You’re sabotaging your own negotiations – here’s how
Are you about to shoot yourself in the foot at your next negotiation?
Negotiation expert Natalie Reynolds points out three ways it can quickly go wrong for you.
When it comes to essential procurement skills, there aren’t many that are more important than the art of negotiation.
After all, it’s one of the key things that organisations expect of the procurement function as a whole: to be able to negotiate the best supplier deals, both commercially and in the long term.
Put simply, it’s not something anyone in procurement can afford to fail at.
Yet sometimes, we still do.
As negotiation expert Natalie Reynolds helpfully pointed out to us in a blockbuster session for our 2022 BRAVO Women in Procurement Program, there’s actually a number of critical ways that procurement professionals often sabotage their own negotiations.
Here are some insights from Natalie’s eye-opening session. Insights from this article also include excerpts from Natalie’s book, We Have a Deal.
Sabotage 1: Not anchoring
Natalie has run countless workshops on negotiation, and one thing she sees time and time again, is procurement professionals who ‘wait’ for the other negotiating party, which in most cases is a supplier, to make the first offer.
This typically takes many forms, from waiting for the supplier to make an offer or proposal to letting the supplier name their price.
This approach, however, is a fundamental failure when it comes to negotiation.
Of this, Natalie says, “Making the first offer in negotiation is one of the best understood and most compelling tactics to help you end up with a deal that is preferable to you.
“The volume and quality of research on this point is huge…the very simple reason why going first in a negotiation can be so powerful is because of something called ‘anchoring’.”
Anchoring, Natalie explains, is a cognitive bias that sees even the smartest people heavily influenced by information that is put first on the table.
When it comes to procurement, this applies to almost any type of information, from negotiating on price to negotiating payment terms.
By going first, Natalie says, you are essentially anchoring the other party to your offer, as it becomes the focus of their attention.
Anchoring can lead to a whole host of benefits, including making you far more likely to walk away with your preferred result.
Sabotage 2: Waiting for an offer and then going on about it
One of the many reasons that procurement professionals don’t anchor, Natalie believes, is because they want to wait to hear what a supplier will give before them before they respond.
But that isn’t the point of a negotiation, Natalie says.
By ‘waiting and seeing’, you are essentially waiting for a supplier to set boundaries that have been designed from their perspective.
Instead, you should always do your research and know what you are prepared to pay, and what else you need for the deal to be acceptable to you.
A related sabotage that Natalie sees often is that when procurement professionals do wait to see what a supplier will give, they are often unhappy with the proposal and as such, go on and on about it.
Natalie has seen many iterations of this, including procurement professionals simply repeating back a proposal (for example, saying ‘How much? THAT much?’ on repeat), and then protesting every part of an offer.
This behaviour is largely pointless, Natalie believes. She uses an interesting analogy to describe it:
“I view [an initial inferior proposal] as a deflated balloon. At the point when it’s put on the negotiation table, it’s pretty empty.
“However, because it’s the only thing currently on the table, it’s the thing that all parties focus on.”
Sabotage 3: Asking a supplier to explain their proposal
In procurement, whenever we receive a proposal that doesn’t meet our expectations, it follows that we’d ask the supplier in question to explain themselves.
This usually serves two purposes: firstly, we want to understand why it doesn’t meet our expectations, and secondly, secretly, we’re hoping that the supplier will see the error of their ways and do what’s required to make us happy.
Unfortunately though, Natalie says this very rarely happens.
“By the time [the supplier] has arrived at the negotiating table, they’ve already invested a lot of time, energy, and enthusiasm into their position. Of course, they will be able to explain themselves, but what’s the point if you’re not going to agree to their proposal?”
Instead of doing this, Natalie recommends simply being upfront that you can’t agree to what they’re proposing.
Are you sabotaging your own negotiations? Learn more from Natalie, and many other procurement experts globally, by joining our BRAVO Women in Leadership Program. Our 2023 program is starting soon – join now.
This article was originally published on May 12, 2022.
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