Welcome to episode 87. In this episode, I chat to Mike Lander, CEO of Piscari, a former procurement director who now assists sales teams in negotiating with procurement departments.
Mike and I discuss:
– the common mistakes agencies make when negotiating with procurement
– what procurement looks for when selecting an agency
– and why they are interested in your financials.
We also dive into a five-step framework to help you negotiate more effectively and shed light on some questionable tactics employed by less experienced procurement professionals.
During this conversation, you’ll gain valuable insights into the world of procurement negotiations. Be sure to follow Mike on LinkedIn and grab a free copy of his guide from his website.
https://www.linkedin.com/in/mikelander/
https://piscari.com/negotiation-guide/
Transcript:
Jenny Plant
Today, I’m very excited to be chatting to Mike Lander. Mike is a successful entrepreneur, ex procurement director, and expert negotiator with a proven track record of buying, growing and selling businesses. Mike has a uniquely valuable perspective on negotiating commercial deals, having worked on both sides of the table as a procurement director and an entrepreneur. He works predominantly with sales profitable deals, especially when procurement gets involved. He also happens to be the chairman of the successful SEO agency. Re:signal. Mike, a very warm welcome.
Mike Lander
Jenny, thank you for inviting me.
Jenny Plant
It’s a pleasure. Absolute pleasure. Would you mind starting off by just talking about your experience of how you help agencies?
Mike Lander
Sure. So, a long history of professional services and consulting in my past and what I do now is having had all that experience, I focus on working with agencies. I work with the salespeople within agencies. Could be a founder, could be a sales team, and I work on helping them improve the negotiated outcomes of the deals they negotiate, especially when they are dealing with bigger companies than they are, deal with tough, well trained, buyers like procurement people.
Jenny Plant
Perfect. And how do you observe that? Typically, agencies approach negotiations with procurement people in bigger deals.
Mike Lander
So, I think understandably, if you look at it, let’s say it’s worth half a million pounds, let’s say it’s a project rather than the retainer, and let’s say it’s competitive. So, what an agency, rightly, is doing is focusing on the creative element, how they are going to engage with the client, how they are going to deliver the outcomes or the outputs, or both, for that client, and that the chemistry is right between them and the client, and let’s say the buyer is the CMO for a region, they have done all that hard work, they are shortlisted, and let’s say they have not really been engaging with procurement as much as perhaps they should, because they are focused on the business stakeholder who has the budget. Well, of course, in the background, a half a million dollar or even Pound deal, procurement are going to get involved because it’s a material sum of money and it represents risk to the business. So, if I was the procurement lead, what would have been happening?
In the background is there is not just you, Jenny, as an agency, there is clearly, Jenny, plus two or three other agencies that I’m negotiating with. I have got you as the front runner, and I have two in reserve in case I can’t negotiate a deal with you. The key thing here is, rightly, agencies spend a lot of effort and money on developing the relationship and selling themselves to the client. Very little time is spent preparing for and switching mindsets for negotiating the deal and that’s the biggest challenge, I think. It is a different mindset, a different approach, but it requires significant preparation if you are going to get a balanced deal.
Jenny Plant
And tell me about that mindset, what is important about having a mindset that you are just about to step into a negotiation?
Mike Lander
So, imagine we are having a coffee, Jenny, because as we have said before, I quite like a chat, I’ve got a few notes, but let’s just kind of talk about the mindset and what happens. I’ve been selling for, I don’t know, 25, 30 years and I know when I’m selling that I am trying to build a relationship. I am trying to tell stories. I am trying to show you that I know what I’m talking about. I’m a subject matter expert and all that’s important when you’re negotiating. If you are negotiating with a trained buyer, a procurement person, they are assuming you have done all that already. I don’t need to re-hear all that. I’m not here to become friendly with you. I’m here to get a deal done. Now, that doesn’t mean that passion for your business and inspiration and being forthright isn’t important, but you can’t become emotional. That’s really important. A very good friend of mine, years ago, oh years and years ago, was a great sales teacher, and he said to me, Mike, the moment that you become emotionally attached to the outcome of a deal is the moment you’ve lost the deal. Matthew was absolutely right, because emotion in the negotiation, even with a trained buyer that’s not going to play games. Some still play games, but most don’t. I would say the moment you start getting emotional about something, A -it gets in the way of the deal structure, B -irritate your party and C – it will yield value. I will probably claim more value than you will in that deal. There is loads of talk about everyone’s a win/win negotiator because it sounds good. It’s not the reality. A true win/win deal, if you look at the true definition, and it’s not just mine. If you look at Harvard’s program on negotiation, which is brilliant, so look at their definitions.
