Health warning! This is a long read 🙂
If you’re selling your services – consultancy, coaching or professional services specialisms – to Corporates or even mid-sized companies, chances are you’ll bump into Procurement.
You may need to submit proposals, take part in formal tender processes, get onto the approved supplier list, or just have them OK your letter of engagement.
And you’ve probably discovered that sometimes working with client’s Procurement teams, well, it ain’t easy 🙂
Sometimes it feels like their only goal is to drive down your price. Or keep small suppliers like you out of the equation.
I’ve worked with Procurement teams in the largest private companies in the UK and internationally and some of the biggest public sector organisations to help them improve the way they buy. Also, of direct relevance, I’ve worked with professional service firms, consultancies and outsourcers (shared services) on the other side of the fence, to help them improve their relationships with clients’ Procurement teams.
I’m concentrating here on what Procurement are really focused on, how non-Corporate firms can differentiate themselves against larger competitors, and the best ways of working with Procurement to make sure you “stay in the game”.
- What do Corporate Procurement want?
Consultants, coaches and professional services specialists are constantly talking to clients to better understand what they want. Procurement can be seen as something of a difficult animal to figure out what they want from you. It can be hard to understand what their goals, core concerns and worries are when they’re involved in buying services from external providers of consultancy, coaching, professional services and the like.
Frankly, without being a defender of Procurement, they’re just doing their jobs.
You’re just going to have to deal with Procurement’s influence.
Their twin focus is achieving price reductions and mitigating risks – these are two key metrics in evaluating their value to their Corporate organisation. Don’t take it personally! They’re paid to get your price down.
In professional services there’s a lot of talk about ‘value propositions’ and how important that is to client. In Procurement they’re more bothered about the risk.
They want a safe option.
You need to be persuasive in how you’ll mitigate risks – perceived or real.
Painful as it is, you need to be compliant with their engagement processes. If you’re going to go through their on-boarding or tendering processes half-hearted, please be assured you’ll be ruled out. When it comes to engagement with Procurement make sure you’re committed to winning the specific project or contract, and are willing to invest the time to win.
- What can a specialist consultant, coach or professional services firm do to position themselves as being low risk to a Corporate buyer?
Recognise and accept that the Buyer is thinking ‘what happens if it goes wrong’?
It’d be great if they were more appreciative of the value of the outcomes and what you can achieve. Looking at you, all they’re thinking is – ‘here’s a risk’ – a non-Corporate organisation engaging with a Corporate.
You need to respond robustly and convincingly to persuade that you’ve experience in the area of services you’re providing. That you’ve done this exact piece of work in exactly similar examples using the same staff – successfully.
Cynically, don’t believe the hype that (everyone in) Procurement wants innovation – or to give you a chance. Convince them that you are safe pair of hands – track record, a proven methodology, proposed KPIs, contingency plans, good insurances cover in place, compliant with the Terms and Conditions of Purchase – put some skin in the game – not a T&M pricing model but risk-reward, for example.
Assure them you know the risk, their driver is the risk of failure. If you are retained and do a brilliant job, nothing happens to them personally. You fail, they’re faced with trouble. There’s a lot of downside for Procurement taking a risk to engage with a niche service provider.
By the way, I’m convinced that consultants, coaches and specialists professionals have the ability to do this; to be persuasive in your broader offering, you’ve just got to get it down on paper.
Articulate evidence to substantiate your claims that you are a trusted source.
The challenge for you is to think through all the things that can go wrong and making sure there’s a plan in place preventing failure happening or addressing it even if it does occur.
A useful approach is to include a truncated risk register in your proposal document. Don’t include a full one unless it is specifically requested in the tender documentation. Identify no more than 6 (not a load more please – lets not frighten ’em!) key risks such as resourcing pinch points, managing disputes and detail how you’re going to manage them.
You’re already allaying concerns to assure the Buyer you’ve thought about the risks and have a plan to deal with them.
- Is competitive tendering for you?
Giving tough love is not an easy thing to do, but this is important, so here goes.
Don’t bother bidding in a competitive tendering exercise unless you are known to the Corporate organisation.
Pretty tough I realise but as a non-Corporate organisation, you need to use your sales and marketing time judiciously. I’m not saying you won’t win if you are unknown to the Decision-Making Unit (DMU) on the buy-side but you will be materially disadvantaged. Make sure you are known to the key players in the target organisation…. and if you don’t, remember, one of your competitors probably does.
