SIG University Certified Sourcing Professional (CSP) program graduate Madison Mobley discusses how to articulate value by utilizing hard savings, soft savings, and cost avoidance.
My first corporate job out of college was with EMC Corporation, now Dell EMC, notorious for its Sales Associate Bootcamp.
Picture seven weeks in a basement without food and water (tee hee, dead serious), and an exam every couple of days, 90% or higher to pass… Delicious.
The result? I learned how to talk technology very well – the bits, the bytes, the speeds, the feeds. And, at a time when the information age called for CIOs to reimagine how their company’s data was to be stored and protected, nothing was sexier than a storage array with fibre channel connectivity and two-factor authentication.
What’s more, I learned who best to engage at the individual contributor, mid-level management, and executive leadership levels. It was the same person(s) at every organization I prospected into 99.999% of the time for what I was selling.
Long preface short, knowing your product, knowing your ICP (ideal customer persona) and articulating that knowledge in your prospect’s “love language” made for a successful salesperson back then.
Fast forward to March 2020.
The day I joined Fairmarkit, the intelligent sourcing platform that revolutionized how all organizations buy the stuff they need (it doesn’t matter what the stuff is), I felt confident stepping into a sales role.
True, I had never sold directly to procurement people, but how different could it be?
The answer? Way different.
Before we cut into the meat and potatoes of today’s reflections, I’ll skip to the bottom line(s): All successful salespeople are selling the same outcomes. Namely - saved money, saved time, mitigated risk, or improved compliance. Most often, unfortunately, and perhaps unsurprisingly, those same successful salespeople over-endorse the value of dollars saved.
Not a massive deal when selling something to someone who isn’t required to care about org-wide spending and all its implications. How-and-ever…
Best in class procurement people (emphasis on “best in class”) are astute in finance, law, analytics, project management, sales, negotiation, ethics, executive address, total cost of ownership, and return on investment.
They are not moved, then, by the mere act of buying stuff. Instead, it’s the ART of buying products and the FINESSE required to ensure they get exactly what they paid for, that inspires meaningful action.
This means hard savings opportunities can’t JUST center around the lowest price and end of month, quarter, and year incentives.
Your value proposition must be delivered in a multicolored dimension.
The goal is a delicate balance between hard and soft. Let’s unpack, shall we?
When preparing to articulate the hard savings your product offering uniquely yields, consider these six avenues of self-discovery to explore:
- Spend analysis
- Can your offering benchmark purchase history, RFX proposals and/or existing contracts?
- Can your offering improve data visibility, availability and/or accessibility?
- Can your offering report upon and analyze spend data in real-time?
- Can your offering proactively alert your prospect of potential saving areas?
- Supplier contribution
- Can your offering invite supplier innovation, competition and/or collaboration?
- Can your offering drive cost reduction opportunities generated by the competitive bidding process? (Procurement Cost Avoidance)
- Bid invitations
- Can your offering enable supplier discovery when needing to buy something new?
- Can your offering lend visibility into bulk pricing incentives?
- Can your offering drive sole-source negotiations, or post-procurement/post-award negotiations? (Negotiated Cost Avoidance)
- Can your offering ensure diverse suppliers are included on every RFX?
- Sourcing decisions
- Can your offering scan and/or consider market conditions?
- Can your offering support a variety of buying events?
- Can your offering incentivize your prospects to keep purchasing decisions in house?
- Can your offering make it easy to evaluate suppliers side by side and ID rate reduction opportunities?
- Contract renewal
- Can your offering simplify contract renegotiation?
- Can your offering improve the quality of your prospect’s existing contracts?
- Inventory reduction
- Does your offering aid in optimizing inventory?
Counterintuitively, in my opinion, hard savings are easy to measure when compared to soft savings. But, soft savings opportunities must also be well-articulated to demonstrate transformative value.
When preparing to articulate the soft savings your product offering can uniquely yield, consider three avenues of self-discovery to explore:
- Headcount deferral
- Can your offering eliminate the need to hire more people?
- Process improvement
- Can your offering automate manual work activities?
- Tech-stack integrations
- Can your offering connect disparate systems?
- Can your offering serve as a single, credible source of truth?
With soft savings, take liberty in thinking in terms of cost reduction opportunities (otherwise incurred) resulting from INTENTIONAL actions, negotiations, and interventions. Intent, as opposed to happenstance, is the distinction.
Or take liberty in thinking of things that can be gained or increased without additional costs. (i.e., productivity).
Okay, boom. We’ve talked about hard savings, soft savings and touched on cost avoidance. Time to land the plane.
Leading a sales meeting with money saved, time saved, risk mitigated, or improved compliance when articulating your value proposition is directionally accurate, sure. But that verbiage is generic, impersonalized and unimaginative.
Let’s commit ourselves to articulating value with panache while demonstrating a continuous effort to understand the illustrious space we’re currently in, THE procurement space.
P.S. If you work on the “buy-side” of procurement, my recommendations still stand. The moment you mistakenly answer a cold call from a salesperson who eloquently articulates the mere possibility of work-life made easier (thanks to XYZ product offering), you become intrigued, then inspired.
Ultimately, if synergies align after candid exploration, the internal sales cycle begins with YOU as champion and ends with your Executive Sponsor’s sign-off. Does it not?
P.P.S. We’re all sell-side, hate it or love it.
The Certified Sourcing Professional (CSP) program is a 12-week course that focuses on the hard and soft skills of sourcing, including strategic sourcing and outsourcing methodologies, as well as best practices in negotiations.
Mobley's career journey also includes time at EMC Corporation, Dell EMC, & Procter & Gamble where she's held global leadership positions in sales, category management, customer advocacy, and HR strategy.
Present-day, most of her time is spent automating non-contract, non catalogue spend (most often the 20% of annual spend made up by 80% of suppliers) and driving supplier diversity and compliance through intelligent sourcing.