A true win/win deal is when both sides create more value for each other. What that means is, if it’s a half a million-dollar deal that we are talking about Jenny, and that’s got a certain scope attached to it, if I can extend the scope for you and increase the value of that deal you have won, you have won more. At the same time, I’ve replaced three suppliers with one. I’ve got better outcomes, more defined outputs, more single point of accountability, and overall, probably a better commercial deal structure so I’ve won. We have both really won. As opposed to, I’ve got a fixed budget, you have got a scope, I want a 20% discount. You say, well, I can’t do that. We end up at like 15% discount. I start chipping away all sorts of other things and I get 20% to 25% off. Might be a very friendly discussion, but it certainly is not win/win.
Jenny Plant
This is really good advice. So thank you for sharing. Do you think that generally agencies are probably too emotional about it and do they try too much to apply the same tactics to the procurement? Essentially wanting to be liked? This is a partnership. We have that lovely attachment to that word partnership, don’t we? Do you find that? and I’d love to hear from you Mike, other experiences where other mistakes are made by agencies just so people can recognize when they are making mistakes.
Mike Lander
Sure and this isn’t a judgment statement in terms of my reply. It applies to anyone selling professional services. In my experience, I think the emotion becomes problematic, as you say, a mistake. I think a lot of organizations, like agencies, consultancy, accounting firms, legal firms when they get to, “oh, I’ve now got to go and talk to procurement”, you will have heard the words, “I think we have got a deal from the CMO. I think we’d love to work with you. You have just got to get this past procurement and we’ll be good”. Those fateful words, they produce a sinking feeling, I think, in most agencies and most other sector organizations that are dealing with big corporates. I think when you start to go on that journey of, I’ve got to go meet procurement, A -you should have met them earlier on, not at the end and B – it’s very hard for a founder or commercial director although, less with commercial directors, more founder led organizations, to detach themselves emotionally from that deal.
So, a really simple piece of advice.
Let’s assume your agency, if it’s a half million-pound deal, then the chances are you’re probably at least 50 people. As an agency. I’d have said, if you are that scale, then my recommendation is, if it’s been a founder led opportunity because it’s a big brand, it’s a really important trophy client into a new sector, I’d switch out your lead negotiator. At that point, if it’s a founder that’s been leading the sales effort and it looks like there’s a deal to be done, bring in someone very commercial, either internally or externally, to help structure the negotiation with procurement and other stakeholders.
Don’t take that founder out of the loop but have them as being the person that understands the context of the deal, the things that hadn’t been written down, but are meant, so that the negotiator on your side can deal with the negotiator on their side. They can prepare well, they can structure a deal, and you then get the essence of the deal as well as the balance of the deal sorted out.
Jenny Plant
That’s a great piece of advice, because you said a word that you emphasized earlier on, which was when agencies are dealing with trained buyers. I mean, in your experience, I probably can guess at the answer you’re going to give me, but would you say that agencies are trained in negotiations?
Mike Lander
No -I would say if I looked at agencies that I’ve worked with across the piece, I don’t know how many agencies there are in the UK. I think it’s about 10,000 plus, and if you took 10,000 agencies, 5% will be trained, maybe less. If you flipped the coin and said, how many buyers in bigger companies are trained, that’s 95%.
Jenny Plant
Exactly, I love that tip. Remove yourself once it’s gone past that negotiation stage, get someone more commercial. Who typically would that be? In a founder led organization of 50 people.
Mike Lander
If you’re at 50 people, you have probably got a “head of growth”, or you have probably got a sales director or at least one senior salesperson out of maybe two or three. I’d pick that personally.
Jenny Plant
Ideally, if you’re not, perhaps it depends on that person’s experience levels, doesn’t it, as well?
Mike Lander
Yeah. What would I say? I’d say bring in a third party. They do it every day. Why do I get brought into client deals? Because I do it every day for clients. I prepare every day. I’ve got templates that I use every day. There’s a funny thing about the human mind, well, not funny, I guess it’s obvious if you think it through. If you’re a fifty-person agency, say, or a ten-person agency, or even a 300 person agency, a half million pound deal is material. You are not doing them every day. You are probably doing, in a year, two or three and at the bigger end, maybe five, maybe seven. You are only doing it once every two or three months, and it’s intense, and it lasts for about two or three months, and then it’s over. You get on with delivering the work.
