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Do You Need to Negotiate Differently with Procurement?

blog author
Written by Dave Shaby
Chief Operating Officer, RAIN Group

If you’re like most sellers, you find yourself negotiating deals with a buyer’s procurement team at least some of the time. Certainly, the frequency with which you’re dealing with procurement and purchasing professionals will vary based on industry and product category, but being skilled working with procurement is often the key to moving your deal across the finish line in a timely way.

You might wonder whether there’s any need to negotiate differently when purchasing plays a role. The answer is yes—and no.

Even if you fancy yourself a top performer when negotiating deals with business buyers and end users, you may find yourself frustrated when procurement is part of the buying team.

Their titles range from procurement officer, buyer, supply chain manager, supplier relationship manager, contract manager, purchasing manager, procurement director, materials manager, purchasing agent, strategic sourcing director, and so on, but mostly they're a roadblock to closing deals.

Having some insight on how procurement views and participates in supplier negotiations will help you work with these buyers.

 

Our global study of Top Performance in Sales Negotiation features a piece often missing in sales research: the voice of the buyer. To get a complete picture of the state of sales negotiations, we surveyed 449 buyers, including 247 business and 202 procurement and purchasing professionals, representing $2.59 billion in purchases over 12 months.

 

For example, if you think the issues facing the procurement team in supplier negotiations are completely different from those of the business buyers you negotiate with, you might be surprised to learn the top challenges cited are common to both sets of buyers:

  • Price/cost
  • Value
  • Time

But our sales negotiation research did uncover some major differences between business and procurement buyers.

The Differences Between Business Buyers and Procurement

Here are three things you need to know when negotiating with procurement versus business buyers—these may surprise you!

1. Procurement buyers are less confident.

This one is surprising (at least it was for me). You might think that based on their role and the volume of their buying activity, purchasing professionals would be fairly confident of their negotiation skills.

However, in our research, we asked buyers to rate their confidence participating in effective negotiations, and the procurement and purchasing buyers are significantly less likely to be extremely confident compared to business buyers.

Procurement-Extremely-Confident

Not only that, but business buyers are 1.7x more likely to be prepared to manage the emotional environment of negotiations.

2. Procurement buyers are less likely to receive negotiation training.

Lack of training only compounds the confidence issue: 45% of procurement and purchasing buyers report they haven't participated in negotiation training (compared to only 18% of business buyers).

Procurement-No-Training

In addition, only 19% of those procurement buyers who did receive training rated it as “extremely effective” (compared to 39% of business buyers).

In other words: procurement receives less training, and the training is less effective than negotiation training for business buyers.

3. Procurement buyers are less likely to sign your agreement.

Finally, only 67% of procurement buyer negotiations result in a signed agreement (compared to 80% for business buyers). This is based on the median number of negotiations in which they were involved over a 12-month period.

That’s one-third of negotiations with procurement not reaching the outcome a seller wants.

Procurement-Signed-Agreements


What This Means for Sellers

When the buying team includes a procurement or purchasing professional, be aware of and sensitive to the fact that their background may not be quite as you expect.

For example, if their confidence level is low, you may find them more defensive or cautious.

If they’re at a junior level, or if they haven’t had effective training, they may be more rigid in their thinking or less prepared to navigate the emotional environment of a negotiation.

It’s important for you to be prepared to manage and effect emotions.

Still, there's no one procurement buyer profile, just as there's no single business buyer profile. I wish I could tell you procurement buyers overwhelmingly prefer one negotiation approach over another, but you’ll find differences among them just as you will business buyers.

Similarly, for every procurement buyer who says, “The driver for our project is schedule and quality more than cost,” there’s another who says it’s, “High cost reduction targets.”

To successfully navigate negotiations with procurement, sellers must be able to read their buyer and the situation—and take the lead.

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Topics: Sales Negotiation