Today’s guest post is from Stephen R. Guth of The Vendor Management Office Blog and it originally ran on that blog on Saturday. It was so extraordinarily well written that I just had to ask him to re-run it on this forum, even though he did call Jerry Seinfeld very talented.
Let me start off with a bold, controversial statement… Procurement pros should be in sales… Procurement pros / Sales pros are natural dualities, the yin and yang, the Jedis and the Dark Side, oil and water, day and night (you get my drift)–but that doesn’t mean that one can’t learn from the other. To that end, sales pros spend a significant amount of time understanding the nature of procurement and how to work around procurement pros. For example, sales pros are specifically trained on how to do end runs around procurement to schmooze who the sales pros think are the decision-makers. With that being the case, why not do the same with procurement pros? Meaning, why don’t procurement pros dabble in the black art of sales?
We all know that relationships matter, and that’s the bread and butter of sales pros. A seasoned sales pro will establish a relationship with a customer and manipulate that relationship to the nth degree to maximize their sales revenue and commissions. In the words of the very talented Jerry Seinfeld, “Not that there’s anything wrong with that.” Leveraging relationships is a crucial part of business… Our job as procurement pros is to help level the playing field between customer and sales pro.
So, ask yourself, what are you doing as a procurement pro to leverage relationships with your internal customers?
Your likely response to that question is exactly my point, and why procurement pros should be in “sales.”
Just like sales pros, my staff have quotas in their performance plans, but instead of revenue quotas, my staff have savings quotas. They are measured and compensated on those quotas. If my staff don’t hit those quotas, they get zinged on their merit increase. They exceed those quotas, and they get more $$$.
In addition to commissions, many companies use special incentives to motivate and compensate their sales pros (called “SPIFs” or “Sales Performance Incentive Funds”). SPIFs can be cash or other incentives like travel or gifts. Well, I do the same thing. I have “Special Procurement Incentive Funds.” If one of my staff do extraordinarily well on a big deal, they get an on-the-spot cash award, free time off, or a work from home day. Over the years, I’ve given thousands of SPIF dollars away and lots of time off.
Sales pros have the job of determining your customer’s “needs,” so sales pros will meet with your customers to get them to divulge this information. Yep, my staff do the same thing. Every year, at the beginning of the year, my staff are required to meet with budget center managers who have made large capital and expense requests. The purpose of the meeting is to understand what the customers have in their pipelines for the year. In these discussions, my staff reiterate how we can help the customer through the procurement process, make it easy for them, and, most importantly, how we can save them budget dollars so that they have some extra cushion in their budgets to help pay for other pet projects that may not have otherwise been funded.
Sales plans are a critical work product for sales pros. Sales plans keep track of all deals in progress and potential deals. The sales plans help sales pros keep their eyes on the ball and keep them on top of the deals. You guessed it, my staff have the same thing. They maintain “RFx Spend Plans,” which document all of the projects where they might need to be engaged to conduct a procurement. We discuss these spend plans at least once a month to ensure that we’re engaged and work is proceeding. As we discover new deals, they’re added to the spend plan.
Relationships, relationships, relationships are the mantra of sales pros. Procurement pros should have the same mantra. Sales pros routinely have lunch, etc. with customers to develop and sustain the relationship. Procurement pros should have the same resources to develop those relationships. At this point in this article, you won’t be surprised to find out that my staff do the same thing. In my staff’s performance plans, they have a requirement to meet with at least one major customer per quarter over lunch (my budget pays for it) to help manage the relationship and build trust / credibility. My staff are strongly encouraged to personally know their customers, and if they become true friends, then that’s healthy.
Sales pros of larger companies usually have an annual customer appreciation event (cloaked as a user conference so as to not appear as too much of a boondoggle) where the biggest customers get an all-expenses-paid trip. Well, I certainly can’t afford to do that, but my staff do something similar. Every year, we have a customer appreciation event where our customers receive personalized, hand-written notes thanking them for their business over the past year and inviting them to our event. At the door to the event, the guests are personally greated by my staff and given a raffle ticket with a small party favor (which includes a pen with our department’s logo.) At the event, we have finger food and non-alcoholic beverages (we go to Costco)–and my staff mingle with their customers. I do a short presentation of our accomplishments over the year and then we present those customers who worked with us on larger deals (where we saved big $$$) plexiglass awards. Finally, at the end, we raffle off prizes to our customers (some really good stuff that we get from our vendors, like laptops and digital cameras). Our customers LOVE this event and the event drives them to want to do business with our department (because it’s an invitation-only event–if you’re not a customer with an invite, you’re not getting in).
Sales pros wouldn’t be very well equiped if they didn’t go through extensive training. Some companies put their staff through months of training before the staff are permitted to hit the streets. That’s one area where I think I’ve fallen down when it comes to my staff. Just like sales pros understand what procurement pros do, the opposite should be true. For next year’s budget, I’m planning to find a good basic sales training course for my staff and have them go through the training. The more my staff can get into the heads of sales pros, the better.