The Buyer’s Confession Tapes is a series of lighthearted interviews with some of the most interesting and experienced professionals in the world of procurement and supply chain management. The purpose of talking with them in complete anonymity is to turn the conversation to areas that normally do not get discussed in public. The intent is to reveal insights and information that are not disclosed to their stakeholders and business partners. The goal is to create more transparency and understanding of the ways of working, thought and decision-making processes so that more sustainable and successful business relationships can be built with these buyers and supply chain managers. No sugar coating, window dressing, or fake news! Just the naked truth of what is really on your buyer’s mind. We deliberately deviate from our normal conventions in this format and try to make it educational but also fun to read at the same time. Let us know what you think about it and enjoy the read!
The interview is led by Jens Hentschel, the founder of THE FIVIS PARTNERSHIP and himself an experienced senior procurement professional having worked in organizations such as Procter&Gamble, KFC and RWE and who consulted many procurement and sales teams around the world on building profitable business relationships.
This is episode two of our confession tape interview series. You can find the first part following this link.
In episode two, I continue the breakfast meeting from the previous session, interviewing a senior procurement leader that worked for some of the largest FMCG companies in the world. I meet him in a little café called ‘The Chapter Coffee Roaster’ in Kensington, West London.
Keep in mind, due to the fact that we want to protect the identity of the interviewee, we will refer to him as Mr.X.
In episode one Mr. X. and I had talked about how salespeople can set the foundation for a great meeting with their procurement counterparts. We started to gain interesting insights from Mr. X’s interactions with sales representatives that he had met throughout his career.
Now, I would like to explore this idea further, getting under the skin of what sets good sales meetings apart from great sales meetings. What has been working well for Mr. X. and what are the traps that salespeople regularly fall into but actually could easily avoid?
The issue with brown shoes.
Jens: “Mr. X., you have probably met thousands of salespeople and suppliers over the years. Is there anything stereotypical that you might have found out over time that is either a positive or negative? I’ll give you an example from my career as a buyer, having sat in so many meetings. I cannot even recount the hours I must have spent in meeting rooms, or the number of different people I must have met in those very meetings. I developed what I think is a quick and totally nonscientific assessment of someone’s trustworthiness. What my ‘research’ shows is that salesmen with light to medium brown shoes combined with a dark suit cannot be trusted.”
We both start laughing.
Jens: “Do not ask me why, it is just a feeling that I developed over the years. And besides that, brown shoes clearly do not go together with a dark pair of pants.”
Mr. X: “I did not know that you were such a fashionista, Jens.”
He leans back while lifting his legs into the air to show me his shoes.
Mr. X: “I just bought this new pair of brown shoes yesterday – is this the right shade of brown then?”
Jens: “Well, they definitely do not go together with your navy suit.”
We laugh again.
Be prepared.
Mr. X: “Well, what I always found highly annoying is the salesperson that does not come prepared to the meeting. And there is pretty much a 50% chance, probably even high now that I think of it, of that happening. Their computers do not fire up, he or she has forgotten the right plug and asks me to find one in the office, or not having an HDMI converter to connect the computer to a screen.”
Jens: “But these things can happen right?”
Mr. X.: “Yes, of course. And don’t get me wrong, I am always happy to help. But remember and as I mentioned before, we talk about what makes a great meeting with sales. Fiddling with the equipment for 20 minutes before we can even kick off is a downer. I always dread the question of ‘Does this monitor play sound?’ It most likely puts me into panic mode! Where is the remote control? Who knows how to work the screen in this meeting room? Sometimes I just think to myself ‘Just show me your slide deck, salesperson, I am not expecting a multimedia blockbuster production here.’”
Jens: “Does that mean salespeople should not have video and or other multimedia effects in their presentations?”
Mr. X.: “That is not really what I said. Prepare the buyer upfront with what you intend to do, so that everything can be set up ahead of time. Have a fall back option handy, just in case the screen does not work. Having sat in so many meetings, I can assure you that there is always an issue with the screen! Another issue that arises more often than you think is that sales representatives just recycle a previously used presentation deck. At times, even the customer’s logo is still on it or in the file’s name. Small items like this can make the difference between a good and a great supplier meeting. You want to be that great supplier that blows me away because I do not have much time and you better give me your A game. Every single time. It sounds harsh but it is the unfortunate reality.”
Price increases are ok.
Jens: “On that note of supplier presentations, what are your thoughts on the actual content of sales presentations? What needs to be in it?”
Mr. X.: “First, don’t start at 1836 when your company was founded, walking your way up through acquisitions and divestures to the present day. This might be interesting indeed but maybe not to me. Have it prepared and offer to present it, but don’t impose it onto me. Focus rather on the issues and opportunities for me as a business, for me as a buyer, and put into context where you can help to make a difference. Inspire me about what you have to offer. Second, remember what we had talked before when we last met. Maybe even remind me of what was discussed and set the scene of what you plan to talk about in this very meeting.”
Jens: “So, a structure that caters to the buyer’s needs is important. How should salespeople approach the topic of pricing in your view?”
Mr. X.: “Well, it is obviously part of the nature of the interaction between seller and buyer that the discussion needs to be addressing price at some point. And it is totally ok to bring up the topic of price increases for a product or services by the seller.”
Jens: “Interesting. So, you actually do not mind price increases?”
Mr. X.: “Yes, absolutely. I mean as buyers we are not removed from reality after all, at least most of us. We know roughly what goes on in the market and yes, we know that suppliers need to make a living. We even do appreciate that a supplier pro-actively addresses the issue of price rises ahead of time and providing us with ample of time to take action. It allows me to inform my business about higher input cost which allows my organization to react through, for instance raising prices to our customers. Obviously, if a seller informs me about a price hike only three months before it becomes effective, well, there is not much I or my organization can do about it.”
