception that they’re rewarded on how much they save but it’s usually based on a fixed level. Boards don’t want to kill value and Procurement always looks good if it delivers more for less. Also, by commoditising everything, Procurement doesn’t distinguish between different types of product or service and treats everything the same. They could be buying widgets one day and consultancy the next and they will rarely consider the differences in return on investment (ROI) or value proposition.

Think outside the process - Many sellers worry about deviating from the form because they feel they will be penalised for it, but no-one in our experience has ever lost out from circumventing the process. If Procurement is destroying the value proposition built up through the relationship with the client, then the solution is to work with Procurement to comply, but rebuild that value proposition. Always try to gain access to the client to find out what they really want, and if access is blocked they probably aren’t serious about your bid. There is always room for negotiation as well, particularly if the client is demanding a lot, such as negotiating preferred payment terms under a conditional yes’.

Make a bid document stand out – The tender document may be designed to commoditise services but there are ways to distinguish your bid from your competitors. Create a line on ROI, explain how the cost savings you will create will add value beyond price, and answer questions they should be asking as well as the compliance ones.

Quantify value and guarantee savings - For the Procurement professional, value has to be tangible and measurable. If you can’t quantify in bankable terms why you should win the business then how can they sell it internally? If you can quantify ROI then you’re more likely to win, or build in rebates from a promised ROI – although you need to be confident that you have the efficiencies in your business to cover this.

Influence the buying criteria – It’s very common for tenders to influence the buying criteria by educating the client about new services or ways to add value. Small firms have beaten larger suppliers by building adaptability or new technologies into the criteria. It’s also possible to see how competitors have influenced the criteria, which helps you decide whether or not to commit resources to a bid or walk away from it.

To see a video summary of Tony Hughes’ presentation from Huthwaite International’s ‘Selling to Procurement’ report, click here.