Your Most Important Negotiation Body Part
Have You Leveraged What's Important In Negotiation?
PurchTips Edition #379
By Charles Dominick, SPSM, SPSM2, SPSM3
What are the most important things to remember as a procurement negotiator? How about these three things?
#1 – Your Most Important Negotiation Resource. Sales organizations know that buyers are crazy busy and under aggressive deadlines. If they have patience and know their advantages in the market, they can leverage that when negotiating. They can propose prices that are higher than their true minimums and wait for you to run out of your most important negotiation resource: time. Conversely, if you can negotiate without imminent internal deadlines, you can leverage time. To be able to come back daily and insist on a firm low price without conceding to “split the difference,” you show the resolve necessary to convince suppliers to agree to their least acceptable alternative.
#2 – Your Most Important Negotiation Body Part. Negotiation techniques generally involve knowing what to say. As such, you may think that your mouth is your most important negotiation body part. But it’s not. What is? Your feet! If you are willing to “walk away” from discussions with the supplier if they don’t accept your terms, it enables you to pressure the supplier to accept a better deal than they usually agree to. If the supplier feels that it will either have to accept a buyer-friendly deal or not get the business, the likelihood of you being successful in that negotiation is higher. In many negotiations, your aim should be to make the supplier feel like you are one unproductive discussion away from moving on.
#3 – Your Most Important Negotiation Realization. Some sales professionals don’t have the authority to grant you the terms that you want. Even VP’s. And sometimes even if you threaten to use your most important negotiation body part! Unless you are dealing with a supplier’s owner, your sales counterpart will likely have to internally justify – to owners, officers, and/or auditors – why s/he gave you that record-low price you negotiated. They may actually want to agree to your terms. But some simply can’t without some documentation to protect themselves. In such cases, arguing won’t work. You must come to an important realization: you need to help sales negotiators help you. You do so by providing ammunition like an expertly prepared should cost model or a market price index. In some situations, a reverse auction – where suppliers see live market pricing or their rank versus competitors – can offer the most powerful form of ammunition.
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