16 Negotiating tactics your suppliers don’t want you to know
1. The pre-negotiation checklist.
Always prepare for every negotiation by completing this checklist.
[ ] Your suppliers existing rates
[ ] Their competitors rates
[ ] What colleagues in other companies or your trade association pay for similar
[ ] How much the product/service costs you on average per year
[ ] What do you want to pay?
[ ] What concessions could you legitimately ask for?
[ ] What concessions are you prepared to trade in return?
[ ] What is your ideal settlement?
[ ] What is your bottom-line settlement?
[ ] What is unacceptable?
[ ] What is your best opening/demand?
[ ] What are your justifications?
[ ] How can you support your strongest demand?
[ ] How can you trade/protect your vulnerable areas?
Now run through each of the questions above from your suppliers point of view. What objections will you encounter? How will you answer them?
2. Come out fighting
Here’s a technique that immediately knocks your supplier off guard by not following a logical sequence of demands i.e. starting with the main demand first.
a) First make one fairly substantial demand
b) Then follow it with as many lesser demands as you reasonably can, safe in the knowledge that they can be traded for later if necessary
c) While the supplier is wrestling with their response to (a) and (b), hit them with your most important (to you) demand.
3. Take notes throughout
Or better still, have someone take notes for you. Not only does this help you review the agreement afterwards – it lets your supplier know that you are keeping tabs on the discussion.
Every time a concession is made, summarise it. Get the supplier to verbally agree to your summary. This avoids misunderstanding (real or feigned) later.
5. Play one supplier off against the other
Use with caution. Check out the terms offered by a competitor – what is their best offer to you? Then pitch into the first supplier with a straight demand below the competitors best price) but not unreasonably lower – or they’ll call your bluff).
6. Cast a shadow
Gently cast doubt on the supplying companies ability. Explore worse-case scenarios with the supplier “What would you do if ………. how can you assure me that ………. how would you cope if ………. what about”. The supplier will fear losing credibility and will be even keener to prove that they can serve you well.
7. Play on your advantages
If you have a highly respected payment reputation – be sure they know it.
If you are a big name – say that you would be happy to give them permission to mention that you are a customer if you clinch the deal.
Do you have influence over others to switch supplier or do you have contact that your supplier would dearly love? Offer them as bait.
8. Try a little TLC
Many sales people don’t get the perks and expense accounts that they used to. Take your supplier by surprise and take them for a meal, introduce them to your staff like a valued client, thank them for their time – be nice to them. Your effort will be repaid by their willingness to concede to demands that they might not have otherwise.
9. Delay….. Delay….. Delay
When you’re being chased in response to a proposal or quotation, delay giving your
reaction immediately. Let the supplier do the chasing. Have their phone call returned with “Mrs Henderson hasn’t had the chance to review your proposal yet – she’s in a meeting ………. please phone back on Tuesday”. Follow this tactic just long enough to make them nervous, but not long enough to make them lose patience. The change in tactic will confuse them.
10. When they say “That’s my final price”
You say “OK. Let’s stop on that price for a moment. Let’s take a look at the actual terms of our agreement (i.e. delivery, packaging, transport, storage, extra stock for reduced price). You will have covered these in your pre-negotiation checklist.
11. When they say “I can’t do it”
You say “Look – give me the terms I’m looking for on this order and I won’t forget it. You can be sure I’ll be placing more business your way in the future”.
12. Save money on bulk orders
Considerable money can be saved by estimating requirements over a 1 to 2 year period, even when the initial capital investment, storage and handling costs are taken into account. Save up to 50% in this way.
13. Negotiate yearly contracts
If you order a product or service regularly, ask for a fixed rate set for a year at a time. You should aim to save at least 30% over the standard costs in this way.
14. Something for nothing
Whenever you ask for a quote (always get it in writing), ask for the ‘stock’ or most
basic price first. In the case of printing – ask for the print costs in one colour print first. When you have reviewed the price ask them for something extra to secure the job – like 2/4 colour print for the cost of 1 colour, or an extra 5,000 copies, or to print another item 2-up in the same colour at the same time, or a high paper grade or finish.
15. At the 11th Hour
The negotiation has finally come to an end. But don’t shake hands or sign just yet. Ask to “sleep on it” overnight and close the meeting. The next day put the decision off another day. Then get together with the supplier and say something like “look, I’m still nervous about signing over all this money. I need further assurance ………. what about………. (re-introduce a previously rejected demand). Or ask for a further 1-2% discount. The supplier may be so cheesed off to see the hours of negotiating apparently move back to square one, they may well agree!
16. Longer credit = a better deal
Here’s a tactic you don’t even discuss: whatever their standard trading terms are, put your own on your purchase order or confirmation of order (make sure that you get in last then your terms are the binding ones). These could include 60 or 90 days credit (from the date of delivery, not order). Free packing/delivery, even a further discount for early payment. Pay up when you say you will though, or this tactic will lose effect, and you will lose credibility.