When dealing with the procurement department within the customer's organization, sales representatives may encounter specific challenges that can slow down the sales process. Here are some issues that can arise:
1. Lengthy approval processes: Procurement departments often have structured and rigorous approval processes involving multiple stakeholders and levels of review. Sales reps may underestimate the time required for these processes, leading to delays in closing the sale. Ask your Champion if they have purchased software before, and ask them detailed questions about their experience, such as:
Can you tell me about the last time you purchased software?
Were there any issues that arose in procurement that slowed the deal down?
Are there any other projects or investments the organization is looking at that may cause the procurement team to be busier than normal?
2. Strict compliance and documentation requirements: Procurement departments typically adhere to strict compliance standards and require extensive documentation for vendor evaluation, contract negotiation, and procurement decision-making. Sales reps need to be well-prepared to provide the necessary documentation and comply with the organization's procurement policies, failure of which can impede progress. They may require documents around certain compliance requirements, such as HIPAA, SOC2, etc.
3. Budgetary constraints and financial reviews: Procurement departments manage budgets and ensure financial viability. Sales reps should anticipate potential budgetary constraints and be ready to address questions related to pricing, return on investment, and cost-saving benefits. Failing to address these concerns adequately may result in extended negotiations or stalled decisions. Depending on the complexity of the company you are selling to, they may require an ROI study to be completed on purchases over a certain threshold.
4. Vendor evaluation and comparison: Procurement departments often evaluate multiple vendors and conduct comprehensive comparisons before selecting a supplier. Sales reps should be prepared to provide detailed information about their products or services, competitive differentiators, and value proposition. It can slow down the procurement process if they overlook the need for thorough vendor evaluation. Sometimes you uncover an opportunity before the company knows it is even looking for a solution, and sometimes you are the only vendor in those situations. Beware of this situation that the procurement department doesn't require multiple vendors in order to complete a purchase.
5. Complex contractual negotiations: Procurement departments negotiate and finalize contracts with vendors. Sales reps must navigate complex contractual discussions, terms, and conditions. Failure to address contract-related concerns promptly or adequately can cause delays or even result in contract disputes that prolong the sales process. This often involves the legal department, and I have seen contracts being held up with redline reviews for over a month. Work to get the contract in front of their legal department for review as soon as possible.
6. Procurement policy compliance: Each organization has its own procurement policies and guidelines that must be followed. Sales reps should familiarize themselves with these policies to ensure their offering meets the organization's requirements. Ignoring or not understanding procurement policies can hinder progress in the sales process. Beware of small, relatively unknown committees within an organization with significant power. I once sold software to an organization with a software deployment committee with the power to veto any software procurement. Ensuring you have access to the procurement team and can drill down into the various steps during the process will help uncover these committees.
Looking at my over 20 years of software sales experience, over 60% of all delays in deals could have been avoided or planned for if the proper amount of discovery of the procurement process had been made. Remember, most likely, no one in the organization understands or knows of every step. Hence, engaging and cross-referencing with multiple stakeholders about the procurement process is also critical.
Homework
Pull up your top 3 opportunities for this quarter and document exactly their procurement process, who has to approve what, any required documentation, and any committees that need to be involved.
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