GPI 218 – Sell to your vendors. Give sales personnel your entire AP vendor list for ‘sales leads’.

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Has your sales department ever asked for a vendor listing to generate sales leads?  They probably have not thought of studying the companies from where you buy goods and services but they should.  There are sales opportunities in the vendor list from which your company buys; someone has to realize this and act upon it.

Sales people should sell to your vendors.  Give the vendor listing to the sales department and ask them to look for potential clients or companies with ties to your current customers.  Many companies are greatly diversified, so instruct them to look for connections.  Line up the vendors based upon year-to-date purchases and last year’s total dollars.  You will have a far greater chance of selling to a firm in the top ten rather than the bottom ten because of the sheer dollar volume.  Remind the vendors of the annual amount you are buying and ask for their help.  They will think of something for you to bid if you are professional, pleasant and fully aware of the dollar amount involved with their business. Be armed with purchasing dollar history and you will make good progress getting their attention.

Why sell to vendors? Because they are awaiting willing market.  Here are a number of reasons why this analysis by the sales department scouring for potential sales should be done on a regular basis throughout the year.

Reasons to sell to your vendors:

  1. Value your business.  Vendors being paid by you do not want to lose the business so they are more likely to listen to a sales pitch.  You have bought from them, owed them money and paid your bills on a regular basis.  Take advantage of this.  You have shown them in the past you are good for payment so you have their attention, respect and trust.  They never had to sue you for payment and they know you, plus your purchases are rising.  This is 50% of the relationship that one needs in order to sell anything – a common connection.
  2. Offsetting AP and AR is easy.  Vendors that can become customers also may appreciate the ability to offset AP invoices with AR invoices so they do not have to issue checks.  Accounting people and banking people do not like this but of course, they are not in sales.  As long as offsets are done cleanly and both parties agree to the details, there are auditable records and it is considered by both parties as desirable, so be it.
  3. Vendor inside sales personnel own lots of clout.  The vendor’s sales people have more clout than their purchasing people so remember who will win on this proposal.
  4. Target big dollar vendors – more likely to buy your products.  Look at the biggest dollar vendors.  They have the most to lose by not forcing their purchasing department to consider buying from you.  You have leverage here so focus on the top of the vendor list first (high dollars), then work your way down.  When you tell the vendors that their competitors have these crossover possibilities and you want to do the same with them, they will start working for you.
  5. Analyze vendors as customers every quarter.  Do this analysis minimally on a quarterly basis.  Your own purchasing department is changing vendors and looking for better pricing all of the time, so new names will show up every few months.  Be prepared to research more selling possibilities with these new vendors on the list.
  6. A vendor may have related companies.  If the vendor does not purchase your product or service, do they have sister divisions or profit centers or associated companies in their firm that might?  Probe this as much as possible.  Many of these companies are large and some of their people do not know the sister divisions that might be right for your company.  Ask your representatives to ask their bosses.
  7. A vendor may have influence on its own vendors.  Some vendors are so large, they can encourage or dictate to their customers and vendors who to deal with.  This is worth a try, doubtful at best, but worth asking at least once.

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