Your bid/no bid decision is key.
Assuming you’re bidding, take a systematic approach to answering the tender questions. To be considered by the Buyer you must be compliant and in order to be awarded the contract you must differentiate yourself. Procurement also appear to have an obsession with page count or word count in the responses they receive.
Ignore at your peril.
Consider a four-step response to the tender questions – Issue, Solution, Benefit, and Evidence.
Convince the evaluator reading your question response you’ve thought about the objective and how you’re going to meet the issues (for example how you’re going to mitigate risk, how you’re going to manage the process, what do you see as the key challenges faced by the Corporate – taking note of the questions they come up with in the tender documents) in answering the questions in the tender document.
Assure the Buyer you’ve thought about the problem or challenge and have an ideal solution; explain the solution in high-level business terms. Then express the benefits that will accrue with your approach and finally bolster your response with evidence – “we did this for a property specialist who said….”
Creative people can get carried away with focussing on the differentiation and less input on the somewhat pedestrian(?) compliance that Procurement are expecting. Following the Buyers response structure is critical – they won’t go hunting for your answers – and, please be assured, you don’t want to irritate Procurement.
- How can a smaller professional firm differentiate themselves in competition with big firms?
If the Procurement process you’re entering into includes an opportunity to make a presentation or attend an interview such a face-to-face forum is where you can best articulate your differentiators and demonstrate ‘why you?’
Big firms have dedicated bid writing teams – it’s all they do for a living – machines producing high quality bid documents. If the evaluation of the tender document is the basis of the award think carefully before you decide to bid in that way.
Perhaps I’m massaging egos here but if we can get the specialist consultant or coach in front of the decision-makers I’m sure they can ‘’sell’ their rare and valuable differentiators.
When you meet with Procurement, remember they’re professionals in commercial and contractual matters. They probably have an awareness of the technical matters and also have a sophisticated tool at hand that they use ruthlessly against the unwary.
Silence.
Don’t be tempted to fill the vacuum with asinine sales messages. Remember every and all engagements with Procurement is a negotiation.
For example, at an investment bank client, sourcing a global programme of change management professional services, in the very first meeting with a potential niche consultant, the proposed day rate dropped by £500.
A discount on a day rate is not a discount on the full price. It’s a discount on the profit, unless there is something else of value equal to the discount that is being removed from the offer. Procurement had hardly got into their stride and here was the consultant caving into commercial negotiation pressures.
Let’s not cry.
Let’s go through the process leveraging your, no doubt, excellent communication skills into the bid document. Make it professional; seek to match the standards of the big firms in the content and presentation. Include a mobilisation plan using Microsoft project, propose management information and related KPIs. Ensure your service experts are front and centre in the bid documents, not just tucked away as CVs in an appendix. Talk up the strengths that you bring to the delivery of the services rather than simply (just) answering the Buyer’s tendering questions.
- How to approach Procurement?
Having built a relationship with a Corporate executive, perhaps even agreeing a budget the next stage is inevitably for the executive client to say we need to pass this through Procurement. You’re a single source of the identified services, you’ve done well to get this far without formal tendering – and here’s where you need to approach the Buyer.
Don’t be cocky with Procurement!
Be respectful of the fact they’re an influencer and, of course, can also be a blocker. It’s great you have an executive as an advocate but you’re not on the preferred supplier list, not on the framework contract. The Buyer can apply policy or Procurement imperatives to exclude small firms wanting to engage with Corporates. It can be a metric of their performance to reduce the number of suppliers.
Weird perhaps, but such is life!
Seek to put the Buyer in a position of an educator of the procurement process and what’s important to them. Selling to them is not the best use of your time; they meet hundreds of potential a suppliers. Your goal is to seek to understand their expectations.
Engage somewhere in the middle of your selling process. I wish I could be more scientific but don’t approach them cold at the beginning of your sales process and don’t leave it as an afterthought right at the end. The first step is to engage with the executive client to ensure your identified project is viable and then move to include Procurement in their on-boarding process.
Finally here, don’t reach out to the Head of Procurement on LinkedIn. Schmoozing or seeking to establish some kind of deep rapport is a sub-optimal activity with Buyers! But what do I know 🙂
- Are you happy to discuss price?
Surely there is only one answer to this closed question – of course!
