Good negotiation skills are an important part of any buyer’s toolkit. Purchasing cost reduction can be achieved by acting on 3 levers: unit price, specifications, and volumes. This paper will focus on the first lever, unit price reduction, and how to achieve it through negotiation. Many books have been written on negotiation, and there are as many negotiation techniques and ways to prepare for a negotiation as there are writers. The aim of this paper is not to propose another methodology. Instead, this paper is a look at the top 20 negotiation tips and tricks, as gathered over the years by our consulting teams in their daily interactions with clients and suppliers.
If negotiation is a game, here is how to win it.
BEFORE THE NEGOTIATION
1. On your territory – If possible, organize the negotiation in your offices, in order to control the timing, to have access to your files or colleagues, etc. If you cannot control the location, impose the date, time, etc. Do not let your opponent set all the details. The point of this is not so much in the actual control of the process, but in already starting to condition your opponent that in order to get things from you, they will have to give as well.
2. Conditioning – Condition your opponents well before the negotiation, by sending them key messages about your objectives, the context, etc. Make sure that your entire organization delivers the same messages. An opponent who receives strong, coherent messages from every part of your organization well before the negotiation will have a tendency to lower their initial asks.
3. Control the room – If you can, plan the positions around the table in advance. Don’t leave it to chance, and don’t give your opponents the opportunity to choose. There is nothing worse than having to hide your notes because a member of the opposing team is sat right next to you.
CONCESSIONS
4. Nothing for nothing – If you give something, always make it conditional on getting something in return, no matter how trivial. Remember : “If you do this, then I’ll do that”.
5. Rule of halves – When making a concession, most people (in particular inexperienced negotiators) halve the distance between their first bid and their walkaway point, and then continue to halve that distance. Test it, and use it to your advantage to determine your opponents’ break point. If your opponent starts at 100, and their first concession is 90, you can bet that their walk-away point is 80, and that their next concession will be 85.
6. Keep asking until they say no – It is tempting to think that we have got “enough”, but why stop there? Often we have nothing Negotiation & cost reduction – the 20 winning techniques
to lose and could gain more than we expected.
7. Quantify the demands – For example, if your opponent says your price is too high, don’t offer anything until he tells you by how much it is too high.
8. Thank and bank – As soon as an offer is made by the other party, thank them and “bank it”, i.e. continue as if the concession had been made. Never ignore or save a concession for later.
9. Keep the doors open – Avoid making your agreements firm for as long as possible, and keep the doors open: make agreements in principle until you have agreement on everything. Keep reminding your opponent that you haven’t agreed on anything until you have agreed on everything.
10. Go back to the table – If necessary, put back on the table concessions or agreements made previously. To do so, find a good reason: a new request on their part, or any change in their situation.
DURING THE NEGOTIATION
11. Give yourself room to negotiate – Don’t get too close too soon to your walkaway point. Start with small concessions (NOT half the distance between your first bid and your walk-away point). Make them work to change your position, which will give you the opportunity to get concessions.
12. Secret code – When negotiating in a team, provide a code for communicating (e.g., when the speaker has to change, or stop talking).
13. Theatre – Have a personal drama element that you can use to emphasize a particularly strong point. For example, remove your glasses or watch. Not only does this buy you time to think, but it also warns your opponent that something important is about to be said.
14. Time out – If things don’t go as planned, or you need to coordinate with your colleagues, inform your opponents that you are taking a time out. Be clear about the time frame and leave the room. It is better to take a 5 minute break to take stock and realign, than try to wing it with an uncoordinated approach.
15. Questions for clarification – Insist on getting to the bare facts and get rid of any generalisations, opinions, feelings, interpretations, etc. For example: “We are very competitive on this product.” “Really? Competitive with whom? By how much?”
16. Read between the lines – Listen carefully to the words used and read between the lines. For example “I really can’t go any lower, I really need around 100 euros” means… that the price can go below 100 euros…
17. “We” not “I” – Using “I” when you negotiate makes you the only obstacle to get around. Conversely, using “we” creates the illusion of a higher authority, which will have to be convinced as well.
18. Be positive, use “and” or “or”, not “but” – A positive attitude is contagious and helps to create a bond with the other party. To do this, use the word “and”, or “or” to build on what your opponent says, rather than “but”, which is negative and shuts the door on what has just been said.
19. Do not form an oral contract – Be careful about the words you use so as not to get into an oral contract. Make your offers conditional on acceptance of the final contract, and regularly make the point that you are not accepting anything but simply exploring different proposals.Negotiation is a process, not an event. Regardless of how well equipped with tips and tricks you are, the success of the one-ortwo-hour negotiating event will depend on the thoroughness of your preparation. Enabling Procurement’s NegoPlan approach and NegoBox service enable our clients to take a structured, all-encompassing approach to negotiation planning.
