If you’ve ever gone through the telecom procurement process before, then you’re probably familiar with the way that vendors seem to end up with the more beneficial side of the bargain. Read our guide on how to offset telecom vendor advantages and walk away with more profitable contracts that meet your organization’s needs.
Read on to discover:
- The advantages telecom vendors have over procurement teams
- How to offset those advantages and walk away with a contract that meets your organization’s needs and saves you money
Working with a professional consulting company is a fantastic way to overcome vendors’ advantages and come out negotiating telecom contracts with the best deals possible. Technology Procurement Group is here to assist you throughout every step of the procurement process. Getting started is easy; just call at 1-888-449-1580, email info@TPG-llc.com, or complete the form at the bottom of the page.
Differences Between Vendors and Procurement Teams
Let’s talk about some of the differences between vendors and procurement professionals and why vendors always seem to have such a leg up during negotiations.
Variations in Training
The first thing to consider is training. Vendor sales staff receive extensive training regarding sales and negotiations, starting with weeks of learning in a classroom. Topics covered during this time include the vendor’s range of products and services and all of their features and capabilities. The sales staff also learns about new sales ploys, contract templates, and relationship management and customer contact systems.
After this initial training period, new sales staff are paired with inside representatives, where they listen in on phone calls and see everything they have just learned in action. After that, they move on to observing in-person sales calls. Once they’ve completed their training, they sell the same products and services over and over, 100% of the time. Each year, vendor sales staff attend events like refresher sales trainings, sales seminars, and marketing presentations to keep them at the top of their game.
Now, think about procurement professionals. They spend all of their time purchasing a wide variety of different products and services for their company, rather than purchasing the same thing repeatedly, which would enable them to learn much more. They’re lucky if they’re able to attend even one purchasing training class or conference each year.
Differences in Executive Relationships
For vendors, it’s easy to get access to the top executives in a company that’s considering buying from them. They can go straight to the top of the company and schedule meetings and demos as they please. But there’s a clear chain of command for the procurement team that typically does not allow the average procurement professional to make that executive connection. It’s much more challenging for procurement professionals to have discussions with the company’s decision-makers and powerful players than it is for vendors.
Contrasts in Compensation
Next, think about compensation. Money is a universally powerful incentive, and vendors’ sales staff have no shortage of it. The vendor’s sales staff is compensated on a very high level, and they make more when they sell more. There are often SPIFs, or Sales Performance Incentive Funds, on the line that push salespeople even more.
On the other hand, procurement teams aren’t usually compensated based on the quality of the deals they get. In most cases, they make the same amount regardless of whether they make a good deal or a terrible one. Therefore, they lack compensation as a motive to get the best deal possible, whereas salespeople are highly motivated in this regard.
The vendor’s sales staff has an impressive amount of expertise and resources available to help them close the deal. In many companies, there are sales contract managers, proposal managers, opportunity managers, pre-sales tech support, brand managers, marketing staff, product line managers, and more. Sales staff can also access valuable tools like the executive briefing center, customer proposal generators, marketing materials, customer relationship management systems, and win-loss calculators.
These calculators conduct complex what-if analyses that determine how specific investments and actions affect the probability that the vendor will win the deal. Meanwhile, the executive briefing center (EBC) is a highly impressive, even awe-inspiring facility where the vendor displays the value it brings to the table to potential customers. When sales staff invite customers to the EBC, they make them feel important and special–and as a result, the probability that the vendor will win a deal skyrockets when a potential customer makes a trip to the EBC.
Another way the vendor gets a leg up on the competition is by pre-empting companies’ RFPs. The vendor’s sales staff attempts to convince customers that they don’t need to issue an RFP at all. This greatly benefits the vendor because it no longer has to compete with other vendors, dedicate time and money to proposal development, and erode its margins as the competitive bidding process moves along.
The vendor may also attempt to assist with potential customers’ RFP development, which is beneficial for the vendor and not for you as the customer. When assisting with the RFP, the vendor manipulates it to make it more favorable for itself. The vendor may even include requirements that completely exclude other vendors, so you’re stuck working with it.
In short, everything that vendors’ sales staff need to close the deal is readily available. Procurement teams, however, generally do not have the same amount of resources and expertise. They may have some helpful programs, such as RFP software and collaboration tools, but in many cases, they just have the basics: a computer, email, and a word processor. Clearly, this just can’t compete with the sales staff’s resources.
The way time works for vendors compared to how time works for a procurement team is very different. For vendors, time is essentially unlimited. Although a salesperson may want to close a deal by a specific date, they can outlast the customer in most situations. Time basically works for them.
However, for a company’s procurement team, deadlines and time pressure are the norm. Instead of time working for them, it works against them, which gives the vendor leverage.
Making Up for These Differences
Procurement teams have quite the challenge when negotiating with the vendor’s sales staff. That’s why they need to create leverage in as many ways as possible. A few methods of creating leverage include:
- Being knowledgeable about vendor ploys
- Competitively bidding procurements
- Pre-negotiating deals
- Using your own contract template
It’s always nice to have good vendors, but since that is often wishful thinking, keeping an alternate vendor closeby at all times is another way to build leverage. Of course, being an expert in contract negotiations and having plenty of familiarity with effective negotiation tactics is an excellent way to leverage profitable deals by offsetting telecom vendor advantages.
Another surefire way to ensure a contract with agreeable terms is to work with a telecom consulting company like Technology Procurement Group.
Get a Leg Up on Vendors with Technology Procurement Group
Tired of watching telecom vendors walk away with the contract terms they want, while your company has to make concession after concession? Working with Technology Procurement Group can change that.
Not only do we offer telecom procurement strategy consulting and IT procurement services, but we also offer telecom and wireless expense management, RFP management, wireless expense reduction, and telecom contract negotiation.