This week on SalesTV.live, we learn from Michael Pearson, a senior procurement specialist. Is meeting the business need and solving business pain really the most important topic to address with procurement? Michael will open your eyes to what salespeople should be considering when building consensus with this important and valuable stakeholder.

In this session, learn the do’s and the don’ts when engaging procurement, in the stages of interaction, from -

* Initial contact

* Submitting proposals and RFP’s

* Giving presentations

* Negotiating with procurement

The Procurement function’s influence over corporate decision-making on suppliers has grown immeasurably in recent years. Michael’s insight and experience will help you, the seller, get inside the procurement mind.

Facts, the latest thinking, chat, and banter about the world of sales.

Come and join us for some lively discussion and debate.

This week's Guest was -

• Michael Pearson, a senior procurement specialist

This week's Host was -

• Alex Abbott, Founder of Supero

Transcript of SalesTV.live Early Edition 2024-12-10

Alex Abbott [00:00:01]:

Good morning, and welcome to Sales TV, where we tackle the reality that there is no easy button in sales. If you're an account executive or customer success representative striving to build relationships and pipeline while navigating the challenges of modern sales, then you're in the right place. In every episode, we explore the one thing that brings you closer to achieving success without stress. I'm thrilled to host Michael Pearson this morning, a seasoned procurement specialist with a wealth of knowledge and experience in navigating the often challenging world of corporate procurement. Michael's expertise has guided countless sales teams to engage effectively with the procurement function, transforming what many see as a hurdle into an opportunity for success. And Michael is here to shed light on what procurement professionals truly value and how sales teams can build consensus with this critical stakeholder group. From understanding procurement and their motivations, knowing the do's and the don'ts at every stage, from initial contact to negotiation, Michael will provide practical insights to help you elevate your sales game. So please join me in welcoming a true expert when it comes to procurement.

Alex Abbott [00:01:27]:

Welcome, Michael. Great to have you on the show.

Michael Pearson [00:01:30]:

Thank you. I'm delighted to be here.

Alex Abbott [00:01:32]:

So how are you?

Michael Pearson [00:01:34]:

I'm very well. Thank you. Very well.

Alex Abbott [00:01:36]:

Good. Good. So to kick things off, can you kinda can you share, the story behind, you know, why inside the procurement mind? What led you to this to this point?

Michael Pearson [00:01:49]:

Few years ago, as a favor to to a couple of sales account managers that I was dealing with, I offered to go in and talk to to their teams about what it's like on the other side of the fence. And the sessions were great fun to do, really well received. I was told they got great value out of it, and hence the idea of inside the procurement mind was born.

Alex Abbott [00:02:12]:

Wow. Wow. Now when I you know, when we fur when we first spoke to prepare for this session, I found it really quite interesting that you were offering this kind of training to salespeople because, you know, from my perspective as a salesperson, the last person or stakeholder that I really wanted to engage with was procurement, you know, never really knowing how much they cared about getting the deal done. And so what does procurement really care about when it comes to a deal managing a deal?

Michael Pearson [00:02:50]:

Well, of course, they want the same as their business stakeholder. And this the business or the business stakeholders are phrase I'll use quite a lot, but it could be IT, HR, marketing, whoever we're working alongside. Obviously, their aim is to get the right products or service for the organization that's within their budget. Procurement will share that aim, but we'll be coming out at a I guess with a different angle and slightly different concern. So the business stakeholder primarily is concerned they're getting the right product because they are accountable for that product or service to their organization. It's their budget. They're the SME. The procurement person is gonna have different objectives.

Michael Pearson [00:03:34]:

Mhmm. We wanna make sure that there's been, for example, a robust review of the market, and we're not just going with the 1st salesman that got in through the door. We wanna make sure that we are paying I'm gonna call it the right price, not necessarily the lowest price. So have we looked at the market and decided can we can we stand up and say, yes. We are paying a fair market price here. Having said, we don't wanna get the lowest price. I make no bones about the fact, and we'll talk about negotiation later on. I wanna make sure I've got your lowest price that's possible.

