So who are they?
Procurement professionals may be known by a variety of titles, for example head of procurement, head of supply, head of purchasing. Historically, their role has been to advise their company about expenditure on items such as stationery and printing. Encouraged by the CEOs and Managing Directors of these client companies, the procurement professionals have a specific remit to look at all areas of that company’s expenditure. Only recently have they been directed to turn their focus to the purchase of professional services.
Procurement specialists are professionally trained and have a whole range of tools and skills to ascertain the value their company gains from an adviser. Many are members of the Chartered Institute of Supply and Purchasing (www.cips.org).
What’s their purpose?
Faced with a procurement professional on a panel review, many law firms panic. They believe that individual’s role is to simply drive down fees to the lowest denominator. This may not necessarily be the case and law firms are invariably and mistakenly viewing procurement in a negative light, avoiding them if possible in a pitch situation. Those firms that are more successful in procurement-led pitches avoid this strategy. They recognise the importance of the procurement professional in the decision-making process and apportion a percentage of their time and preparation to get to know them and address their needs in their firm’s subsequent proposal.
Ultimately, procurement is seeking to understand and improve the cost of a supplier’s service to their employer. Cost is not the same as price and law firms should not feel automatically obliged to reduce their fees when a procurement professional is involved in a new business pitch.
Cost reflects the total value that a company gains from its advisers and procurement specialists will be looking for professional services firms to demonstrate:
ß The fundamentals of the service they are providing (which can be benchmarked)
ß What value a firm adds over and above this service (ideally quantified)
So how do we deal with them?
Law firms need to treat procurement professionals as they would any other member of the decision-making panel. This means seeking to build trust and a relationship with them. It also means understanding their agenda, as much as a firm would that of the in-house counsel.
In response to the skills and tools that procurement professionals bring to a pitch situation, law firms can train their fee-earners to anticipate and respond successfully to them during the negotiations. Those firms that:
ß seek to understand the total brief
ß seek clarification to identify any additional issues, needs and wants and then
ß put forward a response tailored to all these
are more likely to be successful at winning new business in these situations.
Needs and wants
In understanding the procurement professional’s agenda, law firms must understand the client’s needs and wants. Needs and wants are not the same thing. Whilst a client may need a particular area of expertise, there may be other issues which make them want that expertise delivered in a particular way. Needs are what the client thinks they have. These are more likely to appear on the invitation to pitch document.
Wants are the desires, which the client would like to have fulfilled by the purchasing decision. The wants may be more emotive in nature and are probably un-communicated. They are sometimes termed the ‘hidden agenda’ – for example ‘we know we need to appoint a good law firm, but we also want one close to our head office so we don’t have to incur lots of travelling time to get face-to-face contact with our lawyers’. Wants reflect the ‘added value’ the client is looking to gain from the relationship.
Establishing a client’s needs and wants can be found out by:
– asking questions in the most effective manner to different decision-makers and influencers
– listening to, then analysing the various responses
In order to get the most useful information, a law firm needs to encourage open responses from the client. Both listening and questioning skills are crucial here and can be developed in the firm’s staff through training and practice.
Improving our chances – commercial qualification
How a firm demonstrates a detailed knowledge of the client, including the procurement professional’s agenda, can often mean the difference between success or failure in a pitch situation. So what sort of information should we be trying to uncover? How can we establish a picture of the real needs and wants in this organisation?
Commercial qualification enables a law firm to decide how valuable this business opportunity could be to them and if there are particular issues in the client, which will predictate against them in the pitch. It also helps the firm to identify any particular advantages they have which they should exploit in this situation.
