Here is my recently published article for the Charity Finance Group's monthly magazine - Finance Focus:
Do you know the tricks of the trade that salespeople use when selling to you? Tim Jenkins shares a few things to keep in mind when you’re procuring services or products.
As charity finance professionals, you have to procure or approve purchases for your organisation on a regular basis. Whether it’s direct or indirect purchasing, there is normally one ‘necessary evil’ involved – a salesperson.
It’s that salesperson’s job to sell you their products or services at the highest price that they can. A recent piece of research conducted by my consultancy shows that business to business (b2b) buyers are spending an average of 20% more per transaction than they need to.
As charities, when you receive donations
or new funding, you’re often pretty transparent and public about how the influx of capital will help further your charity’s ability to be effective. That’s certainly a positive thing – however, there is a downside and charities are in no way immune from it: the people who sell to you are constantly researching your sector to see where they should focus their sales attention so that when you receive your funding, they are ready and waiting to help you spend it.
And this is where the problem lies...
An unbalanced playing field
To be successful at selling, salespeople are trained that they must understand their buyer’s motivations, challenges and mind-set. They are taught techniques that allow them to control the negotiation and maximise price (and ultimately their profit). If you’re someone based in a charity and regularly have to procure services or products, here are some of my top tips:
#Tip 1 – Level the playing field with knowledge
Here are two questions to consider:
When was the last time you read a book or attended a course on sales techniques?
When was the last time you put yourself in the mind-set of a person selling to you?
If the answer to these questions is never, or you haven’t for a long time, then you are not operating on a level playing field. This will most likely mean you are not getting the best deal. If you do not understand the techniques being used by salespeople, then you cannot counter them. If you don’t understand the motivation or objective of the salesperson, then you cannot know how or when to get the best deal.
#Tip 2 – Price Negotiation
For one-off purchases, the negotiation phase around price is where most charity buyers fail to get the best deal.
In any transaction, there are two factors
that you can influence: price or value. And you should never accept a salesperson’s first offer on either of these factors. If you are at a stage where a salesperson refuses to budge on price, this is not the end of the negotiation. Always ask what else can be included in the deal if you agree to the price.
Always try and negotiate in the largest round numbers possible (i.e. thousands or hundreds) – less experienced salespeople will tend to negotiate by the same unit boundaries set by you at the start, which means you can gain a larger discount. The general rule is, the better the salesperson, the smaller the percent they will move at in each stage of a negotiation.
In tender situations, resorting to ‘e-auctions’ can be an effective way of getting multiple providers to drive each other down on price, however as a word of caution, make sure that you are still getting the same service/ value as was promised at pitch stage. If you drive the price too low, you risk ending up with poor service.
#Tip 3 – When to buy
Every salesperson has varying degrees
of price movement, depending on where they are in their calendar. Buyers will always get progressively better deals at the end
of a month; end of a sales quarter or, for strongest impact, end of financial year.
So if you have time on your side, consider when to make your purchase.
It may sound simple but don’t under estimate the power of ‘time’ in negotiation. Salespeople, by their very nature (and by the pressures they are under) are impatient creatures. By delaying decisions, you will often find that without doing anything, the salesperson will come back with either more value or a bigger discount to get
the sale closed.
#Tip 4 – Understand what sort of buyer you are
Salespeople tend to give the best deal
to buyers they like. This is not right or fair but is true. Good salespeople are taught ‘mirroring’ techniques where they will match your personal characteristics to build trust and a relationship. As buyers, try to mirror the salesperson’s personality. Although this may feel strange, it will lead to an improved relationship – and more likely a better deal.
Sales techniques are evolving all the time. As buyers, an awareness of how you are sold to is critical to fair negotiation, and ensuring your organisation is getting value for money.
Implementing some simple counter- techniques could save your organisation valuable funds.
For more help on making sure you get the best use out of your funding get in touch : www.wheelspinner.co.uk