Michael Pearson [00:04:06]:

And then finally, I wanna make sure that we've got a robust contract with the right SLAs, the right levers, and so on. So as you can see, although we're aligned with the business stakeholder, it's a slightly different lens that procurement are bringing to the whole sales process.

Alex Abbott [00:04:24]:

Yeah. And I in in my experience, you know, procurement either comes in at the end, you know, because the business stakeholders said, right. Now you need to convince procurement or work with procurement, and it's like, oh god. Every salesperson's worst nightmare.

Michael Pearson [00:04:45]:

Yep.

Alex Abbott [00:04:46]:

Or you're at the beginning where you're kind of managing the whole process end to end if you know? And and then it becomes actually don't speak to many business stakeholders. And so, again, that's the that's almost, a salesperson's worst nightmare if they're not on the inside, if they've not been privy to helping to to craft those those requirements. Let's kinda dig into that former one first. You know, what what is it that, is the deal in your mind when, when that happens, you know, the salesperson has spent perhaps many months speaking to business stakeholders, and then they have to speak to procurement. In procurement's mind is, is the deal really done and it's a check, it's a tick box exercise, or or are you actually thinking, no. No. This could be any one of the shortlist?

Michael Pearson [00:05:39]:

Well, we certainly would like to think we're not just there to to tick the box. It's one of the biggest complaints within the procurement world is being brought in late by our stakeholders, and we are we all work within our business to sell our value and to try and make sure that we're involved right up front, but we know that's not always the case. I think from a salesman's point of view, you're right. I'm well aware that when they hear the p word, their heart sinks, and I think they probably think in many cases, well, I'll cross that bridge when I come to it. I really would advise well, first of all, and I'm sure most salespeople do do this, make sure you find out, are procurement going to be involved? I also think it's very important to subtly try and find out from the business what is procurement's role, how influential are they, dare I say, because there can be extremes. In some cases, yeah, they're just there to sort of tick the box. I hate to say it. In other cases, they are extremely influential.

Michael Pearson [00:06:45]:

So I I would encourage salespeople to find that out. The the other thing I would say is as soon as you hear that there is gonna be procurement involvement, my strong advice would be to make proactive contact.

Alex Abbott [00:06:57]:

Right.

Michael Pearson [00:06:57]:

I think, first of all, because you're gonna find out a little bit more about the process that might need to be followed, it allows you to at least start to build that rapport and connection with procurement, who I have to warn you, are gonna be cynical. Sales, procurement people hate it when a salesperson calls up and says I've been speaking to so and so, discussion seems to be going well. What do I need to do now? Because that sounds slightly presumptuous, and the procurement person, as I said a few minutes ago, is thinking competition, have we scarred scarred the market? What pricing have you been promising this, you know, what story have you been telling to to my business user? So they are gonna be cynical, but at least early contact will give you the best fighting chance of getting over that to get into the outcome you want.

Alex Abbott [00:07:45]:

Right. And so is is a better approach for the salesperson to say, you know, be be very respectful to the role that procurement has and say, what can I do to help you in this process?

Michael Pearson [00:07:58]:

Absolutely. And perhaps something along the lines without being too, you know, buttering people up along the lines of understand you're an important person in this whole process. Would very much like to get to understand about the process about you personally, what is it we need to do to make sure that you are absolutely comfortable that, we are the right organization with the right service for you. So something along those lines, what you shouldn't do, as I say, is come across a slightly presumptuous discussion's going well. It's gonna lead inexorably to a sale, so you better get on board. Yeah. People wouldn't use that word, but that's sometimes the the implication from the discussion.