Well, that’s really counterintuitive because the buyer, they are doing it every day. The marketing procurement lead in a big organization does this every day. So not just their mindset. Their mindset, their instincts, the way they approach it is trained, and it’s trained in a very instinctive way. I think instincts are born out of behaviour. If you behave in a certain way for a certain period of time, it becomes instinctive. You asked before about mindset, so let me just go back to the mindset for a second. If you look at the mindset of a negotiator, Chris Voss is a great example of Chris Voss’ book called Never Split the Difference. He was the ex-lead FBI negotiator for hostages and clearly a critical job because it really does save lives. I think how you apply that to business is a bit different, but the book is very good, and his thoughts are very good, and he talks about in the mindset, he’s got this very calm, very slowed down, late night DJ voice, as he calls it and what you are trying to do is, you are trying to calm the other side down, slow the tempo down, take the heat out of the negotiation, and become a much more Zen levelled person. When you do that, what you’ll find is you’ll feel your heart rate slow slightly, you’ll feel your breathing change slightly, you’ll feel your anxieties fade away, and you become much calmer. A trained negotiator will absolutely do that. If you are going to act emotionally, your heart rate’s gone up, your anxiety levels have gone up, you have probably got stress at the front, feeling stressed at the front of your head. You are feeling a bit cornered while I’m not. In those situations, you may well say things that you don’t mean to say. The problem with that is I’ll write those things down and use those, not against you, but as a reminder that, well, you just agreed to X, Y and Z, and I thought, we had really locked that in. Now you have to unwind that position and that’s going to put you at a disadvantage.
Jenny Plant
Love that. I’ve actually got a crush on Chris Voss, I have to admit, honest to God. And I’ve seen, what is it? His little mini course? Just that point about the late-night DJ voice, it’s just so true. When you watch him in action, you just think, oh, my gosh. So, a great reference. Thank you for sharing that. Let’s talk about procurement people, how are they measured? What’s going on for them? What are they looking for? Talk to me about it because you have been on that side of the table going into these situations. I have heard this reference several times, and I think I’ve said it myself, but it feels sometimes like agencies are going in like “lambs to the slaughter” because they are so highly trained. Just talk to us about being that side of the fence.
Mike Lander
Sure. I think that “lambs to the slaughter” is a good visual image to have. We are not trying to kill anyone, and we are not trying to do anything disruptive to someone, particularly we are not trying to be manipulative. If I link the how we are measured and the things we look for into one? I built something a while ago called the procurement success equation. A lot of clients and a lot of people online that have seen it have really resonated with it because in its simple form, and I’ve tested it out with a whole number of procurement people, yes, there are nuances, but this is broadly true. If you look at how a procurement person looks for success, in my old role, there are six dimensions. There are six things that I’m pretty much focused on all the time. So, first of all, savings or return on investment. Some kind of value, but also some kind of savings. And they are different. I could explain in more detail what that means, but let’s just hold it there. For the second, savings and ROI plus innovation. I want innovation, creativity plus quality. I want a quality supplier plus reliability. Are you going to do what you said you’d do? And add sustainability, diversity, equity, inclusion, ESG. Those aren’t buzzwords, those are meaningful words that as a procurement buyer, I absolutely want evidence that you are a sustainable, inclusive supplier. Here’s what I think is the important bit, if you add all that up, you will say, well, that’s success. Well, then you divide it by risk. So go back to your math days. If you divide something by a big number, it gets smaller. If the risk is high, my success goes down. If you can help me get the risk to be lower, my success goes up.
If you are negotiating with the procurement person, you have got to think about risk in terms of the way that you are negotiating the offer and the way that you are explaining to me how you are a low-risk solution. Let me give you an example.
Let’s say your agency turns over a million pound of fee income, say, and let’s say this is a £300,000 deal. So, I’m going to be a third of your turnover and pay on 90 days. The first thing on my mind about risk is, how are you going to manage the working capital, Jenny? How are you going to fund the fact that I’m paying you on 90 days?
Now, there might be a negotiation, it might be 60 rather than 90, but there’s still a working capital stretch.
Helping me think that through, talking to me about the strength of your balance sheet, how much cash you’re holding, talking me through your management accounts and your cash flow. Show me that you are a well-managed business because all that helps, but to agencies, it seems counterintuitive. I’m not saying, tell me your profitability, tell me the detail of your profitability.
