Best Practices

Converting Sales Reps into Champions for Your Cause

Procurement’s job is to inject Cost Transparency into the negotiation so everyone can win: procurement gets what they need: a lean, competitive price; and the supplier makes a profitable sale at a reasonable and sustainable margin.

Let’s start with the obvious: Sales reps want to close – that’s how they get paid.

To do this, reps know they need to forge good working relationships with their customers: people rarely buy from sales reps they don’t like or trust. Sales reps’ compensation is usually not tied to price; if price is an obstacle, they will be keen to remove it.

Procurement’s job is to inject Cost Transparency into the negotiation so everyone can win: procurement gets what they need: a lean, competitive price; and the supplier makes a profitable sale at a reasonable and sustainable margin.

Here’s how to reach that point: make transparency front and center by arming the sales rep with graphs or should-cost models that make a compelling argument that their current prices are too high.

When a sales rep brings a buyer-generated graph or model back to their management, they probably say something like, “I can’t get my customer to agree. I can’t sell her the 2% increase. Look at this data she gave me, it shows our raw material costs are actually down and we should be dropping prices by 3%. Is this true? Are our costs really down?”

While likely not happy, the sales rep’s management team should be highly motivated to cooperate because their company’s reputation is at stake. Not agreeing to a decrease will paint them as greedy and hypocritical because, in the past, they justified raising prices based on higher input costs.

If higher input costs justify high prices, then lower input costs justify lower ones.

Once procurement arms the rep with information that shows input costs are falling, the supplier will feel strong pressure to play fair. Preserving a company’s good name is a fundamental senior management responsibility and a key to long-term business success. Sullying their company’s reputation is something they will want to avoid at all costs – and that is a cost initiative sales and procurement can both agree upon.

If you’re interested in judging for yourself if cost transparency really works, join thousands of other procurement professionals and take out a free trial to ProPurchaser (no credit card required).

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