Losing our Ability to Negotiate - RFPs and Bids

In my opinion, we have lost the ability to negotiate! We post fixed prices in our markets, stores and online. We are even seeing great success with car dealerships that have a non-negotiation price. In the rest of the world, negotiation is a way of life, from South America to the Middle-East, negotiation is an indispensable way of life. While some would argue that negotiation opens the door to questionable business practices, I would argue that it is a tool for the win-win mentality.

RFPs (requests for proposal) and Bids are an easy way out. They represent an organization that would prefer to keep vendors at arm's length and avoid any risk of conflict. It is also a way to avoid work. No need to get to know the real needs of your organization or the vendor's needs. It avoids the potential to get an even better deal from your SOS. When you avoid direct communication with your SOS (Snake-oil Salesperson) through a structured RFP or Bid, you eliminate the ability to discuss additional discounts for Exclusivity Agreements, Reference Calls, Introductions to other departments or business associates or co-marketing opportunities.

Too many times, the purchasing folks are give too-little power or do not understand the overall business objective, and therefore, cannot negotiate effectively. Management has given them the direction to just buy this or that widget without any guidance about its importance or business value.

Some ideas for more effective and win-win negotiations:

1. Management should handle negotiations on key items for their business. Don't delegate something that is mission-critical to your success.

2. Purchasers should be given an understanding of the business needs for a particular product or service. They should also be empowered to give and get key items. Outline their negotiable terms. Get creative, and put yourself in the suppliers shoes. What would be of value to them that I can give? It may be as simple as an intro letter to a potential client that you know.

3. Schedule a negotiation meeting with your suppliers. Let them know that you have decided on their product or service, but that they should come prepared to negotiate the terms and pricing. Work for a win-win, don't just needle them on price. Perhaps extended terms would be in your interest, or an introduction to another customer that your sales team has been trying to crack.

4. Avoid RFPs or Formal Bid processes after you have decided on what you want. It will get you the absolute minimum and leaves things on the negotiation table.

5. Keep the negotiations professional. Avoid personal favors or side-deals. This is why State Agencies and other entities have gone to RFPs and Bids and sometimes even outlawed lunches. Don't ruin it for the rest of the companies by being a back-door dealer.

Purchasers-do your homework, learn what is of value to both sides. Take a class in negotiation or read a book. One that I enjoyed was Negotiations that Close Deals by Jim Henning.

The "Sales Itch"

A very good friend of mine and the best Cold-Caller I've ever seen (Bob Fenner), recently sent this to me...take it as some additional thoughts on successful SOS.

"The other day I jotted down a few notes on what makes a successful sales professional and what I hope to mimic in my professional career.

From working with you for the past year and a half, I have noticed successful SOS do the following...

• Exhibit a strong moral base: you truly do what is right for the customer
• Posses a "child-like" wonder about you - you are always learning new things
• Understand what motivates people and connect with them on a personal level
• Re-engineer processes - you are not afraid to try something new or scrap something that doesn't work
• You enjoy the "Sport of Selling"
• Constantly appreciate people and let them know about it
• You understand the numbers / math behind the madness

I am not a doctor; but you also may have a disease... I have defined it as "The Sales Itch"

Symptoms of "The Sales Itch" include SOS standing in the back of the room, prolonged BlackBerry use, loud sighs, extended bathroom breaks, scheduling meetings to block out other meetings, and ending meetings early.

Causes of "The Sales Itch" have been linked to wasting SOS's time on non-selling activities, making him sit through long PowerPoint Presentations, sitting through meetings with no agenda, and partaking in work events that don't lead to revenue.

Cures have been linked to letting him do what he does best.... SELL!

Farmers Make Good SalesPeople...Not necessarily the other way around

Two years ago I moved to a semi-rural area. It has a history of large, open tracts of land where corn, peas and alfalfa were and are still grown. The residents of the area are crusty, old and come to find out, WISE! I have seen some of the best sales-skills in action as I stand on the corner and take a tongue-lashing for killing off my corn by sprinkling instead of flooding. I have tried to put all their words of advice into practice over the past two years. We ended up with 1600 ears of corn on less than a 1/4 acre by doing so.

Let me relate the story... When I moved, I thought I could be a farmer. I watched my neighbors. Plowed when they plowed, watered when they watered, sprayed when they sprayed. When I decided to plant my 800 feet of row corn, little did I know what it would take to keep it alive as the temperature climbed.

I planted seeds and started watering via sprinklers. After about 3 weeks, it started to sprout. It grew to about 3 inches tall and then started to curl up and turn purple. The next Sunday, at church, one of my crusty neighbors walked up to me, looked at me and said, "Yer killin' it!" and shambled off. I stood there for a minute, shocked at his candor. I caught up to him after about 3 strides and asked him what he meant and what I should do. He proceeded to explain that I should be flooding my rows instead of sprinkling. He also said I might as well plow it under and start over. I had put too much effort into creating rows and planting to just give up!

I went home and converted my irrigation over to flood-method the next day. After two weeks of flooding it, I succeeded in resurrecting my corn. It began to grow again. The following week, the same crusty old farmer shambled back up to me and mumbled, "Glad to see yer stubborn enough not to give up." Then he meandered off again.

I learned some very important lessons that year that relate directly to sales.

