321: Sales Procurement & Relationship Building, with Jens Hentschel

George: We’re finding that procurement is starting to happen even on smaller buys. It’s not the big multimillion-dollar deals. It’s even deals of 20 or 30,000 dollars where you’re seeing procurement get involved.

George: And there also is a bit of a game that’s played sometimes by buyers. And I’m hoping that when we dig under the hood with Jens, he’s going to give us some feedback on how the procurement side of the business works and how as salespeople we can start to navigate that side of the business a little bit better.

George: So Jens Hentschel, the founder and managing director of THE FIVIS PARTNERSHIP on everything you need to know when dealing with the procurement departments out there when we returned on the Conquer Local Podcast next. Jens thanks for joining us on the Conquer Local Podcast. We’re glad to have you on the line, and you’re calling in from London, England, right now.

Jens: Yeah, that’s correct. Thanks, George. Thanks for having me on the show. And just to let you know, I’ve been on the dark side all my career. I’ve been a professional buyer. So hopefully I can shed some light into what it’s like to be on the other side of the table.

George: Well that’s exactly what we’re going to do here is really dig into what the process might entail if you are faced with a procurement department on the other side of a deal. And what I’ve been hearing from conquerors is that more and more we’re starting to see more of these requests for proposals even in smaller buys. And your background, Jens, you’ve been the founder of THE FIVIS PARTNERSHIP for the past 11 years, but you’ve been doing supply chain management and procurement for some of the biggest brands in the world. Tell us about the work that you did over a few years for KFC recently.

Jens: Yeah. So look, I’ve been, again in the procurement as you say, and supply chain management all my career. I really have a passion for that. Right? And I think that you might disagree George and some of your listeners, but I think procurement is one of the best functions that you can be in, right, as a career.

Jens: So yes, I started my career at Procter & Gamble. Worked there for many years, and was buying the materials and services for various different brands and moved down to KFC as you say, Kentucky Fried Chicken. Was the supply chain and procurement director over there. Then founded THE FIVIS PARTNERSHIP and we deal with relationship building between sales and procurement.

Jens: The reason why we’ve decided to do that, I founded the company with a few colleagues from Procter & Gamble, the reason why we decided to do that is we wanted to build bridges between sales and procurement. Because I think you said it in your intro, right? I mean there is this dreadful world of procurement out there and we’ve realized that a lot of sales teams, a lot of sales organizations are exactly perceiving procurement, perceiving us as buyers in a dreadful way, which is unfortunate.

Jens: Because what procurement actually is, what it is to us and what it is for many companies out there is an enabling function. We are tasked as professional buyers to find supplier capabilities, suppliers skills, the best suppliers out there to help us to deliver and delighting our business results and delighting our end consumers. And we need to do that in partnership with all suppliers. Just to give you a figure there, 80 percent of any kind of innovation that you see in the FMCG world comes from supplier relationships. And if you don’t have a good procurement team there that can build bridges, that can interact with sales and that has found and identified the right supplies and salespeople, then we as a function, as a procurement function, will not be successful.

Jens: So this is what we do now as THE FIVIS PARTNERSHIP. We go into sales team and help them understand what procurement is and how they can build winning relationships with them.

The Confession Tapes – the Process of Procurement

George: Yeah. When I started stalking you online, and I’ll tell you where my first interaction with you Jens came in was I was listening to your confession series, The Confession Tapes. And I was, I got to get Jens on the podcast because I think that there is this misnomer when it comes to procurement when they’re involved in a deal.

George: I think the salespeople are afraid, whereas what they really need to be is … I think now I’m starting to look at a little bit differently where PA and procurement involved. I’m pretty excited, because if we’re able to pass those tests that procurement has in place, we’re probably going to build a really great partnership that could last for a number of years rather than just a flash in the pan. Because, correct me if I’m wrong, procurement is involved to help find the right supplier to fit the needs of the organization. Is that not the case?