Keep it short and sweet, don’t get into the detail of day rates. Steer the conversation to pricing models, such as asking what options they’d prefer – time and materials (ideal!) or risk and reward (don’t mention this unless they do!). Nothing controversial or obstinate.
There’s a limited number of pricing models to pursue in the delivery of professional services. Let’s consider three: time and materials, fixed price and risk and reward.
Time and materials is the commercial tool of last resort for a Buyer. The hours/days of service provision are potentially open-ended and anathema to budgeting. However, if the buyer proposes or agrees to this option – happy days. It is, after all easier for the comparison of bid proposals for the buyer, noting the risk is with them. Now you have the challenge of a presenting competitive unit rate.
Fixed price is surely more appealing? You’ve done this type of work before and have clear sight on time/resources required to deliver the output(s). Remember to document your assumptions and caveats – in positive, upbeat language. You’ll need to include some contingency provision and be ruthless in keeping to the specification or terms of reference as you are carrying most of the risk. There may be a loss of good will here but of course the Buyer started it 🙂
Risk and reward could drive negative behaviour by solely focussing on the deliverable(s) that lead to the reward. Clarity on dependencies from Corporate client are key for this option. If they don’t deliver their side of the bargain regardless of your motivation to perform, you could fail. One final point, experience suggests the Corporate Buyer isn’t delighted to authorise the reward. Take it in your stride and keep delighting your Corporate client – and grow that account.
Your role, as the potential supplier, is to align with the option most attractive to the Buyer, let them choose what suits them best.
This is a good example of the topic for discussion when you engage with Procurement during the selling process. Oh relief! A supplier embracing compliance with their process.
For my part, if they propose T&M as the basis for pricing, nod sagely, agree and move on.
- Corporate Procurement – strategy or culture
“Culture eats strategy for breakfast”, a phrase originated by Peter Drucker, my favourite writer on management, is an absolute reality in Corporate Procurement!
The Procurement processes will have variations on a theme of key steps – identify need, specify, budgeting, market research, solicit bids, award contract- but relationships with suppliers vary greatly.
In some sectors you’re going to feel loathed.
That’s something you’ll just have to deal with.
Retail, construction, investment banking for example; it’s pretty rough how some folks engage with niche professional services providers. Antagonistic relationship with external parties is a tradition in some Corporate sectors. Don’t walk away – your service is valued at a strategic or executive client level. You will be challenged on all facets of your offering at this first stage of Procurement.
You must, of course, keep your own standards but be ready for the interrogation on price, mobilisation, deliverables, timescales, expenses, reporting, intellectual property (land grab on your pre-existing IP not just the IP created while working for them!).
You need to battle, with a winning smile, and focus on the prize. The Buyer is just doing their job.
This approach is, of course, in many Corporate environments, a deliberate strategy. The Buyer seeks the best deal without sullying the productive, often warm, relationship with the Corporate client. Candidly, both of you can speak ill of Procurement – and Procurement don’t care, they’re just doing their job – aiming to reduce price and mitigate risks.
- The critical value of a one-page executive summary
Information overload is an inescapable part of today’s Corporate world.
Filtering this data glut will make the life of the Buyer easier. Here’s where the Executive Summary can help you and them.
Even if it’s not requested in the tendering documentation include an Executive Summary – just a one-pager – concise and to the point. It acts as an aide memoire for the Buyer when discussing your proposal with internal stakeholders. Ask yourself, if you were the Buyer:
- Do I really need to know this?
- How will this information improve my (Corporate) life?
- What about this information is important to me?
Convince the Buyer you understand the service requirement and how and why your proposal exactly meets that need.
That’s it!
And always hark back to what the stoic philosopher, Seneca said back in Rome, 2000 years ago – luck is what happens when preparation meets opportunity.
Till next time
Steve
PS and as I said, apologies to Procurement professionals looking in. You know I’m talking about all the other Buyers, not you, right?
Stephen Ashcroft BEng MSc FCIPS is a procurement learner stuck in the body of a procurement veteran, and with over 20 years’ experience still sees the glass as half full. Working with leading organisations across diverse industry sectors, Steve helps clients reimagine procurement to drive improved performance. A recognised advisor, speaker, lecturer, and author; the ever-hopeful Kopite shares his bright-eyed/world-weary views on Twitter @ThinkProcure, LinkedIn and here on his new blog.
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