Alex Abbott [00:08:38]:

Yeah. Of course. So coming back to what procurement cares about, you know, for many in sales, we've worked you know, we're working a deal. We've perhaps worked really hard to quantify the the business value and perhaps the differentiating business value compared to the competition on the shortlist. And, you know, and we're in this negotiation phase. I know there's multiple stages with procurement, and perhaps we can come back to that. But, we're in this what we think is the negotiation phase because that's how we've been conditioned with regards to the role that procurement plays. But you don't really care about that business value per se, do you, as you've touched on, or do or do you?

Michael Pearson [00:09:26]:

It it'd be very remiss of me to say we don't care. Of course, we do. But I suppose, that's what I was saying, almost at the start, If I'm working alongside someone who understands what they need, understands their budget, and ultimately is gonna be accountable, then I guess I'm treating them as my SME. We're we're past the stage of knowing whether this is the right product or solution. I am now in the mode of absolutely making sure that we have got the best deals since since you've talked about negotiation. At that stage, I am in the mode of making sure we've got the best pricing, and I make no bones. Personally, it was my personal mission to get the lowest price out of you. A price ideally below you where you thought you could ever even go.

Michael Pearson [00:10:14]:

That that was my personal mission. Okay. And I should quickly say, I always trusted that you would not go below what you required to make the deal work and to provide a good service.

Alex Abbott [00:10:26]:

So it was never personal towards the salesperson.

Michael Pearson [00:10:30]:

Oh, no.

Alex Abbott [00:10:31]:

You you you just wanted to make their life hell by negotiating

Michael Pearson [00:10:37]:

Well,

Alex Abbott [00:10:38]:

as hard as possible.

Michael Pearson [00:10:39]:

The thing is, Ali, yes. Because most procurement people will say that negotiation is the part of the the job that they love the most. Yeah. It could might be something of an ordeal for the salesperson because they're being put through hoops. They wanna get the deal done. You have to remember that for procurement person, as I say, it's a it's a fun game of cats and mouse. It's the part of the job they love the most. And, of course, almost certainly, they're gonna have a savings target sitting behind them Yeah.

Michael Pearson [00:11:07]:

Which they which they need to achieve, and negotiating is one of the best ways they can achieve that.

Alex Abbott [00:11:13]:

Yeah. What they're only

Michael Pearson [00:11:13]:

way using.

Alex Abbott [00:11:15]:

Yeah. Let's, we're jumping around a little bit, but I just wanna come back to the scenario when procurement's leading. And, that makes it very difficult for a salesperson who wants to wants to try and take a bit of control in the deal, but also convince the business stakeholders of the, you know, the value that they bring and how it's different to the competition. And often that means changing the requirements because, you know, typically some you know, a gap analysis, you know, whatever the process is that a company goes through to identify where the gaps are and what needs filling by a by a supplier. No. They've not always had the right things in mind, especially if it's a technology purchase. You know? What are we missing from a capability perspective as opposed to what are we missing from a revenue generation perspective? And, you know, that's where I think from my perspective, I always like to bring that different perspective to the conversation. But if procurement are leading the process and it's, you know, batten down the hatches, These are the dates.

Alex Abbott [00:12:24]:

This is the RFI request for information. This is the RFP request for proposal. Don't speak to anyone other than me. You know, I am I am God in this process. And and that makes it really difficult. How how bad is it if, you know, if you are if you do become aware that a salesperson is it then continues to to build relationships quickly to put themselves in a in a good position with with a deal like that?

Michael Pearson [00:12:55]:

I mean, the scenario you paint there, I I know it happens. Not not I I could not imagine running an RFP without having a a business stakeholder right beside me and having all those discussions. I think if you're faced as a sales organization with that situation and you've had no pre discussions whatsoever, then I you you actually knew would need to think very hard about qualifying that RFP opportunity, to decide, particularly if you're if it's competing with others, do you really want to invest all that time and money in it? Now it could be, of course, that you are no greater disadvantage than any other, of your competitors because nobody's had the chance. I think without being too stereotypical, I'd like to think the private sector typically is more open to those discussions and perhaps changing, the specification maybe partly during an RFP or at least being open to other ideas. Public sector, I think, has a bit more of a reputation, for being a little bit more rigid, and it's more difficult to to go off piece and provide something because they are much more rigorous in in their, scoring mechanisms. And, of course, they can be open to a legal challenge, so they tend to be a little bit more conservative. That's a little bit stereotypical, but that's might be my experience of having worked in both sectors, and that's what I hear from salespeople as well.