Commercial qualification identifies the key business drivers, or rather what’s really going on in the client company, what’s on the horizon and what’s going on in their industry? It provides the law firm with the vital information on how best to position the main thrust of its pitch response and differentiate its offer from the competition. There are 5 areas which the firm should investigate to establish this knowledge. These are:
The decision-making process
The bases of decision
Monetary or budgetary issues
The competitive situation
The decision-making process
This means addressing with the client who is involved in the selection decision. By understanding the client’s decision-making process, the firm can determine what will happen on the client’s side of the fence over the time period between now and the decision date. This will confirm who will get involved and what their involvement will be. It will identify when and how decisions will be made. What points of reference will be sought and what are the key stages of the process? Sometimes law firms pursuing a bid often become obsessed with their own sales process and forget entirely that it is irrelevant. What is critical is to understand the client’s buying process. Those firms that are more successful, tend to realise that they have to tie their whole approach into this.
The bases of decision
Too often law firms guess at what is important to the client when making their decision. They try to work out the ‘gist’ of what is important. Sometimes they are right and sometimes they are wrong. By endeavouring to uncover the bases of decision, the law firm is seeking to understand what each person in the decision-making process is looking to gain from this purchase.
If the firm can’t meet with all the people concerned, then they can seek agreement from the client to speak with them over the phone. This enables the fee-earners to look at each person’s agenda and ask if there are any particular aspects each is personally looking for in this appointment. This will begin to establish the key needs and wants across the firm in relation to the pitch. Such information will also guide the firm on what it needs to demonstrate in the pitch.
Often these discussions demonstrate to people within the client organisation that the law firm is interested in their views and their issues. With any luck, the perspectives gained from these discussions could subtly change the initial brief and give the law firm additional differentiated ways of constructing its solutions.
Monetary or budgetary issues
The law firm will also want to establish if the money that the prospective client has in mind is in line with the work and results they are expecting. Clients are sometimes coy about this subject, so we have to give them a good reason why it is in their interests to provide us with some idea of the money they have to allocate and what they are expecting from this expenditure.
If a client has not stipulated a timescale both for the pitch and for the work or project itself, firms also should try and get them to work back from the end-result. That way both parties can agree what time is available between now and the end dates. This also enables the client to get an early feel for the likely time that will be required to execute the work in question. Unrealistic expectations can then be dealt with very early on.
The competitive situation
Finally the law firm should find out about alternatives, competitors and incumbents they are up against in this pitch. There will no doubt be other competitors and alternative solutions to ours. We therefore have to position our final proposal to be better than the others. If we do not know what those other alternatives are, then how do we best position ourselves? This basically requires the law firm asking who else is being considered?
Moving the goalposts
In one of our clients who regularly bid for both private and public sector work, the expression ‘moving the goalposts’ is now part of the firm’s language. Everyone understands exactly what it means. In a competitive bid situation one of the questions that the bid team asks itself is ‘What have we done to move the goalposts?’ In other words what have we done in order to slightly change or enhance the client’s initial brief in order to give ourselves an advantage over our competitors. They don’t always succeed , but it is always part of their bid process and the practice has seen them achieve some stunning wins – even when procurement professionals are involved on the client’s decision-making team.
Having carried out its commercial qualification, a law firm is now in a position to suggest solutions to the client’s requirements. The firm will also know how they need to produce a better proposal and the ways they will deliver direct additional benefits to the client.
Increasingly procurement professionals are being used by client companies, as part of their decision-making process. With some professionals, their purpose may indeed be to drive down costs. With others, they are looking to improve the overall value of the relationship the client has with its professional advisers. The more successful law firms talk with procurement people as early as possible to find out their interests, their brief and their terms of reference in this pitch. Some firms are even involving their purchasing people in new business pitches so they can liaise directly with the client’s procurement people and ‘speak their language’. Ultimately, these firms include the procurement professional’s needs in their final submission and turn that person into an ally or advocate.
Of course, firms can also decline to bid. There is a tendency in law firms to accept every invitation to tender that comes their way. As resources are not infinite, this is a costly tactic of winning new business. Instead, it is better to be selective about the pitches you accept and endeavour to build a relationship with the prospective client before you receive their tender document.
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