Every procurement professional has a special bag of tricks when negotiating– let’s see if you recognise these seven tips from experts in the field…
The benefits of countless hours of negotiation experiences is that you know what you should be doing more of and what to stop doing. We discover the key traits and tools that make us perform better and are better armed for our next negotiation.
Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning interviewed seven procurement leaders to find out their favourite negotiation trick that played a key part in their business success.
1. Making the first proposal right away
I like to come to the negotiation table well prepared and well-aware of the market alternatives. Making the first proposal allows me to anchor conditions to a level close to the bottom of the market offer, immediately reducing the amplitude of the BATNA of my counterpart. Then I try to improve the conditions that are more valuable for me by making and requesting mutual concessions.
Francesco Lucchetta, Director Strategic Supply – Pentair
2. Preparation, Target, Value
I make sure I follow these three steps at the starting point in any negotiation where I am leading. The first is undoubtedly being well prepared. Secondly, to have a clear understanding of the desired outcome with a predefined “target range”, and thirdly, to fully understand the “value” of the business in the context of the potential suppliers being considered.
Les Ball, Chief Procurement Officer, ABB Motors and Generators
3. Profile your counterpart
Understand whom you face before negotiating! I use initial negotiation meetings to pique the interest the person I’m negotiating with – letting them discover all the potential benefits of working with my company. Then I encourage the speaker to talk as much as possible whilst showing genuine interest in their activities. I try to understand the way they work, their objectives and challenges. Having key objectives clearly in mind, I can better understand where our common interests are and how to shape the deal accordingly. From this moment onwards, I consider it the precise point where the negotiation starts.
Olivier Cachat Chief Procurement Officer, IWG
4. Asking yourself the right questions
It depends on the scenario but for mepersonally, negotiation always starts from knowing your position versus the market. You need to ask yourself ‘what you need to achieve’ and ‘what is the nature of the parties and the cultures you are engaging with’. Nothing beats preparation and being able to explain ‘what you need, why you need it and what is in it for the other party’. My go-to-guide for knowing the best methods in discussions are those from ‘Getting to Yes’ and its methods of principle negotiation. Be firm on your expectations, be open how to get there.
Jon Hatfield, Director Global Supply Management, PPG
5. Do your homework!
Preparation is the essence of a successful negotiation. Knowing your targets, your limits, and your BATNA is extremely important however it is useless if you fail to understand the other party. Put yourself in their shoes to know what they are looking for and how they would conduct research about your company. Do they really need your business? Are they looking for volume, for margin, for market share or for a combination of these? With these insights you will be able to drive and steer the negotiation to your preferences.
Christophe Schmitt, Head of Strategic Supplies, Omya
6. Make them love your vision and strategy
My preferred technique is to make the strategy attractive to the supplier and develop a common vision. Once the supplier is onboard, you can design an agreement in a very favourable direction.
Fabrice Hurel, Director Global Indirect Sourcing, Emerson
7. Questions, Questions, Questions
Asking questions, particularly the ones carefully prepared for in advance. I recall a negotiation with a professional services provider where the negotiation lasted for 3.5 hours. They started the negotiation feeling very confident about winning the business. After two hours of thought-provoking questions, they decided to substantially reduce their prices and ambitions. At the end, we reached a satisfactory agreement for both parties (good for them, great for us!)
Giuseppe Conti, Founder and Managing Partner, Conti Advanced Business Learning
The following answers were collected by Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning (www.cabl.ch), a consulting firm that specialises in negotiation & influencing. This article is part of a series aimed at collecting real-life negotiation experiences from Procurement executives.
Check out Part One of this series: Seven Negotiation Fails We’ve All Experienced