Alex Abbott [00:14:25]:

Okay. Okay. Interesting. So what about so so building upon that scenario, what's, you know, what's your view when a a vendor, and it could be a very well respected vendor, reviews the RFP? And it could be someone that you've thought they probably need to be on the list because, you know, their position in the marketplace, you know, their success stories with other with other customers. What's your view if a vendor then decides on reading the RFP to actually take themselves out of the of of the running be for whatever reason, and it could be valid reasons in there. Do you do you treat that with some respect, or do you said you know, do you think, actually, you know, forget them?

Michael Pearson [00:15:16]:

Yeah. Well, first thing to say is a lot of procurement people don't quite appreciate just how much time and effort is involved on the sales side.

Alex Abbott [00:15:25]:

Yeah.

Michael Pearson [00:15:26]:

And and there's almost an an arrogance of, well, everyone's fighting to be on an RFP list. How how would they not want to respond? But to answer your question, it it would depend on how likely we thought it was that there would be a really, really strong contender. Because to be very frank and cynical, if you've invited 5, 6 people and someone drops out, you could think, great. One less one less response to have to review.

Alex Abbott [00:15:56]:

Yeah.

Michael Pearson [00:15:56]:

But, clearly, if it's a major player yes. I've been in situations where I've gone back and, clearly, you don't wanna sort of be begging someone, and you and you can't give them of, you don't want to indicate to them too much that you're really, really strong shoe in for this because then, of course, I'm gonna lose competitive advantage in negotiations. But now I I've been in that situation where I've said to someone, look, this is a genuinely open RFP where you have as good a chance as as anyone, so we really would encourage you to bid. And then, of course, you try and understand the reasons why they didn't in the first didn't want to in the first place.

Alex Abbott [00:16:31]:

Yeah. Yeah. Because I've I've been at a company where, you know, we were laser focused in terms of who our ideal customer was, and therefore, we would put a great deal of effort into winning that customer. And, there was internal analysis done that it typically cost us $20,000 to run an engagement, a sales engagement the way that we run it. And, and if we if we weren't in early, the close rate you know, if you if we would just kind of add it to the list and there was no prior engagement, the close rate's incredibly low, you know, like 5% for a blind what we call a blind RFP in sales that if you call call it the same in procurement. So it'd be very difficult to make that decision to actually be involved, you know, with absolutely no idea that, you you know, you have a chance of of winning.

Michael Pearson [00:17:30]:

I think, again and and, again, I don't mean to be too, stereotypical. Public sector because the reasons I gave earlier tend to be very, very I obviously use the word rigid, but very objective scoring things very precisely. It it is less easy to bring in previous discussions, previous experience. I'm a very strong believer in cultural fit, which can mean myriad different things, but in the private sector, it's easier to bring those kind of factors in, than it is in the public sector. So I think public sector, you are more likely to be able to win with with relatively little prior, engagement. I'm not talking about really complex solutions, of course. Private sector, I I would agree with you, and it doesn't surprise me at all that you said your win rate was much higher with those where you'd have that engagement, than than than not.

Alex Abbott [00:18:28]:

Yeah. It kind of you know, I can't help but think businesses potentially end up making the wrong decision without knowing it because the the the the purchase, process was so closed. But but, hey, will we ever know? So, look, I just wanted to call out the comment here from from Peter, Peter Button. Thank you. Yeah. No. We we believe it's a very important topic, and, I think anything that gives salespeople a competitive advantage is a good thing. It's it's obviously up to up to you, up to the audience, how you use this this information, that's kindly being shared by by Michael.

