“Should you have provided value throughout and added a positive, measurable contribution to your customer’s business, then renewing a contract should be a walk in the park”.
This is how I started this business book, tackling negotiation and objection topics in the corporate world. This book has made its way to the trash bin and there are good reasons behind this.
Wining, renewing and losing contracts for a business is part of life for many entities.
Even as individuals, we go through the same cycle with brands and products we surround ourselves with. Our cars, our flat TV screens, mobile devices, internet providers (when we have a choice of course), interior furniture etc. Every time we go back to the same product, it is then a mini victory for this brand as it has managed to retain our loyalty. On the other hand, when we jump ship and decide to purchase from the competition, then one entity has lost and the other one has gained a new customer. Acquiring new customers, it is.
As an individual and end-consumer, I tend to stick to selected brands when it comes to major investments. Take TV screens and cameras for instance, SONY would be my go-to brand. I do not even look at the other manufacturers. What could be the reason behind this blunt, stubborn and perhaps a bit foolish purchasing behaviour?
1. I have worked for SONY in the past and really enjoyed my time with this brand and full range of products.
My memories attached to SONY are nothing but pleasant.
2. I had the chance to experience the full range of products, from TVs to sound systems, cameras and laptops.
I have never been disappointed by the stated performance of the products which have always lived up to their promises.
3. SONY is positioned as a mass-premium brand. It is not your entry line product and not your niche, ultra-priced piece of equipment either.
You do not feel like your neighbours will have the same TV or camera and that helps you to stand out.
4. I am used to SONY’s interface, menus, shortcuts and abbreviations. I do not have to re-discover how to use a competitor’s product to its full potential, however user-friendly this may be.
Well, the above listed 4 reasons are your usual suspects, right?
A mix of rational and emotional buying motives. Nothing new there.
Now, how is it in the corporate world? Do companies select vendors, partners, suppliers using a mix of both emotional and rational buying motives?
Based on my experience with the team in presenting learning and development solutions to prospects, my answer would be NO…. a big fat NO. I do not see any emotions and non-rational, fact-based, number-driven or cold-straight-to-the-point-factors being discussed during an answer to an RFQ for instance (Request For Quotation).
Is it normal Doctor? Of course, nothing wrong here:
1. People working in procurement/purchasing departments have targets, like in any other departments. One of their main targets, and attached to their bonus if any, is to generate savings to the company they work for. So squeeze, squeeze and squeeze those suppliers.
Are there any emotionally driven feelings here? NOT-AT-ALL!
2. Unless your business activity is connected to industries such as art, spectacle and events in general there might be a tiny bit more sensitivity towards emotional decisions. There might be discussion around the fact that your company has produced A, B, C shows and the potential customer really likes the tone, colors and flow of events hence they would consider inviting you to the RFQ.
After conversing with friends working in those industries, the discussion really depends on the customers, some are budget driven with very little inclination towards emotional triggers. Others are more flexible with numbers if the proposal hits a sensitive cord.
There is another factor that will add weight to your company being invited to introduce your services, answer an RFQ and, down the line, perhaps win a new contract: relationships.
What about the relationship you might have as a supplier with the company you are trying to get into business with?
You might know a few people inside this company and, depending on where they stand in the decision-making process, they might become your champions cheering for you.
And here I witnessed several cases:
1. You enter a bidding process, a sales presentation or a sales pitch. In the meeting room (or online), your compelling story managed to generate traction and the conversation is now open, you start answering questions ranging from logistics, payment terms, possible milestones. It went well.
The meeting is over, you have a good gut feeling and attendees are leaving the room. A couple of attendees come over to you and engage in casual conversation. It is all pleasant until the conversation takes on a different flavour. These two people, strategically positioned in the food chain, are now throwing a different angle to the scenario. It is obvious they do not have their company’s best interests at heart. Using carefully selected words and without finishing most of their sentences, they are just letting you know that they can steer the conversation internally in a way that the contract will come to you. They just need to understand what is in it for them.
Well then it is really up to you and how comfortable you are in engaging in such practices.
I cannot say that I have faced such situations very often but when they occurred, I have always refrained from entertaining such behaviour.
I find it despicable and one of the most damaging corporate diseases that has ever existed.
2. As a potential supplier, you have a relationship with the right people inside the company. This company corporate governance is not particularly ‘’by the book’’ so there is place for some ‘’Habibe’’ business. An RFQ will be launched, so the process is respected, but you are almost certain that you will get the contract. Your insider(s) are actually guiding you on how to respond to the RFQ, sharing competitors’ pricing, strategy, methodology.
All the other bidders will waste a precious amount of time, and potentially money, responding to the RFQ.
Is it the best way for a corporation to purchase a service or a product? Probably not. Does this leave room for improper pricing, conflict of interests, kick-backs and ultimately a corporation not getting the best out of a deal?
Certainly, but it is what it is as they say…
3. You respond to an RFI (Request For Information) and then to an RFQ without having any relationship or people you know working in this company. Let us imagine for a second that all the other bidders are in a similar situation and that all the stakeholders do not have any interest, or can’t, twist the process by seeking personal gains. Then it sounds like you have entered a fair and square game and the best offer should win the bid. This scenario is the most neutral of all and should be the one where both entities enter a business relationship based on value proposition.
Now you do not really know what kind of relationship your competitors enjoy with the potential customer while bidding. You might hear rumors that the customer VP of Sales is a good friend of the CEO of one of your competitors or that the head of purchasing is going on vacation with one of the competitors’ GM.
True or not, does this mean the process is biased and you stood no chance from day 1?
That is one of the beauties of entrepreneurship and engaging in business development activities. You might never know or you might actually discover, sometimes along the process, that yes, there are parties who know each other and the chance of colluding is high.
You either accept it and live with it or you go and sell ice creams on sunny beaches.
Well, even there I am not entirely sure that the picture would be as rosy as we would like to imagine.
Welcome to sustaining your business while keeping dignity, ethics and being able to look at yourself in the mirror every morning.