Jens: “But you would clearly try to negotiate with the seller and try to fend off the price increase independent of notice periods?”
Mr. X.: “Well, as a buyer I am the gatekeeper of spending the company’s resources in the most efficient way possible. So, absolutely, will I need to challenge my suppliers on their pricing strategies. If I just accepted any price that is put in front of me what value would I bring to my company? At the same time, I am expected to be reasonable. If my suppliers go bankrupt tomorrow because of my unrealistic price expectations what have I achieved?”
Jens: “Well, you tell me.”
Mr. X.: “Best case scenario, a consolidated supplier market with less competition which ultimately leads to higher market prices, worst case, an interruption in supply of the products that I do need as a business. The former will give me a headache, the latter will cost me my job. Simple as that.”
Jens: “More concretely, how should seller then go about addressing this delicate topic?”
Mr. X.: “What leads to frustration is if price increases are being tabled and the seller has no data to back it up. Meaning the salesperson has no data to provide further insights into why prices need to increase through explaining the various product cost structures, for instance labor costs, commodity prices, import taxes, etc.”
Jens: “Would you not say that this is again ‘sales basics’? Knowing your product or service cost structure and being able to explain why prices need to increase?”
Mr. X.: “Oh my God, totally. But you cannot imagine how often sales representatives have actually no understanding behind the reason of why they ask for a price increase. Oftentimes it is absolutely unsubstantiated. Even worse, if by challenging some of the numbers presented to you, you come to realize that the salesperson is just a messenger without really knowing what is going on in the market. This is very detrimental to the relationship in my eyes. It ruins the trust and probably gets me into a rather tactical mood trying hard to push back on any pricing discussion.”
Jens: “To summarize what you just said, the seller should provide you with the right data to convince you a price adjustment is required, right?”
Mr. X.: “Yes, correct. For instance, the salesperson is making case that labor costs have increased by 20% and that is the reason why their product prices need to be increased by 3%. This is a totally fair argument. Assuming labor costs have indeed gone up of course. Now, will I readily accept it? Probably not. Will I feel the need to collaboratively find a solution on this issue? Absolutely. Especially if the seller does not only present the proposal to increase prices but at the same time pro-actively suggests measures on how this price hike could be absorbed by for instance changing the minimum order quantities. This is great account management that buyers appreciate. One watchout here though, be aware that if you as the seller play the card of increasing your prices due to a certain cost driver, I as a buyer will come back to you as soon as that driver, labor costs for instance, and to stay with the previous example, have gone down to ask for a price reduction. So, be careful that your business is actually aligned to this before you expose yourself to what looks like a good sales story.”
Meeting etiquette.
Jens: “Let’s go back to the actual meeting environment. Any tips and thoughts you can share how seller should approach and manage a meeting with you as a buyer?”
Mr. X: “I also always appreciated my sales counterparts to send an agenda 1 week before the meeting. That just helped to ground everyone on what the purpose of the meeting was. Opposed to just sending a note that says, ‘I just want to come over for a chat’. This is not going to cut it any longer for any account manager, in my view. What is also a sign of managing the meeting in the right way by the seller is to send a meeting summary 1-2 days latest after the meeting with clear next steps.”
Mr. X continues on how frustrating it can be to not receive a business card, especially if there is more than one person that you might have not yet met as part of the sales delegation.
Mr. X: “Remembering all the names of the people that you meet is difficult. Having this little reminder card right in front of you of who is who just makes the interaction much more relaxing. I understand that many companies want to go green and no longer provide business cards, but really? Does that really make such a big difference?”
Mr. X: “One of these other issues that regularly come up and that just causes disruptions is needing a guest WIFI code?! Hello?! You are not in an Airbnb, right? Don’t get me wrong Jens, it is not that I don’t want to help and support the seller in and during the meeting, but we came together for one hour to meet and discuss business opportunities. Using 20 minutes just to get going and sorting out technical issues is quite frankly, not good. Another faux pas is asking for too much when it comes to drinks when offered by the buyer. Just keep it simple. Yes, we can get you a Frappuccino if you insist, but it will take ages and we have only 60 minutes to meet. So, rather stick to a black coffee. The safe and easy option.”
I get the message and continue finishing my cake. The cafe is getting busier now. We approach lunch time. In the air hangs the smell of freshly roasted coffee beans. The woman next to us with her small child gets ready to leave. The waiter walks past our table. I ask for the bill.
Know what you want.
Jens: “Wrapping up, what would be the one big mistake that salespeople should avoid in meeting procurement teams from your own personal experience?”
Mr. X. reflects a moment.
Mr. X: “Not knowing what you really want. This is most annoying. Not being able to clearly articulate what you as vendor want to achieve in the relationship between our companies. I understand that you need to earn money, that you are bonused on a certain turnover target, but that is not the basis on which we come together as business partners. Inspire me with a vision for our relationship, what we can achieve together, short, medium and long term. Easy!”
The bill arrives.
“I have it.” Mr. X insists.
1 coffee Americano 3.50
1 coffee Americano with cow milk 4.65
1 Walnut cake 4.50
Total: 12.65
“No tip?” I ask.
Mr. X.: “What do you expect? We are buyers!”
We both laugh.
Look out for Episode 3 of our Buyer’s Confession Tapes series which will be released soon. Another interesting and insightful procurement and supply chain professional that will openly share their experiences with the sales function, as always in complete anonymity to bring out those insights that normally do not get discussed.