Alex Abbott [00:19:11]:

Let's let's look at some of the stages. So, you know, what are some of the stages that procurement expect to engage with sales, and what are some of the common mistakes that sales professionals make in each of those stages?

Michael Pearson [00:19:26]:

Well, the first stage we've already talked about, which is the the the the initial engaging with procurement.

Alex Abbott [00:19:32]:

Yep. Being

Michael Pearson [00:19:33]:

Simply then, of course, it it you're at the submitting a proposal or an RFP. A few simple do's and don'ts, just getting on the RFP list obviously can be a challenge. What I sometimes find is that a sales organization would have approached a procurement company, let's say, 9 months ago, been told there's an RFP at, let's say, the end of the year, and they assume that they will be on the RFP list. Actually, in my experience, a lot of procurement departments are not that systematic. So staying in regular contact is important. Few of the basics do's and don'ts with RFPs, really try not to ask for an extension. I know it can sometimes be frustrating when you're given perhaps only a week or 2, and you feel you need longer, but that is very frustrating for procurement people who are obviously trying to coordinate a whole process, and coordinate dates with with their stakeholders and so on. The other piece of advice I'd give is even if you're told that we want a concise response, I would say, on the side of being comprehensive.

Michael Pearson [00:20:49]:

I've never heard a stakeholder say to me, the bid was far too long. It it didn't it was far too much material in it. It's much more likely to hear people say, it was a bit thin, wasn't it? They're obviously not that interested. But I would follow-up by saying, bear in mind the poor people who've gotta review these half a dozen RFP responses. They're probably doing it at the end of a long day or even at the weekend. So try and get that balance between maybe concise answers in the core of your document, but then reference appendices with for further detail if people want it. That way, you're kind of getting the best of both worlds.

Alex Abbott [00:21:26]:

Yeah.

Michael Pearson [00:21:28]:

It's the Pearson law of procurement that somebody will always get the wrong client name in the in the RFP response. It's not the end of the world. I I sometimes ask how important is that. It raises a joke. We know you use templates, so it's not the end of the world. But if somebody was on the edge of deciding whether you were the right company or not, that's just a small thing that could tip it over. So, obviously, proofread and be careful. Next stage, of course, is the presenting stage, and, you know, typically, you do the RFP.

Michael Pearson [00:22:00]:

You go down to a short list of 2 or 3. Some very practical do's and don'ts there. Make sure you have the right people in the room. I know it sounds obvious. The right number as well. The number of times there's been a veritable army turned up, and when I've asked the salesperson, why so many? And they say, well, we brought someone just in case, and that just in case person didn't didn't say anything. So make sure everyone has a role. Have an identifiable leader of the team.

Michael Pearson [00:22:31]:

Doesn't need to be the most senior person, but make sure it's coordinated. Keep to timings. Most people do on their presentation slot, but then when they're asked questions, they're they're rabbiting on and on and on, and you're losing time, and you're gonna lose goodwill. And the final thing I'd say on the presentation stage, obviously, you're you're looking to build rapport, but it's like the x factor. It's kind of there or it's not, but you can at least help yourself, as I say, by the timing side. Try to keep you in jokes to a minimum. We like to see rapport within the team, but don't over egg it. Don't be distracted by the difficult person on the, on the procurement side be who's throwing you really difficult questions because probably that's just their role to be obnoxious.

Michael Pearson [00:23:24]:

So that's that kind of stage. And there's a let's say some basic do's and don'ts there. Yeah. And then you've got the negotiation stage, which obviously we've we've talked about. I think if I was gonna give just 1 or 2 piece of advice, I've seen 2 extremes on you're going to get challenged by procurement people on pricing. We are never gonna believe your first price is the best price. We're always going to challenge you, and yet it never fails to surprise me how some salespeople seem surprised at the challenge, and they stumble and stutter, and they stay inane things like, well, all our other clients are happy with the pricing or my other clients wouldn't be happy if I gave you a better price. At the other extreme, I get to see see people who are very inflexible.

