How to use the “funder” in negotiations

In major sales, a supplier’s sales person will try to identify the type of buyer they are dealing with. In most major procurement activities there are at least five buying influences.
1. The funder. Their focus is price, performance and return on investment (ROI)
2.The user. This is someone who will actually use the product or service. Their focus is on making their job easier.
3. The champion for the purchase. This individual may advocate the purchase as part of solving a problem or improving performance. Their focus is on making the problem go away or getting improvements
4.The technical influence. They can have veto power over a decision on technical grounds. Their focus is on the technical fit of the purchase
5.The procurement person.

For the sales person to be successful they need to know who will be making the decision and how to focus on them, as each will be looking for different results. My preference is to always keep “the funder” away from the sales people until I want to involve them. The reason for that is in the supplier’s dealing with the users, the champion or the technical influence, the supplier will begin to form an opinion about how they perceive their and other suppliers chances of getting the business. The more they know you need or want them the less competitive they feel they need to be. This has a negative impact on the procurement person’s ability to negotiate price.

This is where “the funder” can be used to assist in the negotiation of the price and can help level the playing field. While a supplier may know that they have a solution that is preferred against other suppliers, what they don’t know is all the other problems or investments “the funder” has to consider in terms of whether to fund this purchase. “The funder” will look upon the purchase from a strictly financial results perspective. How does it fit within their available budget? How does it compare with all the other investments they need to make? What is the ROI from this purchase versus other investments?

“The funder” can send the message that if the supplier wants to make the sale, and have him or her invest in solving this problem versus other investments they need to make, the supplier needs to provide them with a better ROI. To improve the ROI the supplier has only two options and both of them are good for the buyer. They can provide more at the same price, such as extended warranty or other services or they can reduce the price. When a buyer tells a supplier they need to lower their price the supplier knows that’s the buyer’s job and they may still not lose the business if everyone else on the decision team wants that solution. When the funder tells a supplier they need to improve their ROI or risk losing the sale it’s a different message. If the funder doesn’t agree, the odds are high that they will lose the sale.