Negotiation is an art, not a science. An
art because it involves human beings! With their many complex thoughts,
emotions and attitudes. All of which can and do affect the final outcome. When
negotiating via the written word, or by phone, we lose a lot of behavioural
feedback.
With the environment not so lucid and all
vendors also in a very inconsistent phase, how do you handle the negotiations
with vendors? In phone or face to face and kill the deal, either way. Or use
the tactical way of writing to them and waiting for a reply.
Frankly, the channel through which the
negotiation is conducted will affect largely the dynamics of such interaction,
will depend on the quality of communication, your degree of trust developed,
quality and amount of information to be shared, clarity of your own
position, the environment of negotiation, is
it beginning or the finishing up, your own motivation and the outcomes.
Face to face or telephone is easier and far
better if you have all information, the balance of power to the negotiation itself,
you have power to healthy and aggressive body language with the flexibility to use
positions as gestures, posture, facial expressions and a changing tone of voice
to be precise and to be loud, bold enough.
But then, don't use the phone
unless it's just a small polishing term you want to check or you are closing
out. And if PO and value are critical, the vendor is known, for sure, use writing as
first preference. You lose the skill to win on vendor points on the phone.
Especially these days.
Ensure you reflect a positive, polite
& professional tone throughout the letter. Even if you are upset -
let that come politely in the middle. If you feel the supplier cannot
accommodate your discount, then you better be diplomatic but firm and polished
outline the possible course of alternative you will take. And if you know the
technical proposal is going to come soon, and, you want to win a negotiation,
better keep time factor and write in parallel, so if the answer is negative,
you can keep the suspense of not giving any PO for few days. Silence and
not responding to email are so annoying but is also a powerful tactic if
done by conscience and deliberately to break the deadlock and force the others
to move position. And ensure you know the culture of vendors getting into organizations
through back channels, then use the police card to not let the supplier get in
touch with the technical team.
The first couple of lines start with
greeting and the first couple of lines or a paragraph of letter must
praise the vendor where required for a summary of the comprehensive
proposal and the salient features you feel to appreciate. But then going
further….......
Complete your rest of paragraph. And it’s
also prudent to touch upon the past business volume and expected business
volumes if not in rest of 2020 but in 2021
Depending upon the volume, contract period
and scales, you could mention the business split possibility %
based on this letter among three suppliers (or more) which helps build a
parameter of certain share initially for the vendor – and it’s up to you on how
to scale it up.
Further, do specific share your concern, your position and more so the budget cap or added value features (in commercial terms like incoterms, guarantees, services and life cycles, payment, shelf spaces, brand building, indemnities, etc, etc) and reflect how eagerly you would be to push their case for preference on approval. A bit of hype and a bit of reality both make sense depending on the phase, degree and environment of negotiation.
If it is a specific negotiation for further
improvement, then rest assured a figure of 10 or 15 or 20 will not be any
effective. But yes, if you are able to create the dramatics to leave the gap
including premium with an odd number such as 4 or 7 or like 13 of
16.5 and so on. Never ask for 5/10/15 % and so on. When you ask for an odd
number it shows that you have carefully evaluated the proposal vis-à-vis the
others and your own should cost in depth. If the materials or services you are
negotiating are on a low margin basis, even 1.35 or 2.65 or 3.20% is also okay.
When you do get responses, watch for the soft
action words. It’s all about the science of psychology.
Some soft words in emails that need to get
the grab are such “Our opening feedback which means that there can be more they
could adjust or make other roadways. ‘Around’ is a good word to catch attention
because it means that there is more to have.
"We could possibly consider’ meaning
they are likely to move to a better revision. The same way “its difficult” can be
pushed because it means remotely possible for making something work. and so on.
Let the vendor do know what would happen if
he will not negotiate on price – both immediate and the long term. Perhaps you
lose the current deal to let vendor win but they lose on the long term. It's all
about the touch class of your words in the communications.
Never
make a mistake of closing discussions negatively (like if you don’t agree,
we just move on to others, OR we decided to discuss no more and we have
rejected and disqualified your bid etc ) - You never know when the scales
reverse because our end users could be as volatile and irrational as ourselves
are – does not matter you agree or not, that’s not the point. The prospect of
no business in future or the potentials of large future business – both ends
need to be non-committal unless it’s a very specific phase and you are on that
stage to give away a few sliders.
Use
your intelligence when not to mark any cc. Often it is presumed that CC
is for ensuring you have written and attempted negotiation well but often
bosses. And without any cc, your degree of drama and your request for your own
survival kit may be much bigger.
Last but not least as add on to this, use
your common sense also very well to adjust and refine. Because you know
what's best. Don’t just reply, don’t just forward, mind your mindset and
logic, mind your English and the structure of it. Case by case
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