A Negotiating Technique With A New Name
PurchTips - Edition # 137 October 16, 2007
By Charles Dominick, SPSM
Can This Negotiating Technique Get You Results?
When negotiating, suppliers may mention how they are different than their competitors and, therefore, better for you. They often base their difference on common problems that buyers encounter with other suppliers.
In sales, that technique is called differentiation. You can use a variation of this technique when negotiating with suppliers. We'll call it "reverse differentiation."
In using the reverse differentiation negotiation technique, you identify common problems that suppliers have with other customers. Then, when negotiations are at an impasse, you appeal to their emotions by showing how working with your company isn't as painful as working with some of their other customers.
The key is that your point(s) of differentiation must be true. If your organization has one or more of the following characteristics, you will be different than most of your suppliers' customers and can use these characteristics to "sell" your supplier on the benefit of giving you a better deal in order to earn your business.
Quick Decision Making. Some organizations take weeks or months to make a purchase decision, have it approved, and place an order. If your company moves on its decisions quickly, stating how you can help your suppliers have shorter "sales cycles" can persuade them to offer better deals when negotiating.
Prompt Paying. Some organizations take 45, 60, or more days to pay their invoices, which is costly to their suppliers. If your organization pays promptly, you can use that fact to your advantage when negotiating.
Evangelistic. Supplier marketing is more effective when their materials contain customer testimonials. But many companies do not permit their staff to offer testimonials. If your organization willingly provides testimonials, you can demonstrate that your value as a customer is higher and that the supplier giving you a better deal would be well worth it.
Low Maintenance. Some customers whittle away at supplier profits by demanding more attention than other customers in the form of requesting special procedures, customizations, or other unique attention. If you aren't a "high maintenance customer," you can mention this when negotiating to give the supplier assurance that a thinner profit margin won't be eaten away by forcing the supplier to respond to special requests.
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