Negotiating After "No"

PurchTips - Edition # 175 April 7, 2009

By Charles Dominick, SPSM

How Do You Respond When Your Supplier Says No?

One of the strongest negotiation techniques your supplier can use is to simply say "no." Your ability to distinguish a real "no" from a "no" used as a negotiation technique is vitally important. These tips will help you move past the first few no's and negotiate a better deal.

Shift Focus - Try to shift focus onto another item of value if you're at an impasse on a particular negotiation point. Negotiate a longer warranty period. Ask for some free products or accessories. Gain agreement on firm pricing for a longer period of time, a downward price protection clause, better lead-times, or seek greater discounts on related (or unrelated) goods or services.

Do The Math - Set emotions aside and walk your supplier through the business problem you both face. Develop a "should cost" model to determine if there is room for additional cost compression. Benchmark the offer you've received against published industry data from consultants, trade organizations, etc. Offer to analyze and help reduce supplier's upstream costs.

Paint A Picture - Sometimes suppliers need help understanding the implications of not reaching agreement. Explain the importance of your business to their bottom line. Describe what their business might look like 2 or 3 years out if they lose this deal or if the relationship is damaged. Ask how this future state would affect their personal performance review, career or compensation.

Change Players - Insisting on the involvement of a higher-level supplier representative in the negotiation might seem elementary, but many negotiators mess this one up. The trick is to find the highest level executive who would experience the greatest pain at the loss of your business. Aim too high and your pleas may not be treated as high priorities. Done correctly, your contact will help you fight within the supplier's organization.

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