Speaking Sales
In the sales and negotiation process, communication is key. So what is it that isn't being said? The following is a list of questions and topics to bring up with sales reps. Sometimes leverage is available to buyers who are able to be flexible in the right ways - not in leaving money on the table - but with timing and other deal structure elements that allow suppliers to offer a better deal.
Most of us have been trained to negotiate based on cost and volume. But those aren't the only benefits, and they often don't scratch the surface of what suppliers are authorized to offer. The trick is in uncovering the motivations of the sales people.
Compensation Structure
The compensation plan for most sales people is a unique kind of motivator. While all of us know what our company's objectives are (and some of us may even try to help meet them) sales people receive more or less pay based on how far their deals go towards those objectives. Obviously, big deals are better than small deals. That goes without saying, and all companies have the objective of maximizing revenue. The trick comes in the next level of detail.
Maybe minimizing days to cash is a priority for the company. If you can make a deal to pay for goods sooner, you might be able to cut a mroe aggressive deal. Alternatively, some products or services may be the priority, and if you are negotiating for one of those, the sales person will receive a higher commission for moving a high-priority item.
Believe it or not, many sales people would love to be asked about their comp structure during a negotiation (word to the wise: this is NOT the same as asking them how much they make). Another way of getting to the same information would be to ask what their company's objectives/priorities are for the sales force. Even sales people are human - if they know you are looking to close a deal in such a way that they will receive a better then usual commission, they will go to bat for you internally to get something you want in exchange.
Access to Decision Makers
In many cases, the procurement person interfacing with a supplier and doing the negotiating is not the one making the final award decision. We provide process expertise, due dilligence, a level of objectivity, and hopefully better negotiating skills than the actual consumer of that service internally. It can be frustrating for procurement as well as sales that usually the two sitting across from each other during a negotiation are not the ones making the final decisions.
Another bargaining chip you may be able to offer is an even exchange of access to decision makers. If you allow a meeting between a supplier rep and your decision maker during the sourcing process, they may be able to arrange access for your stakeholders when it comes time to learn about a supplier's ongoing R&D or new releases. A word of caution though, always be sure that you are present if the meeting is to take place during the procurement process, and if you arrange a meeting with one supplier, you need to do the same with all suppliers still in contention for an award.
Payment Terms
Knowing how your company likes to pay for goods and services as well as how your suppliers handle their accounting is the key to getting the right payment terms. Some categories of goods are very straight forward; they send you a product and this allows them to bill you for it. But other categories are less black and white and this allows for greater flexibility. With B2B software licenses, a key typically allows you to start using the software, and sending that key is the trigger for billing, but you may be able to work out a schedule that better fits your needs.
Can you offer to pay them sooner (30-45 days instead of 60-90 days) for a lower total cost? Or is it better for your company to pay a little bit more but to have longer to pay? How often can they invoice you - monthly? annually? Over what period of time are they willing to let you pay off a larger sum without incurring additional costs?
Timeline
Sales people live and die by their sales cycle. They are incented to meet targets for each quarter and year. Know what this schedule is and use it to your advantage by offering to make a deal so that it will hit in the current period.
Remember that you have far more leverage in the last week or two of a sales cycle than you do in the first month of a new quarter. If your technique is to play hard to get, or threaten to stall on making a choice, remember that such approached work much better when the sales rep can really feel the time pressure.
