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09 Jul 2018 | Filed under: Procurement, Video

Making Business Buying Decisions

Hello I’m Paul Strachan and I operate a registered office of the Auditel network, I work with organisations of all sizes to help them become more profitable, improve their efficiencies and help them in time to become more productive.

It’s been said, that before making any business buying decisions, make sure that you know what you want to achieve from the outset.

Sometimes when I’m engaged by a client it’s because they’ve had a bad experience with the supplier.

To give you an example of that, I once worked with a client who had contracted with an energy supplier and during the contract period they’d received no bill, no payments have been taken from an account, and the supplier had given them no resolution to that situation. Totally unsatisfactory from the 2-year contract that was in place.

Recently I read an article written by an executive director of an IT services company in the States, and I can remember when I’d read it thinking – that makes so much sense, and so much of that is true, so I thought I’d share it with you today.

The analogy that he used was that there are two ways to join a piece of wood, you might use a hammer and nail or a screw and screwdriver, glue them together or simply clamp them.

If you were framing the walls when building your house you would probably use a nail gun because it’s quick, it doesn’t matter how it looks in the end, and it’s the most efficient tool for the job

Likewise if you were making a china cabinet, you would glue the bits and pieces together and use small screws through countersunk holes to achieve the best results.

Well, it’s the same thing when you’re negotiating a deal, and which method you choose is dependent on the situation. The simple question from the outset would be:

What do I want to achieve?

If you are at a stop sign, or waiting to get in a lift, there would be no “Let’s get to know each other first” before one of you made the first move. The goal is expediency and you just get on quickly and do that.

If you are planning a holiday with your partner, because your goal is relationship, you’ll hopefully end up going to the same destination.

If you were buying a car, there’s no relationship in place, the dealership is looking to hold off giving you any discounts for as long as they possibly can, but you’re looking to drive down the price. Now it may be that the dealership isn’t interested in a relationship either, but because the the goal is price eventually you get there.

When it’s large business agreements, you need to be able to combine the substance of the agreement, along with the relationship for the optimal outcome.

If one side is trying to drive the other one down in price to win, then ultimately both sides are going to lose.

And when it’s a multi-year agreement, where the goal is success, you need to get in, install the system, improve the quality, and then the cost is driven out of the total operation. If that engagement fails, no one asks, “Well, did you get a good price?

To go back to the china cabinet analogy, if you were making that of pine and using a nail gun, nobody’s going to come along at the end and say ‘’That looks fantastic, and I’m happy to have that cabinet in my dining room.’’

So with complex business engagements, nobody will be satisfied with cheap and fast, because you’re going to end up with not very good.

So I would urge you to look at your decision-making process, and if the cheapest option seems like the best, just make sure that you’re taking stock of what your goal was from the outset.

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