So, for example, management accounts, you might say, no, but a cash flow statement at a high level, you might go, that might be okay because it shows what your current cash is and how you manage cash and your working capital cycle, that might work. Talk to your finance director. If you’re a small agency, that might be the owner, that might be your accountant. Looking at your trading history, looking at how if you’ve grown by 30% per annum, year on year for ten years, you’re giving me comfort that you can manage finance.
Jenny Plant
Very good.
Mike Lander
All of that is really important. How am I measured? I am measured on a balanced scorecard. If you look at those elements, if I just buy cheap at the expense of quality and reliability, but deliver savings, then I won’t get well compensated. I may well get fired. It’s an illusion that agencies have that procurement just want to buy cheap. It’s not true.
Jenny Plant
I agree.
Mike Lander
It’s not sustainable.
Jenny Plant
What else is on that risk? What else are they looking for in terms of risk as well as working capital?
Mike Lander
If you looked at all the elements of risk, okay so let’s just take a few. Reputation, or reputational risk. Which are the clients do you work with? Which sectors do you work in? Certain sectors I would be concerned about supply chain. So how does your supply chain work? You might have freelancers. Most agencies do. I’d expect you to have freelancers. Where do those freelancers work? Under what conditions do they work? – Legal. The legal risk that you work with freelancers. Well, have you backed off my contract against them? Have you passed through the terms that I impose on you to your freelancers? Insurances -How are you insured? How do I call on that insurance? Do you have a single point of failure? Have you got one delivery lead? That’s the key. Well, if they move company, what happens? Does the whole thing fall apart? So already we’ve got about five or six.
Jenny Plant
You have really helped explain this because I used to think procurement was, well you do think, well, why are they asking us to open up our books? When I was working at Publicist, for example, they wanted to know everything about the business. Actually, you think, well, but, where do you draw the line? I think, as you say, cash flow statement rather than profit would be more flexible. For all of these reasons, I can now understand. And it’s so funny that you highlighted that legal point about your contract reflecting the same terms as a freelance contract because that’s come up so many times in discussions I’ve had with agents.
Mike Lander
Oh, Really? Interesting.
Jenny Plant
Yeah, very interesting. And it’s a real pickle.
Mike Lander
Imagine if your freelancers start talking about working with your client in a Tweet or on LinkedIn, and yet the terms of your contract say you are not allowed to do that or you’re liable.
Jenny Plant
Well, one of I think Mars came out within a month. I think Tina Fegent posted something about this, that Mars is suing their agency, a small agency, just because the agreement in the contract was if you refer or mention the company, then you have to ask us for permission. They found out through the grapevine that this agency had submitted an RFP to this competing company, I don’t know how they found out details, but they were suing them. You cannot afford for your clients to be suing you because that would just wipe you out.
Mike Lander
Also, Jenny, on that point, I think it’s a really interesting point about non-compete clause. If I was helping that agency negotiate that contract and Mars stood firm and said, you cannot work for any competitors, we’re not going to name the competitors, we are going to take a judgment view on who those competitors are. I’d say don’t do a deal. They have no right to do that. If you are going to accept non-compete clauses, A -limit it to two or three companies, and B -ask for something in exchange. If you’re going to limit my ability to grow as a business, then I want an extended contract term. I want a three-year minimum contract. I don’t want any cancellation for convenience clauses, only for performance. What will happen is they will say that’s outrageous; you can’t have that. We would say that you are asking for exclusivity, you don’t think that’s outrageous. And you start to balance the discussion.
Jenny Plant
It’s all down to that negotiation skill. Isn’t it?
Mike Lander
It is, by the way, something else on negotiations, Jenny, which I think is a misconception. When people are selling, people think that negotiation is the last 5% of time in the sales cycle. You do it at the very end. But you are actually negotiating all the way through because you are saying things to your client, that they take as being true and that gets passed on so don’t be surprised when the SOW, A -is on their paper, not yours, and B -has all sorts of things in it that you really rather wouldn’t have been in the SOW
Jenny Plant
Oh? Like what?