Jens: No, you’re absolutely right George. It’s not only probably some of your listeners or yourself that struggled with procurement for a while. We hear that all the time from smaller companies and larger companies where people are saying, “Look, procurement is a black box,” or where people are saying, “Look, I tried to avoid procurement at all costs. I’d rather do cold calling then deal with procurement.”

Jens: And when we started on this journey, we really dug a bit deeper on why that is. And we found out that a lot of sales methodologies actually teach you guys as well to avoid procurement. And we find that, to your point, we find that dangerous. Because what we are tasked, what we are KPI’d on, is to first understand internally what is the business need. Right? What do our internal stakeholders require, an IT director, a marketing director, an operations director? What do they need in terms of requirements?

Jens: Then we are tasked as procurement team to go out and see what are the best suppliers out there that can match the internal requirements and needs that we have. And we’re totally agnostic, right, to who the provider will be. We’re totally, we’re non-biased. We just apply analytical tools to analyze the market, and then based on that analysis we select our suppliers.

Jens: So for us, it is very, very much process-driven. And if you as a salesperson can understand our processes, can understand how we KPI’d and how we evaluate the market and how we evaluate you and your capabilities, that can provide you with a lot of insights and opportunities to actually win business and grow your business with that prospective organization.

George: The one question that I’ve always had is do you encourage sales organizations to build rapport with the procurement department, and to especially work through the RFP? But how can we go a little bit further in building that relationship when we see we’re facing a professional procurement organization inside a prospect?

Jens: Yeah. I think what is always important is to build that relationship early, right? There’s obviously different maturity levels of procurement professionalism out there, right? Let me give you just two extremes maybe.

Jens: So the very non-mature procurement organization would be involved by the internal requisition very late in the process. Right? And they’re probably just there to rubber stamp a deal that you’ve already agreed upon with an IT director, with a marketing team, with an R&D department, whoever it might be. Right?

Jens: So the other extreme, on the other hand, is that procurement is driving the whole process. They have the decision making authority. They will select based on a requirement that has been defined when you’re actually not involved as a salesperson at all and everything in between exists as well.

Jens: So I think the first step really for you as a salesperson is to understand, okay, where does procurement sit? Because you can easily fall into that trap that you spilled a beautiful relationship with that internal requisition. All right? And you pretty much build a relationship. They say, “Hey look, George, you’ve won the business. You’re the best supply on this planet.” And then they say, “Oh, by the way, George, I need to bring in procurement because now there’s this new company policy that they need to be involved.” And then all of a sudden I come into the room and obviously you’re not going to be impressed, right? I’ve never been involved in this. Right? And then probably my internal peer there has not really followed the process.

Jens: So you can easily as a supplier, as a salesperson, get in between me and that internal stakeholder, and I probably need to treat you very roughly to really make sure that first, you not do that again. You involve me early. Second, that my internal peer realizes that I can deliver value.

Jens: So this is something that I’ve seen on numerous occasions in my career where people have really, as I say on the sales side, we underestimated the internal politics, the internal standing of the internal requisitioner and the procurement team. And to see and anticipate that early and to build the rapport early with procurement is absolutely crucial.

Jens: So if you have today, any one of your listeners today, if you today have a customer that you don’t know who the professional buyer is, reach out tomorrow and give them a call. Give them a courtesy call and say, “Look, I am George. I’m part of that company. I’m already interacting with some of your stakeholders internally. But I just wanted to reach out and say that I exist pretty much and have a meeting with you potentially.” That will only break the ice. It really, really, really pays off.

George: Yeah. And I think that just being aware that this situation could exist inside an organization. So when you were telling that story of the buyer and you’re the sales rep, you’ve been working with the buyer, you get it down the road and then all of a sudden they say, “Oh, by the way, I’ve got to bring Colleen in. She’s with procurement.”

