Time for LSPs to Stop Playing Hide and Seek with Procurement
Language service providers frequently go out of their way to avoid involving procurement teams at client companies or prospects. They fear that working through such groups will be fraught with delays and challenges, especially if their staff knows nothing about language services or forces providers to lower rates beyond their comfort level.
LSPs typically prefer to work with the business buyers within the organization – those who require a supplier’s services directly, such as a marketing team that needs to translate a campaign for a new product or an event planner who must schedule interpreters. This approach initially focuses on finding a business buyer with immediate needs and later attempts to penetrate the organization to cross-sell services to other departments. Alas, LSP teams often hit roadblocks and struggle to expand past their main point of contact. If they do succeed, the resulting gains are often small, short-term contracts. Even worse, when their main contact leaves the company or changes responsibilities, they may lose the account altogether.
Selling to procurement teams at buy-side organizations forces LSPs to step up. After all, procurement teams are made up of professionals dedicated to sourcing. They have high expectations and are usually immune to sales pitches. Instead they seek proof that potential vendors meet a set of criteria identified as important to their company, which means that LSPs need quantifiable data and a proven track record.
Why do organizations involve procurement teams? They exist to make sure that the enterprise buys from the best suppliers: ones that have the potential to be partners for years to come. They ensure that the company pays a fair and standard price for good quality, reliable, and timely services and products. They provide their expertise in negotiation and supplier management so that the business buyers can carry on with what they do best: preparing marketing campaigns, developing products, and supporting customers.
Procurement teams formalize the purchasing function and collaborate closely with business buyers and other teams, including finance and legal. They rely on a variety of tools to document requirements and agreements. Amongst the most common ones LSPs encounter are:
- Request for proposal (RFP): invitation for one or more suppliers to tender a bid for a service or product engagement;
Master services agreement (MSA): contractual definition of the engagement between the supplier and the company that governs the relationship;
- Service level agreement (SLA): definition of agreed-upon requirements for service such as support responsiveness and delivery time;
- Preferred pricing agreement (PPA): definition of prices for each service available from the supplier, which enables vendors to offer discounts but does not let them increase prices;
- Purchase order (PO): form that gives the authority for a supplier to begin work on a single specified project based on a defined budget and payment schedule.
Despite the challenges of formal procurement processes, savvy LSP sales teams understand the importance of collaborating with procurement teams for the sake of achieving successful long-term partnerships with large clients. Even if the new prospect claims that global procurement doesn’t need to be involved for the first small project, they learn how to involve and manage the relationship with the procurement team – before the initial engagement, during requests for proposals or tenders, and during the course of the life of the account. The advantage for LSPs is that contracts obtained through procurement or RFPs tend to be almost twice as large – and of longer duration than those that LSPs get through other channels.
CSA Research recently published a report with actionable insights on how to develop a strong and profitable relationship with global procurement people. We cover techniques to involve, negotiate with, and pitch to procurement teams and manage accounts when procurement oversees the relationship.
The global procurement team is LSPs’ doorway to more business and greater stability in revenue streams. It provides the structure that allows marketing, product development, support, and other internal organizations to work with them. Time and again, procurement will make vendors jump through hoops and over hurdles to prove that it can trust you to be a reliable supplier for business buyers. However, the potential prize is worth the time and effort. LSPs shouldn’t hide from procurement teams: They should instead proactively seek them out.
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