Negotiating in the Procurement Age

Ted Leonhardt
Ted Leonhardt



negotiating-in-the-procurement-ageIan led the team that designed the packaging for the client’s most successful brand, “Z.” It resulted in sales of a billion a year. But here he was, three years later, responding to an RFP from the same company, the same team, even the same individuals.

“What’s with these people? Don’t they remember the success we had with the Z launch? We knocked it out of the park for them, and now they throw us into a competitive situation with an RFP.”

The answer is procurement and an amped-up focus on negotiating every purchase from machine tools to office supplies. Creative services are no exception. Ian’s client now requires bids from three qualified suppliers for any purchase over $100,000. Ian was lucky that he wasn’t required to submit a request for qualification (RFQ) before submitting his RFP.

Some call this “the Walmart effect” because of the retailer’s relentless pursuit of the lowest costs, but it was the burst of the housing bubble in 2008 that really accelerated it. Consumers stopped consuming, and corporations tightened their belts. Today, purchasing agents and procurement departments have more influence than ever before. And it works! Employment is still off, but corporate profits are high — largely due to cost control.

Mr. Procurement exists for one reason only: to get the most while paying the least. So here we are filling out RFPs. Our direct clients hate it too, but they don’t like to challenge Mr. P. Hence, the RFPs are sliced, diced, compared and contrasted. Spreadsheets are created, and arguments are prepared for the meeting where the demands for a lower price are made.

Ian recalls that meeting.

“There I was responding to Mr. Procurement’s challenge of every line in our proposal with my heart pounding and two competitors standing in the wings.”

“I reminded them of the success of the Z launch, and Mr. P said, ‘with all due respect, I must remind you that there were many other factors in that success.’”

This was a classic intimidation technique meant to undermine Ian’s confidence – Mr. P is a trained negotiator and has many such techniques ready.

But Ian wasn’t intimidated.

“Of course there were other factors, but please tell me why you would choose anyone else for the most critical factor of all: the creation of your consumer face?

“And why would you cut the budget? Don’t you know that those cuts will reduce the potential for success? Do you want us to do less discovery? Less strategy? Should we cut the research? Limit the creative time? Cut the rapid prototyping?

“On the shelf, on the site and in the ads, your market will see only one thing: the package. Are you prepared to risk it all on someone who’s not a proven winner? You represent a multibillion-dollar corporation. This new launch has the potential to drop hundreds of millions to your bottom line. Are you prepared to risk that for a few hundred thousand in fees?”

Long pause.

The client team asked for 15 minutes alone. When they reassembled, Mr. Purchasing compromised, and Ian compromised. A little.

Later, Ian’s client said that Mr. Purchasing was impressed with Ian, and that his comments made sense — this was not a project to risk. Ian had asked for and received the respect he deserved. He did so by asking questions that reinforced his expertise and explaining the consequences of cost cutting.

Ian was frustrated, but not angry or intimidated. He used his high emotion to make his case, not break it. Mr. P was protecting his company, and Ian was protecting his ability to meet that company’s needs. Ian was the right choice. Mr. P’s parting words?

“Award him the contract, and see that he stays within the budget.”

Topics: Negotiation
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