George: It might not even be that the salesperson didn’t do the needs analysis. It might’ve been that the prospect just isn’t exposing it because they’re not following procedure. When should we be looking for procurement to be involved? Are you finding that there’s a threshold in the size of business that may be using a procurement team, or is there categories of business where a professional procurement and supply chain management process might be in place? Is there something that we could say, “Oh that kind of looks like I maybe should be looking at that prospect and asking these questions??

Jens: Yeah. Obviously there’s a lot of questions in there. Maybe the first one, I just want to reiterate the point. You absolutely right you need to read is your internal customer that you’re dealing with actually following the process of the company, yes or no? And that might be saying, “Look, no one needs to deal with procurement. They’re a blocker anyways.” They might exactly relaying that message to you. Right? I’ve heard it on numerous occasions.

George: Yes.

Jens: But there is obviously some kind of mandate by the CEO, by the CFO to say, “Look, every dollar that we spend as an organization has to be approved by procurement and we don’t care if you don’t like it internal IT director, you have to follow the process.” Right? And then it gets nasty, if then only at the 11th hour you get in touch with procurement. So that’s number one.

Jens: But you’re right though. So procurement teams in organizations sometimes manage up to 50 to 60 to 70 percent of the P&L, so we manage a lot of expenditures for a company. So we need to make choices where we want to be present. Right? We need to prioritize all the time.

Jens: So this is another analysis that I always advise every salesperson to do. Understand how much expenditure is your buyer actually managing? So it could well be George that you’re selling something worth 500 grand or 2 million, 20 million, and it’s a big deal for you. But if the buyer on the other side of the table is managing an expenditure of let’s say 200 million, it might be just a drop in the water for him or her. So she might not or he might not be as involved as for bigger spend items or it might be completely automated or it might indeed be handed back to the internal requisition to say, “Look, go out and sorted yourself because it’s so non-important to us as procurement team.” We will keep an eye on it, but at least we’re not involved as we are on other areas.

Jens: So this is probably how-

George: So there are a number of different scenarios that could exist as you go into these organizations and you notice that there is some sort of procurement process that is in place. I think it’s important to understand your buyer persona and who is the economic buyer in the deal and keeping in mind that there are other influencers.

Pet Peeves – Sales Rep Prep

George: In The Confession Tape series I noticed that there was a bit of a theme in one of the episodes that I was reading through. I had the transcript so I actually read through it Jens. But it was around a pet peeve that I think you were speaking about, and that was that a lot of salespeople just aren’t ready when they come into the appointment. Do you see this as a bit of a theme?

Jens: Yeah, unfortunately, yes. When I was still on, on the other side of the table, my standard question just to sense check how prepared a salesperson was, was to ask him, “Okay, what are your goals? How do you see the relationship evolve over the next three years?” Right? And if you get then at 10, 15 seconds of pause, then you already know, okay, there’s something fishy. And if you then get an answer of, “Well, I need to make the quarter,” or, “I just want to sell this product,” or there’s no kind of rapport that the salesperson builds with your business needs as a business, with your functional needs as a procurement function, with your personal needs as a buyer, then you know that that person is not prepared.

Jens: Probably most of your listeners say, “Well this is the basics. We always do that.” I have to tell you, no you don’t. Right? I would say in 90 percent of the cases of various different companies of software or services or ingredients or raw materials, most of the salespersons, unfortunately, are not thinking of, “Okay, how can I excite and inspire my customer by delivering above and beyond just the pure product that I’m offering you?” Right? This is a crucial, crucial step, being prepared.

Jens: Some things that we talk about in The Confession Tapes as well with some of my colleagues that I met throughout my career is just anticipating on how to manage a meeting. It can be as easy as that. Right? Small things do really matter.