1. Flood the Field, don't just sprinkle - you must create momentum in the first 90-120 days of selling a new product or entering a new market. Figure your win ratio, your goal and then make enough calls to exceed that number by 120%. Seed loss is a big issue with corn, I planted 2-3 seeds for every stalk that actually came up. Plan on it.

2. Listen to the old and crusty farmers around you. I have learned more from my recent manager who's been around the block than all my other managers combined. He is old-school, but I found more than one nugget of gold by going back and doing it the way the old-timers did it. I learned how to track and predict my business/harvest like never before.

3. Be Patient. Too many SOS expect their efforts to yield immediately. Some patches of ground may require fertilizer and bug killing. Expect 6-9 months for a patch to really start yielding fruit. Don't forget to Flood.

SOS are typically impatient and don't take the time to analyze their field or activities that are supposed to yield fruit. Just walking around the field will not make the corn grow. Timing is important. Steps to success are important and you can't shortcut them. Farmers know that and live by it. Learning from every source possible and imitating successful SOS will go a long way towards a harvest. Be wiling to alter your style of watering (selling) if necessary. Don't be the typical arrogant SOS who thinks their way is the only way.

Just like I had more corn that I could eat, I have had sale's harvests that filled my b ucket to overflowing and it was all I could do to bring it in fast enough or follow up with all the requests.

Are you a Vendor or Trusted-Partner?

It is the Holy Grail of all Snakeoilers(SOS) to become a "partner" to their customers, but few ever achieve it. Many of the SOS feel they are partners out of sense of their own over-inflated skill as a salesperson. So how does an SOS determine if they have reached sales-nirvana, been brought into the inner-circle and become a true partner to their clientele?

Let me start by opening up the kimono and baring the awful truth to the SOS who think they are Partners, but in reality have experienced some self-delusion and are only vendors (a necessary evil).

Harsh reality struck me one day with one of my largest customers. For seven years I had been calling on this customer. I had been able to grow the business with that customer from $2 million per year to over $12 million per year. I had relationships at all levels and across all departments. Then one day, I found out that this customer was looking at a large software deal and that I had not been included in the bid process. I shrugged it off as them not knowing I could offer the same product, but requested that I be included. They agreed and I began to receive communication. Something seemed fishy when i was invited to a meeting at their office and found all my competitors in the same room. It quickly became apparent that I did not have the inside-track. One competitor seemed to already have the answers and sat near the decision-makers. Over the next few weeks, I received just enough information to provide a quote, but no additional information. I quickly found myself on the outside. The customer called me to make sure I was going to provide a quote. When I told them that I did not see any reason why I should and that the decision seemed to already be made, they got upset. I found out that they needed 3 separate quotes to complete the bid process and that I was throwing a wrench in the works, by refusing to quote. It was a brutal day in my sales career to be treated to like a vendor (necessary-evil) by my largest customer.

On the other side of the coin, I had another customer that quietly began to invite me to participate in Advisory Board meetings, teach their staff and ask me to sit in on meetings that were not directly related to my products. My sales with this customer rose steadily until one day we came to realize that we had nearly 90% of their business and that all exceptions required special approvals. This customer began to introduce me to others that might need my product and even asked me to join them for dinner at the house.

How do you know if you are a Vendor or a Trusted Partner? Try these:

Vendor (Necessary-Evil)

1. Asked to provide the 3rd required quote to complete their Bid-process?

2. Constantly being needled on price?

3. No introductions to other departments or potential customers?

4. Will only meet with you over a free meal?

5. Only returns a phone call when they need something?

6. Meetings are infrequent and customer sets the agenda?

7. Caught off-guard for a large Request for Proposal where you had no input in the content?

8. Always asking to meet with your boss with the hopes of getting a better deal?

9. Won't introduce you to the entire chain of command?

10. Tries to go around you in the sales process?

Trusted Partner

1. Willing to negotiate a Win-Win Sale, not always and only dictated on price?

2. Invitations to meetings that deal with areas outside of your specific product?

3. Activities outside of Sales (dinners, etc., sporting events where customers pay)?

4. Request to help them write their Request for Proposal before sending it out to the public?

5. You are quoted in a separate meeting?

6. Are they asking your opinion on adjacent products and services that you don't sell?

7. Returned or un-solicited phone calls and emails?

8. Willing to pay a little more for your product or service than the competition?

9. Writes letters of recommendation to your boss or potential customers?

10. Recommends you to others and sends you their names?

Trusted Partner status is hard to come by and takes years in many cases. You may think you are on the inner-circle one day and be treated like a Vendor the next. One department may consider you the Trusted Partner, while the other thinks you are a quote-monkey.

It takes a long-term view to become the Trusted Partner. You can't be out always looking for the BBD (Bigger, Better Deal). End of Quarter incentives can't be your only motivation. Your customers benefit has to be the driving force in the relationship. Ask yourself, "What is best for this customer?" Do you even know what is best for them? Understand their business drivers and attach every sale to one or more of those drivers.

Most importantly...YOU MUST ADD VALUE AT EVERY MEETING! Idle Chit-Chat is unimportant in today's world. Don't waste their time and come prepared. Predict their needs. Under promise and over-deliver at all times. Send them a Thank-you card once in a while.