Mike Lander
Oh, all sorts like we’ll give away free services for a period of three or four months for X, because we want to do more digital PR with you. IP yes. fine, I’m sure we can share the IP, there’s no problem. Yes, you can use the stuff that we create, that’s all okay. Well, that’s absolutely not okay. The IP in big consulting firms, as I remember very well, when we work for a client and we are developing deliverables for them, that IP is owned by us, and it is licensed in perpetuity to the client free of charge. They have the right to use it free of charge forever. They don’t own it because what happens is, if they own the IP for something that we have developed, you can’t ever use something similar ever again. Well, that’s restraint of trade on your business. Now, I’m not a lawyer, but it’s a really important point because they could come after you saying, “that campaign you just did for company X looks quite similar to the one you did for us, and you’re in breach”.
Jenny Plant
Again, Mike, again, I was referring to this situation with another agency. It’s all in the wording because I’ve got an agency, they are working with a big client, and another part of the organization wanted to use the same artwork and they asked for the artwork, and they were asking me whether they should give it. And I said, what’s in the contract? They weren’t sure what was in the contract because the wording of the contract was so legal speak. I ended up referring them to a legal or hybrid legal, to work it out, because it wasn’t so much that they were reluctant to give it over, it was the freelancer that had done it.
Mike Lander
Exactly.
Jenny Plant
Again, to your point before, I think there’s a lot here, actually, that we have to be aware of, first of all what are some of the typical tactics that procurement tend to employ when they are negotiating?
Mike Lander
So I think if you look at it , you know people think when we say tactics, people think of games, and I’d advise people do not think about it as a game, think about it as a well prepared mind. You meet a procurement person, what they are trying to do is a few things. For example, they are trying to lead the process. Why? Because they want to be in control. It’s well proven that whoever is in control of the negotiation process tends to win more of the value. If you are in a value claiming scenario, which often happens, they will be focused on savings. Now, savings has a very particular definition, so let me just give you a very quick example. If this is something that they have bought ten times before and it’s a retainer and the scope is really clear, but they’re looking to switch, what I would call maybe a third or fourth generation contract, then a saving is on a true like, for like basis.
For example, what I bought last year. If it was £100,000 then and I can get that same thing for £80,000, it’s a £20,000 saving because it’s a true like for like basis. If I’m buying something from you that I’ve never bought before ever, and I get a discount on your list price. That’s called cost avoidance. It’s not a cost saving because there’s no previous reference point. And these nuances are important. Something else that is a tactic. They run a process, probably an RFP, either formal or informal and therefore it’s competitive. It’s a tactic. What am I trying to do? I’m not trying to waste my own time by reading 20 RFP responses. What I’m trying to do is work with the stakeholders to define what the scope of that work is and what the outcomes are and how we’re going to select an agency.
I’m going to shortlist five, ideally probably five to go out to market. I’m going to get four high quality responses back, maybe one’s not quite up to the mark. I’ve now got four or three that I am going to take through to the next stage and then I’ve got one front runner and one or two nears. So, is it a tactic? Yeah, I guess it is. It’s just the reality of me trying to buy high quality, reliable services, innovative services from the right agency. So that happens. One really key thing, so a really important thing about the kind of imbalance that can happen as a tactic, what I just said then was I’ve got my preferred and I’ve got two others. I have a BATNA – a best alternative to a negotiated agreement. If I can’t do a deal with you for whatever reason, I do have two others I can go to.
Mike Lander
That makes me mentally calmer, less anxious, gives me more certainty and more negotiating leverage. So, I have true BATNA. You as an agency pitching for this work, as the preferred salespeople say, well, I’ve got no BATNA, I either get the deal or I don’t. I say, that’s interesting. What’s in your pipeline? People don’t respond. So, take 100 agencies, when I say what’s in your pipeline, particularly in a tough market like this, might say in confidence, Mike, it’s not looking good. We have not got a really strong pipeline. So, they have a weak BATNA. It’s not a fault, it’s a reality. What that does is it puts them under huge pressure. Whereas 20% of the agencies that have a strong pipeline who are the front runners, their BATNA is I’ll go off and do the other deals. I’ll spend more time on the other deals I’m working on rather than this one. I will cut this one short early and say, thanks, it’s not for us. I’ll work on something else that’s more profitable, an easier relationship, less risk. Having a strong BATNA as a salesperson is to have a strong pipeline.
Jenny Plant
It like it because it’s also that opportunity cost, isn’t it? If I’m putting all my time and energy into this pitch opportunity and I haven’t qualified it and I’ve got a weak pipeline, you are very much over a barrel because you become desperate and then that makes you emotional and then that’s that roller coaster effect.
Mike Lander
I can see it in your eyes and your behaviour. I’ll spot it because I do it every day.