Jens: That question you think of, for instance, you think of preparing meeting minutes. Right? Nobody loves to prepare meeting minutes. So if you can do that for me and you offer that proactively, that’s something that I keep in mind. Right? Or you send me a reminder that we actually have a meeting. Because one thing that a lot of salespeople probably don’t know is we don’t have a lot of time actually on our hands to meet people. We probably spend five percent to maximum ten percent of our time meeting suppliers. We wish to spend more time on it, but that’s a lot of admin stuff and operational issues that we need to be dealing with unfortunately still as a procurement function that we only have limited amount of time.

Jens: So when you come to a meeting you need to really deliver your A-game. Support me with delivering the meeting, wrapping up the meeting, meeting minutes, et cetera, et cetera. All these things matter really quite a bit, and that’s what we try to bring alive in The Confession Tapes series that you already mentioned early on.

George: Well Jens, when I wanted to, I noticed you online and I started doing my research around what your partnership is doing. I think that it’s pretty cool that our listeners could access someone like you who really is playing on the other side of the fence now. The way that I understand it, THE FIVIS PARTNERSHIP exists to help sales organizations in how they interact with procurement.

George: Now in your previous roles, you sat on the other side of the desk and I always find that to be very valuable training. And I’m sure that you probably have some train wrecks. I was wondering if you might be able to share as you’ve been working with these organizations, maybe one or two of the biggest train wrecks that you’ve ever seen in a sales organizations trying to deal with procurement.

Jens: Yeah. I think it comes back to what we discussed early on. So I was responsible for IT and software spend at KFC, and it was a fairly recent mandate that we received from the CEO saying, “Look, procurement now needs to take over that budget as well.”

Jens: So the IT director was not yet really used to us being involved, et cetera, et cetera. So week one pretty much, we hadn’t yet set up the resources and everything. But the IT director comes to me and says, “Look Jens, we have that IR supplier coming into our office tomorrow. We had a great discussion with these guys already. They are an incumbent supplier. They put a three-year deal on the table. Could you just come in tomorrow into the meeting and pretty much rubber-stamp it and then we’re good to go for the next two years.”

Jens: So I said, “Yes, of course. No problem. I can come over.” But obviously in the back of my mind I was slightly frustrated, because I always compared with this kind of scenario. You take your child into a toy store and your child runs to the shelves and takes out a toy and says, “Daddy, daddy, I want to have this. I want to have this.” Then you try to negotiate with the shop assistant to get a ten percent discount. It’s not going to happen. Right? Because you’ve got your child screaming on the floor-

George: Right.

Jens: And you want to save the situation. So this was a good analogy on what is happening exactly in that case that I experienced early in my career.

Jens: So I went into that meeting the following day. The sales representative obviously had no clue why I was there. The IT director didn’t brief him. So he was fairly shocked when I introduce myself that I’m from procurement. And so I could definitely see in his face that he was slightly nervous.

Jens: The thing is, my agenda was not to be aggressive at all. My agenda was not to squeeze the supplier whatsoever because I knew that we didn’t have any alternatives. We had to go with the supplier, and the IT director was a big fan of that supplier. So actually my leverage was fairly low.

Jens: But the thing is what I had to do to showcase to my IT director that what I’m doing as a living actually a skill and not just something that everyone can do. Right? We deliver value as a procurement function, and I had to showcase to the supplier obviously that procurement is now a function that he has to involve early on in the process.

Jens: So I just started to dig and ask some questions, and in the end of the day what we, to make long story short George, we settled on a 25 percent discount on the original price. Whereas probably I would have been totally okay if that person would have just said, “Look, Jens, I know you’re new. Let’s set up a separate meeting, and let’s discuss how we can create value together.”

Jens: But the salesperson got so nervous that he would lose the business that he immediately gave in. The thing is now though, that I immediately after that meeting said, “Look, we need to put five people onto IT expenditure for this company. Because if I spent just half an hour sitting in a meeting saying my name getting 25 percent, what would happen if we really tried to analyze the market and try to see what other vendors are out there?

