David Meikle, Founder, Salt Value Management discusses techniques and tips on how to negotiate with client procurement teams.
Each year doesn’t it seem like negotiations with your clients’ procurement teams are getting tougher? I recently asked a group of marketing procurement professionals from ten blue-chip marketing-led organisations whether they each had a personal savings target incentive; ten out of ten said they did. Then I asked if they were accountable for any kind of quality measure for the goods and services they procured for their marketing departments, no hands went up. So often when you’re negotiating with procurement it’s like coming between a mummy bear and her cub.
If agencies are to negotiate more successfully with procurement we need to change the game. Not purely by honing our technique, like learning how to handle dirty tricks, though of course that helps, but by understanding how it works and how it ought to work when it’s procuring for marketing. After all, why should somebody in marketing procurement be incentivised to make cost savings when marketing is an investment?
Negotiation is a full time job for most people in the advertising business. Day-to-day you negotiate over more than just money but also over time, strategy, and creative work, in fact all sorts of weird and wonderful things. Procurement, however, represents the Olympic athletes of commercial negotiation, right down to the pounds, shillings and pence - it’s all they do.
So when you’re going to compete with such athletes here are some questions you might want to ask yourself:
What do they really want out of this and why?
One of the first steps in a negotiation is to understand the other party’s interests. You have to know what somebody wants either to facilitate their goal differently or to build adequate defenses.
What will they have done to prepare for this negotiation?
Procurement rarely goes into a negotiation unprepared. They’ll have historical data, industry benchmarks and more, each cut six different ways to present the best argument. If this is what you’re up against what can you do to prepare yourself better?
What are the variables in play?
What’s fixed and what isn’t? Are there some lateral solutions to the problem you’re facing? Successful negotiations are about matching both parties’ interests but sometimes altering or compromising interests on both sides can achieve that.
What is their procurement strategy and how can I use that to my advantage?
Everybody has a buying-strategy whether they realise it or not. Just as most people don’t haggle over the price of a tin of beans, neither do they ask a heart surgeon his hourly rate; even the absence of negotiation is a buying strategy. By understanding procurement strategy we can make the negotiation process one of principle before it’s one of hard numbers.
The reality for the marketing procurement industry is that most of the lower hanging fruit has already been picked: production has been decoupled, TV production estimates are routinely audited, as are time sheets and so on and so forth, so when all these have gone it starts to get tougher. And unless you’re fully match-fit, the metaphorical bloody nose you could get from an unsuccessful negotiation can mean much more commercial pain than you’re ready for.
On 20th June 2014 join me on the IPA training course Negotiating and winning with procurement to find out how to develop a fighting chance, you’ll brush up on techniques and tips but the real benefit is to know what the other side is thinking and how to use that to your advantage.
The next Procurement course run by David Meikle is 20th June 2014. Book your place now.
Last updated 12/05/2014