Jenny Plant
Tell us about, I know you made a point of saying these aren’t tricks, but what have you seen? I mean, you and I personally know Blair Enns that has the podcast, the 20% podcast, and it was called the 20% Podcast for a reason, and you were featured on it, one of the best episodes, really good. The 20% being at the end of the negotiation, they string you along and then at the end they say, well, just give us an extra 20% and you’ve got the deal. And that’s why you called it 20%. Tell me about some of the other, maybe less evolved marketing procurement teams, what do agencies need to be aware of?
Mike Lander
Yeah, sure, like you, I’m a massive fan of Blair. I think his work is fantastic and that podcast is really interesting, that he’s looking at, well, how do marketing procurement work and what are they looking for? I’d recommend people listen to that series because it brings on procurement people and they give the alternative perspective about what they are actually looking for. So, yeah, it’s a great series, definitely. In terms of what are the tactics might some of the less evolved marketing procurement people use against agencies? There are still tactics, although used far less frequent than they used to be 20 years ago, I would say. I think it applies across all sectors, but let’s have a quick two or three that might be entertaining for your audience. There’s a table thumper, which is, that’s absolutely not what we agreed. That’s absolutely the wrong price, the wrong terms. I thought we had agreed something far more sensible. So actually, Jenny, I’m pretty offended. If you want to come back, sharpen your pencil, we may have a conversation. So this is the table thumper.
Jenny Plant
The old sharpen the pencil line!
Mike Lander
Exactly. Again, even though we’re having a podcast, obviously, for this, we’re on video, but they’ll hear it on audio, your audience, I can see in your face, even just now when I thumped the table, you had a reaction. It’s for less evolved marketing procurement people, very few of them out there, they might use that to get a reaction from you.
Jenny Plant
No, I agree. It’s just from the agency’s perspective, we want you to come on board. We’re at the beginning, we’re all excited about it, and all of a sudden there’s this breakdown in the relationship because we’ve seen you thumping the table and being really aggressive and it does it’s quite shocking.
Mike Lander
It is shocking, it’s rare, I thought it died a long time ago, but apparently not. I know clients who have come back and said they have been banging the table and walking out the room and throwing their books around. So it’s a tactic.
There’s the Colombo negotiator, also called the last-minute chipper. Anyone that’s of a certain age to remember Colombo in his shabby raincoat as a detective, there was always at the end, the ” there’s just one more thing”. And it was always said very calmly, “there’s just one more thing which has been puzzling me”, but it’s always the most important thing. At the end of a negotiation, you may well find there’s just one more thing that we need to think about. Yeah, if you could just take 10, 15 percent, actually, maybe 18% off the deal, I think I can get it past the budget holders. We’ve just had a note from Central saying that all contracts now need to be 18% off. Yeah, if you could just sort that out for me, I think we’ll be okay. It’s the last-minute chipper, so again, don’t fall for the last-minute chipper.
What else is there? There’s the late-night DJ voice, and then there’s the aggressive bang, the table thumpers. You get both sides of the person, the Jekyll and Hyde characters. There are all sorts. There’s the Mr. Spock, which is completely rational, logical, no emotion at all, only focused on price, won’t talk about anything else. There’s the price anchor, counter anchor, whereby you say a price, and what you’re doing is, whether I know it or not, you are anchoring something in my mind. What I’m going to do immediately is I’m going to counter anchor. Jenny, interesting, you think it’s worth £100,000? I know the market really well. I’m in the market a lot. I know a lot of agencies like yours that do very similar work. The market price for your kind of service at that scope is actually about £60,000. If you want to come back to the table and talk to me about something around 60, I’m all ears. You are counter anchoring using market data as a way of refuting your initial anchor.
Jenny Plant
I could just imagine you doing this. Mike, honestly, I really can. It’s just so professional and actually everything that you have said has been so useful. If you have got a weak pipeline, you haven’t slept because you need this deal. You’re paying people’s wages. The poor people are just kind of falling. Let’s turn it around for the agencies. Can you give us some tips and advice for agencies on negotiating in a more effective way?
Mike Lander
I’d advise any agency, just get some training for start, be that online training. Read some books. There’s a brilliant book by William Ury called “Getting To Yes”. It’s probably, I’ve read, I don’t know, probably 100 negotiation books. It’s one of the best books. It’s very simple to read, takes probably two or three hours and it talks through some really good principles. It’s called “Getting To Yes”. By William Ury. He’s a Harvard professor. Two other things, prepare. The most important thing you can do as an agency leader to rebalance the negotiation is to think it through in advance. Prepare. I’ll give you a very simple five step framework now that anyone can apply. Anyone can do it in probably ten minutes.