Michael Pearson [00:24:13]:

Mhmm. What I would advise, I think the best response when you're challenged is along the lines of, we've given a lot of thought to our proposal. We feel it's fair and reasonable, but I hear your concerns. So so I have to structure expectations. We probably haven't got too much we can give, but let's see how we can work on it. That that you're kinda covering all bases. You're being you're not appearing too inflexible, but you're structuring expectations that there's probably not too much to give away here. The other little tip I would give is do ask for specifics.

Michael Pearson [00:24:48]:

So if you're just told by procurement, you need to reduce the price.

Alex Abbott [00:24:52]:

Yeah.

Michael Pearson [00:24:53]:

Almost certainly that pricing is gonna have a number of elements. Probe and ask where. Because if you're just told, oh, just look at the whole lot. Doesn't really matter. That would indicate that procurement are just on a fishing exercise to see what saving they can get, and, actually, you've probably already got the deal. Similarly, if you offered to reduce the specification to reduce the price, the response you get from procurement, again, can give you a bit of insight how important is the price. Because if the procurement person leaps on that and says, yeah, that would be great. Let's work together on this.

Michael Pearson [00:25:30]:

That would suggest that the the cost really is an issue. If procurement insists that no. No. No. We want to keep the the spec the same even without referring to their stakeholder, again, that would suggest that just on a a fishing exercise because don't forget, if I'm negotiating with you, I would say in the majority of cases, it means my business stakeholder likes your service. They like you as a company. Your but your price is probably already in the right ballpark. Otherwise, I wouldn't even be bothering to negotiate with you.

Michael Pearson [00:26:03]:

So you probably have got more strength and power than you may realize.

Alex Abbott [00:26:09]:

Yeah. And, actually, I guess at that stage, then the less the salesperson says, the better because you you just want an outcome, a reduced price. What timeline Is there a timeline in your mind when it comes to negotiation, Michael?

Michael Pearson [00:26:30]:

So we are always trained as as procurement people that the people who want to get the deal quickest will be the people who capitulate earliest.

Alex Abbott [00:26:37]:

Yeah.

Michael Pearson [00:26:39]:

But, of course, and, of course, the salesman's gonna have a month end, a quarter end, a year end breathing down their neck. From the procurement side, we've got a business stakeholder breathing down our neck who really wants to get on with with the deal. So, typically, I would argue that probably the more of the power is with procurement. We we probably are more able to just go quiet for a few days and leave the other side sweating than the other way around. Although, I I would say, ironically, salespeople probably don't always realize it. If they suddenly went quiet, in many cases, the procurement person would suddenly start to worry because as I say, they've got a business stakeholder saying when's the deal? You know, when are we gonna get it done?

Alex Abbott [00:27:22]:

Yeah. Nice. That's great advice. That's great advice, I think, to end on. We've we've come we've come to the end of time. Michael, this has been absolutely fantastic. Thank you for sharing your your insight and your experience with us.

Michael Pearson [00:27:36]:

Well, okay.

Alex Abbott [00:27:37]:

For our audience that want to learn more about you, where can they find you? How can they engage with you?

Michael Pearson [00:27:43]:

Yep. So LinkedIn, of course. I have a profile there, and my organization's website is www inside the procurement mind dotcom. And I I I as as I hopefully has come across, I'm passionate about this subject. I love talking about it, and always happy to talk to anyone.

Alex Abbott [00:28:02]:

Brilliant. Brilliant. And, Peter, thank you for your engagement this morning. Some great, great comments and great points. Well, until next time on sales TV, I would like to wish everyone a wonderful rest of week and, and Christmas ahead. Take care all. Bye bye.

Michael Pearson [00:28:20]:

Bye.

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