Mike Lander, Chairmen of Resignal discusses his tips and tricks for heading into a negotiation with procurement.
After acquiring a consulting company in 2006, Mike built it up to produce £20m revenue. He then built and sold a procurement consultancy working for private equity backed firms in 2015. Mike now advises on portfolios and all things procurement.
Referencing the COVID-19 repercussions, Mike explains his thoughts on what will happen moving forward within the context of procurement. ‘Post-crisis, corporations will need to rebuild their cash reserves, and savings will be back on the agenda’.
He suggests that, to deliver these savings, procurement specialists during this time will:
- Agree baselines costs with finance.
- Review the marketing plan and existing budgets.
- Renegotiate with existing and new agencies to break down costs.
Mike suggests that to prepare in advance of your meeting with procurement, agencies ‘can review all of their big contracts and gather evidence of tangible ROI of their services’.
Mike suggests, that successful agencies learn how to engage properly with procurement. He notes that procurement people tend to be rational, analytical and tough-minded. Their priorities are savings, innovation of the way the service is delivered, risk, and quality.
He advises that honing negotiation skill is the best form of preparation, ‘because negotiation is more of a trained skill than an art’. ‘You’re more likely to get me listening if you talk my language’.
‘Don’t spend your time telling me about the brilliant relationship you have with marketing, or the campaigns you run. If you have got to me, I have assumed all of those things are great.’
Savings + Innovation + Quality + Reliability
‘There is a misconception, that I only care about price, when in reality it is a combination of all of these things, and we are human too’.
Mike suggests that if you are told by procurement that ‘the price is too high, and to come back with a better offer’, your best option is to say ‘we will review our price and scope, but can I just understand which of these things are more important to you’.
IACCM carried out research that suggested there is a direct correlation between those who have mature negotiators, and the increases in net income.
With honed negotiation skills you will ‘do better deals, you will get less pressure on your margins, you will feel more confidence when doing those deals’.
‘If you’re investing in nothing else this year, investing in negotiation training will absolutely be the gift that keeps on giving’.
Mike discusses the factors he negotiates around, ‘his playbook’, including; price ladders, price rebates, service cards, termination clauses and IP.
Mike suggests you ‘have got to get inside the mind of procurement’. ‘Agencies that think that they are more important than they actually are in the marketplace than they are, and defend their pricing as such, can be a fatal mistake’.
‘The prepared mind will win the day.’