Step one, understand the context of the deal and the goals. So what are your goals? What are their goals? What are their interests? What your interests and what’s the deal about the context.
Step two, so what’s the process we’re going to use to negotiate and how long is it going to take? How many steps are there to get from where we are today to a signed contract? Write it down on a bit of paper, send it across to your counterparty, see if that’s right. They’ll write back with lots of comments saying you’ve got it wrong; you’ve now got more information.
Step three, prepare the deal. What I mean by that is think about the deal variables. Yes, you have got price, but you have scope, you have payment terms, you have contract length, you have termination rights, you have IP clauses. Well, there are six. Write the six down in column in rows. You have six rows now with these variables in them and then draw a line and list on the right-hand side, what’s my ideal outcome for each one? On the left-hand side, what’s my least acceptable outcome? But you have now got a range. As one variable moves down, the other one’s got to move up. So, you start to trade. Now you’re ready to negotiate.
Step four, engage. Take control of the process. Use your deal preparation sheet on the variables. Start negotiating. Most importantly, listen to how they respond. Write down how they respond and what their issues are, then go away, re-prepare, come back.
The last step is, when you have a deal, then obviously make sure it’s in the contract as an SOW with the service level agreements and the KPIs, make sure they are all correct and they align with what’s been agreed. Anyone can do that. I guarantee it will at least double, if not probably five X the quality of the negotiation.
Jenny Plant
Mike, that was really useful. Thank you. I can see a little handout coming that we’ll put your name on the front of.
Mike Lander
Thank you.
Jenny Plant
No, that’s really super advice and very thorough. We will make it easy for the listeners to see that, just give us a bit of time to create it. But that’s really useful. And I’m sure if you cover all of that, you would be on the front foot of probably 95% of other agencies who perhaps are actually a little bit blind. From now, I know that you’re working with Blair, you’ve got lots going on, you’re helping sales teams, you’re the chairman of an agency, you see the industry. Do you have any thoughts to share about the future of agencies as they’re dealing with procurement or procurements, because according to a LinkedIn survey, and I think it was in 2020, the CPO title, job title, C suite, title of Chief Procurement Officer was one of the fastest growing titles. It feels that procurement are becoming more and more important. But what are you seeing?
Mike Lander
So I think a few things. I think we’re seeing the growth of the Chief Commercial Officer role in big companies. If you search on LinkedIn for Chief Commercial Officer for bigger companies like over 1000 employees, or 10,000 employees, what you will probably find is they cover procurement but also sales. Because if you think about it, it is two sides of the same coin, effectively, very common skill sets. I think that’s happening more and more, that they are covering both the buy side and the sell side in senior roles. I think if you look at the WFA, the World Federation of Advertisers, they did a report called Project Spring about two years ago now, and the strap line is moving from cost to value. I think what I’m hoping we are seeing is more focused by marketing procurement people on the value creation rather than just the cost to serve.
I think the other thing that’s happening and is the third thing I’d have is balancing the relationship with the substance of the deal. So particularly in the kind of services world, when you’re buying services, most procurement people now recognize that having a good relationship with your agency is as important as the terms of the contract that you negotiate. and agencies need to recognize the same thing, that it is that building a relationship with all stakeholders as well as focusing on the substance of the deal, are both important. Don’t mistake that for then I can get emotional. It’s not about that. It’s about how do you build a professional relationship with procurement as well as the other stakeholders. For example, once you’ve signed the contract, make sure you’ve got quarterly business reviews in place. The QBR, and I know, Jenny, you focus on this a lot in your programs. A QBR is a great way of keeping everything on track, make sure procurements are at the table. They negotiated the contract, for goodness sake, so make sure they’re there. I think those are the three things on my mind.
Jenny Plant
Thank you so much for sharing very, very good points. It’s funny because just a quick side note, I was training someone about three years ago. I’ve been working with her ever since. And she recently came back to me, and she said, Jenny, the one thing you told me was to develop a relationship for procurement. That has been the biggest payoff for us. I’ve done a whole podcast on it with a procurement team in a pharma company, I always encourage agencies because a lot of agencies might have something to do with procurement at the beginning of winning the business, but then they don’t see them again.
Mike Lander
What a missed opportunity. What a huge, missed opportunity.
