A few years ago, a bid director of a large IT company asked me to facilitate their strategy process. I sent him an offer for a two-day workshop that (obviously) perfectly met his expectations, as he told me on the phone. We agreed to start the project four weeks later. But before we hung up, he said: ‘Oh yes, the purchasing department will also get in touch with you. About the formal contract.’
And so it was: “Hello Mr Kälin, we have received an offer from you, the terms of which I would like to discuss,” said the friendly purchaser. The rest of the conversation could be aptly described as a ‘deadlock’: I knew my client (the bid director) had already decided to work with us. The kick-off meeting had been arranged, so the order had actually been placed, even if not through the formal purchasing channel. So why should I make any concessions on the price now? For my counterpart on the other end of the phone, however, the matter was also clear: the purchasing department had not concluded a contract with us, and as long as no contract had been concluded, negotiations would continue. And so a little negotiating ping-pong took place between the buyer and me.
This lasted until he said: “But we’ve never worked with your company before. That’s a risk for us. We expect an introductory offer from you.” That was my chance. “This is already an introductory offer. We normally charge around 300 euros more per day,’ I replied. “But that’s not visible in your offer,” was the buyer’s reply. “No problem. I’ll make it visible for you,” I replied. “Okay, then you’ll send your updated quote?” “Sure!”, I said and sent him a new quote, the final price of which was exactly the same as in my first quote. The only difference was that there was now an introductory discount.
While I hadn’t actually given any discount, the buyer was able to go back to his boss and show that he had ‘negotiated’ 600 euros off for this workshop! I don’t know whether he received praise or even a bonus for this. But it is also clear that I no longer granted the above ‘introductory discount’ for my second and third projects with this company!
De facto, the buyer actually drove up the price for our services.
So, what can we learn from this? First, get to know the unique needs and desires of each member in your customer’s buying centre. And second, when treated right, procurement folks can actually become valuable allies. Who knew?
Christopher Kalin
Chris is a global authority on bid and proposal management. He was co-founder and chairman of the Germanspeaking APMP chapter and regional director for Europe/Africa. He is APMP-certified at Professional Level (CPP APMP) and is an APMP Approved Trainer. In 2013, he received the prestigious Fellows Award.
