April 19, 2021 | Blog
RFQs Are Like a Rigged Horse Race: Are your sales teams ready to win?
Imagine that you are at a horse race. You’re feeling lucky, so you decide to place your bet on the long shot. The odds of you winning are slim, but the idea of betting on the underdog is too exciting to pass up. The horses are all lined up anxiously waiting for the gates to open. When they finally do, you’re so close to the track that you can feel the pounding in your chest from the horse’s feet hitting the ground. The crowd is roaring, the announcer is rattling off leaders, and your adrenaline is through the roof. In a matter of minutes, your horse comes in first, and you are one happy bettor.
What about the other bettors who were confident in their odds but ended up losing money? That feeling of lost value can be the same for a sales team that’s hit with an email informing them that their business is up for bid.
In business, the procurement process is a lot like betting on the long shot, but with someone else’s money. There doesn’t seem to be much downside risk. The buyer will always find a supplier. On the other side of the table, suppliers have everything to lose, especially if they are the incumbent.
Procurement organizations in large corporations are investing aggressively in mathematical software from companies like Coupa. The software is structured to put their suppliers through a horse race. But the software skews the results so that the fastest and strongest horses end up out of the gates behind the longshots chasing to catch up by making endless concessions and discounts.
Coupa is one of the emerging leaders in procure-to-pay software. Like many companies in this niche, the Coupa platform includes tools to manage sourcing events. The tools bring together qualified and fringe suppliers to generate savings based on manufactured price competitions. Guess what: the slow horse always seems to be at the front of the pack.
With the increased use of sourcing technology, there’s an additional buffer between sellers and buyers. The suppliers with compelling points of differentiation are challenged to find a receptor who will listen to and confirm or refute their nuanced value story. Procurement organizations create a landscape where sourcing events run on game theory-based models that intentionally obfuscate differentiation while commoditizing and flattening the playing field for all the competitors.
So does a supplier defeat the machine-like approach purchasing organizations are leveraging in technology-enabled sourcing events?
It’s time that sellers are empowered by scenario-based negotiation playbooks and technology-enabled negotiation readiness. A process-centered, technology-enabled approach is required to win in today’s complicated landscape.
Chances are, the people sitting across the table are using powerful procure-to-pay software to optimize their position. With Velo, you don’t have to bet on the long shot in hopes of gaining the value you deserve. You can have a sales team that goes from misalignment to alignment, helplessness to confidence, and desperation to optimism. Procurement isn’t disappearing as a way of virtual negotiating any time soon, nor should it. While there’s hope that procurement professionals strive to enhance pitch processes, sellers must become more proactive when it comes to developing a structured process to ensure deal readiness and eliminate profit leakage.