Jenny Plant
Exactly
Mike Lander
As a buyer, if I negotiate a deal with you and then I never see you again, and in six months’ time, I am sending an RFP out for some more work in marketing services. I have forgotten who you are because we did a deal six months ago. Well, you won’t be on the list. Just the cost of acquiring new business is huge. Anyway, why on earth wouldn’t you go to the people that are sending out RFPs or even to shortcut the RFP process and say to me, Mike, do you need to go to RFP? I might say, what do you mean? As an agency, you might go, we are already on your list. We have got an MSA in place, we have schedules, and we have scope of work. We actually provide this service already, so we could negotiate with you to provide that as a service without going to RFP. I breathe the sigh of relief and go under certain circumstances. Thank goodness for that. That saved me writing an RFP. I’ll build a scope of work and I’ll build out what the objectives are and the criteria and the search , we always have to but we’re not the police.
Jenny Plant
Well, exactly. If you’re not keeping that regular cadence or touch point with procurement, the agency services and business evolve, like you say. So, if I’m now offering, I don’t know, digital strategy services that we were not before, then keep the procurement person up to date with that. Similarly, I think the procurement team tends to be very plugged in with what’s happening generally with the C suite. I had an agency a little while ago where there was a change of CEO, and the agency wasn’t aware of that. All of a sudden, they were presented with an RFP to have to re-pitch for their business, which they had already forecasted. So having a relationship with procurement, it keeps you more plugged into what’s happening at a commercial level with the company. So, thank you for making that point. I think I’d much rather hear it from you, and I feel like a broken record when I say it.
Mike Lander
You seem an expert in this. By the way, do you want to find the best agency leader I’ve ever met at doing this?
Jenny Plant
Go on.
Mike Lander
Katie Howell. Katie Howell is the best agency leader I’ve ever met about engaging on a regular basis with procurement.
Jenny Plant
Really?
Mike Lander
She proactively, goes out there and meets procurement people on a regular basis, well in advance of a deal, two or three years in advance of a deal, and then when they’ve got the deal, maintain engagement with them. She’s brilliant.
Jenny Plant
Wow. So, this is from a prospecting perspective?
Mike Lander
Once you’ve got the business.
Jenny Plant
Very interesting. I’ve made a note and I’m sure her name rings a bell. I’m sure I can see her in my mind.
Mike Lander
You will have come across her.
Jenny Plant
Yeah, I’m sure I will. Mike, this has been superb. Thank you so much. I just want to be respectful of your time. The time has just gone like this. Tell me, share with the audience what you’re working on now, how people can reach you and ideally, who you want to hear from and how in terms of people you can help.
Mike Lander
So what’s going on at the moment? The biggest thing I’ve got going on, I’m always trying to do something, I’m building a sales negotiation survey tool, which is not five questions, simple answer. It’s an in depth, six-dimension assessment of agency sales negotiation skills. When that’s ready, I’ll be launching that. People can fill it in, and you get a high quality report off the back of it about how you compare to others in the marketplace and where the gaps are in your negotiation skills. So that’s one thing I’m working on. There’ll be a new podcast coming out probably in the summer, so we’re now in May 23, when we’re recording this, by about June, July, that will be launched because I’m working with the Drum on their podcast, but I’m also going to be working on my own podcast as well, so that will be coming out. Also, people can always find out more about what I do on LinkedIn. Best thing is to find me on LinkedIn. So, Mike Lander on LinkedIn, there’s always some content on there that you can look at.
Jenny Plant
You also, I mean, I hope you don’t mind, but your website currently has a really good eBook
Mike Lander
Thank you.
Jenny Platt
I downloaded it a few days ago and I thought it was fantastic.
Mike Lander
Thank you.
Jenny Plant
Can you just remind us of your website as well?
Mike Lander
Yes sure, it’s piscari.com (P-I-S for Sugar cari.com). On there is the How To Negotiate Procurement Guide, which is quite an extensive guide as a PDF. Thank you, Jenny.
Jenny Plant
It’s really, really good. We’re going to put all of that into the show notes and when you have launched the podcast in Summer and you have that sales negotiation tool ready, we can also, if you just let me know, I can put it back in the show notes.
Mike Lander
Perfect. That’d be great. Thank you. I’ve really enjoyed it.
Jenny Plant
It’s been fantastic. Thank you so much. I’ve really enjoyed it. Thank you for coming.
Mike Lander
Pleasure.
