When preparing for a negotiation, it is common to identify the issues to be negotiated, decide on negotiating tactics to use on your supplier, think through what your supplier may say and practice saying the words you’ll use during the negotiation.
Those are all necessary components of negotiation preparation.
But, they are not enough. To truly reach your potential in a negotiation you need to understand some key things about your supplier. This article will focus on three major things you need to know about your supplier before beginning a negotiation.
How do you get to know them? You can research your supplier and/or you could – get this – ask your supplier contact!
If you need to ask your supplier contact, you would ideally ask him/her in person, as you’re most likely to get an honest answer. Learning these things can be a negotiation in itself. And, communicating in writing during a negotiation allows your counterpart too much time to think and provide answers intended to influence you rather than answers intended to give you exactly the information you need to influence your counterpart!
Here is the first of the things you need to know about your supplier.
What is your supplier’s priority?
When many people think of sales, they think that the priority of a sales organization is to get as high a monetary volume of sales as possible, irrespective of anything else.
And, yes, sometimes that’s true. But, other times, it’s not. Some sales organization’s place a higher priority on gross profit. Others’ priority may be increasing market share or landing a well-known client. You cannot reach your potential in negotiating with a supplier unless you know what their priority is.
Knowing a supplier’s priority helps you determine how flexible a supplier is likely to be when a supplier is bluffing and what other concessions you can pursue when a supplier no longer concedes to your requests for improvements on certain terms like the price.
Two other specific things you need to learn about your supplier prior to negotiating are:
Who is the decision-maker?
Your negotiation strategy can involve persuading your counterpart to change his/her mind, giving your supplier the ammunition necessary to lobby a behind-the-scenes decision-maker to change his/her mind, or demanding to deal directly with the decision-maker. If you don’t know who the decision-maker is, you can’t know which strategy to use. And, if you use the wrong strategy, you aren’t likely to succeed.
What deadlines does your supplier have?
Deadlines are powerful in negotiation. Many times, a party to a negotiation is willing to concede on something they long defended simply to conclude the negotiation before a deadline. You can use this to your advantage. But only if you know the deadline that your supplier needs to meet!
Situations that may drive supplier deadlines include things like: Wanting to meet a sales quota for a month, hoping to close a big deal by the end of a quarter so that executives can report it on a quarterly conference call with investors, desiring to begin production before vacation season disrupts the number of production employees available to work on your order and so forth.
As you can now understand, there can be many reasons why a supplier may want to conclude a deal sooner rather than later. There’s also the possibility that your organization may be in more of a hurry than the supplier. Knowing deadlines can feed brilliantly into your negotiation strategy.
I know that some of you reading this article have never probed a supplier for the valuable information discussed so far. So, we will provide sample questions you can ask your supplier to extract this information.
Again, I must emphasize that you should ask these questions in person, not in writing. Communicating in writing during a negotiation gives your supplier too much time to prepare answers intended to influence you rather than providing you with the truth! These questions are only examples to be used as a guide and are not mandatory. Use your own judgment to decide on questions – these ones or your own – that are appropriate for your specific situation.
- What are your organization’s sales goals?
- What is your organization’s #1 sales priority?
- How is your sales performance measured?
- What are the benefits of accomplishing your sales goal?
- What are the consequences of failing to accomplish your sales goal?
- If we discuss some terms, who decide if they are acceptable to your organization?
- How will the details of our discussions reach the decision-maker?
- How likely is it that we can pull the decision-maker into the discussion if we come across an opportunity that you are not authorized to agree to?
- Are there any significant dates related to changes in your production capacity?
- How often do you have to internally report your sales numbers?
- Is there a particular date by which you’d like to get this deal done? Why?