While working for a previous employer I received two competitive quotes from a supplier for production parts. The price of one of the parts came in 15% higher than my budgeted cost. And in order to get it through management approval I knew I had to negotiate that price down. So I contacted the supplier and requested a 20% reduction. (Start high and negotiate down to the actual price we need, right?) The supplier came back and said, “I’ll give you 20% on the one part if I receive the orders for both parts I quoted.” What the supplier had done is a “classic” negotiation tactic: He “bundled” the pricing of the two quotes in order to get both purchase orders. In other words, “I’ll give you what YOU want if you give me what I want. Let’s make it a WIN-WIN.” And it worked! Management was happy because the price of the one part ended up 5% below budget. The supplier was happy because he received an order for both parts. And I was happy because management was happy. It ended up being a WIN-WIN-WIN.
But the entire bundling scenario made me think about that “classic” negotiation tactic. If that strategy is so “classic”, then why don’t more Sales Professionals use it? During my career in global purchasing I’ve only been approached by a handful of suppliers bundling quotes on various products: offering to reduce the cost of one or more products in order to secure the business for all of them. Of course you won’t have a chance of winning all of the business if the Buyer or End-User don’t think your products are technically capable of meeting their needs. And it won’t work if other suppliers are collectively lower than your bundled costs. But the plain truth is that most Sales Professionals don’t even try!
One of the reasons why most Sales Professionals don’t try is because they are unaware that bundling opportunities even exist! They think to themselves, “Well, I personally don’t have other products or services to bundle with my quote”, not thinking that perhaps someone else in their organization does. And maybe no one in their own sales office is quoting anything to that specific Buyer. But if their company has other sales offices in other parts of the country, even other parts of the world, they need to find out if they are quoting anything to that specific Buyer, or to another Buyer in the same purchasing group, or to another Buyer within the Client’s global locations.
And bundling quotes doesn’t have to be tied to your own sales office. Expand your horizons and think outside the box! Bundling quotes can include any business opportunity within any sales organization in your company from any part of the world. Unfortunately most Sales Professionals tend only to think about what’s going on in their own environment without considering the rest of their company’s national or global sales organizations.
When I was a Buyer at the DaimlerChrysler headquarters in Michigan, we developed a database to keep track of current and future projects around the world. Project information on the database was input by the responsible project Buyer. We could see what other Buyers in other procurement organizations around the world were currently sourcing and what they were planning to source for future programs. Information on the site included the responsible Buyers and their contact information, the global project names and definitions, the products and services needed for each project, the project budgets, and the names of the suppliers who were currently quoting or would be asked to quote. This information was incredibly advantageous to the Buyer! We could contact suppliers and negotiate lower costs by offering to source more than one project to their parent company. So it was imperative that we Buyer’s kept in touch with each other. It didn’t matter if our desks were separated by an ocean.
As an example, let’s say I was planning to source (10) grinding machines for my U.S. project. And based on the quotes I received, I had a preferred supplier to source the machines to. By researching the database I found out that the same supplier had a sales office in Germany who was quoting (5) boring machines for a Daimler project to a Daimler Buyer. I contacted the Daimler Buyer and we agreeded that if the supplier could “bundle” and lower their quotes for both of us, they would receive my (10) machine order and their (5) machine order.
It’s important to point out it didn’t matter that the bundling took place between two separate sales offices located in different parts of the world. It didn’t matter that the bundling involved more than one our global projects. And it didn’t matter that the bundling involved more than one product commodity. What mattered is that the supplier was able to bundle both quotes and received both orders, while the Daimler Buyer and I enjoyed better pricing for both of our projects. It was a GLOBAL WIN-WIN!
The database at DaimlerChrysler was a huge success. It compelled us to seek savings opportunities based on the rest of the global organization, not just within our own little world in Michigan. Well, that same success can be achieved at your own company either with a similar database or though simple face-to-face communication with your domestic and/or global counterparts. But it amazes me when I ask Sales Professionals, “Is your company quoting anything else to my company right now?”, 80% of the time, the Sales Rep doesn’t have a clue! From the Buyer’s side of the desk, here’s an incredible opportunity for your company to improve their sales. Remember that it doesn’t matter if your company is global or not. It doesn’t matter if your company has more than once sales office in the same town or in different national locations. Even if you only have ONE lone sales office located within one building, here’s my question to you: Is your Sales Team talking to each other and sharing information that could provide bundling opportunities?