Jens: So the big learning here is if you go unprepared into a meeting, if you don’t know the political structure in an organization, if you don’t know your procurement contact, you need to save the situation. Don’t get nervous and don’t give away money too soon. It can backfire tremendously. The bottom line is we actually removed that supplier from the mix because we found other suppliers that were much more valuable in the end of the day.

Jens: So it was, yeah, pretty bad for that salesperson, unfortunately. But this is something that happens more often than you think. So that will be probably the best example that I can give you that we got George.

George: So would you judge that supplier then based upon that experience to say that something’s not right here. They gave up too early or they didn’t come with the value proposition again to reiterate the value. They just dropped the rate. It really speaks to the quality of the person you’re dealing with, and also to the quality of the organization in my mind. That’s what I took from it.

Jens: Yeah. Obviously there was something going on as well. I think the IT director and that organizations, it’s a large software house. They obviously had a great relationship for I think ten years or whatever. So there was probably a slight element of complacency to really offer the best product, the best value, et cetera, et cetera. So to immediately drop 25 percent tells you right away there’s something not right. Right? Because obviously nobody wants to go home with a loss. And that’s where we investigated then over the next six months.

George: No, that’s really good insight… I appreciate you sharing that story, and there is a whole bunch more where that came from and we’ll definitely put the links into the material for this podcast.

Conclusion

George: Jens Hentschel is the founder and managing director of THE FIVIS PARTNERSHIP, working with sales organizations all around the globe to help them in dealing with professional procurement practices and supply chain management on the prospect side. So if you want to learn more about Jens and the work that his team has been doing, by all means, visit him on LinkedIn and have a peek at those Confession Tapes. There’s some great value there.

George: We really appreciate you joining us on The Conquer Local Podcast Jens, and we’ll let you get back to it across the pond. Thanks for joining us today.

Jens: Thank you, George. Appreciated being on the show. Thank you.

George: Well what a great episode from Jens Hentschel. Interesting for him to say, “You all say that you’re prepared, but the majority aren’t.” We find that when we’re training salespeople as well, and I think if you think back to your last four or five presentations, even my last four or five presentations, there’s a couple of them where I probably should have been a little bit better prepared. So preparation, always something that we should be focused on and spending more time on.

George: I think that we really need to dig deep inside the buyer personas to see if we’re dealing with everybody, and that’s a horror story that Jens just told us about losing 25 percent of your deal value just because you got afraid that procurement was involved. And then number two, eventually losing the deal because they just smelled something wasn’t right in the value proposition. It scares me, even more, when I hear that dreaded word.

George: But I think that it’s interesting, and if you really dig into Jen’s content where you can find him on LinkedIn, The Confession Tapes series that they have built is a great resource for trying to look at your presentation. Look at the way that you are crafting your value proposition. And your entire sales process when dealing with procurement might need to be a little bit different and then think about your teams and how you’re training how to handle the dreaded P word when they come up against it and they’re doing their needs analysis or even in that horror story, they didn’t even know about it until the very end.

George: Then the salesperson, it was a bit of a rookie move just gave up 25 percent of the deal value. Then the spider-sense really is tingling on the other side going, why would they do that?

George: So some great learnings today on this edition of The Conquer Local Podcast. All about dealing with procurement and what some of the goals of those folks in the side of the desk around supply chain management and what they are trying to accomplish in their KPIs and their goals when they’re involved in a deal.

George: We’re always looking for your feedback. LinkedIn the best place to speak to us or you can become a part of The Conquer Local community. This might be a great topic inside The Conquer Local community. If you ever run up against procurement, it would be great to get some feedback from our members, the conquerors, out there when they’ve come up against procurement. So if we could maybe get a channel started on that, I’d love to see some feedback from the various sales leaders that are inside The Conquer Local community and how they’ve handled dealing with procurement on the other side of the desk.

George: Well thanks to Jens Hentschel for joining us this week, the founder and managing director of THE FIVIS PARTNERSHIP here on The Conquer Local Podcast. My name is George Leith. I’ll see you when I see you.