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What Are Your Suppliers Thinking When Negotiating With You?
There are several negotiating principles for purchasing managers.
From the supplier's side, "the key to negotiation is that you have
to start with a pretty wide spread," Knudsen shares. "If my goal is
to sell something for $20 a case and I open at $20, we don't have
negotiation room. Most sales professionals have something in their
'back pocket'."
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So what can compel a salesperson to offer the better deal in her
"back pocket?" The goal of many salespeople is to earn more and
work less. That goal is best accomplished by working with
customers with long-term relationship potential. But that
doesn't mean that a purchasing manager's only
necessary negotiating tactic is to promise a long-term
relationship.
Salespeople are trained to identify whether a purchasing
negotiator is serious or bluffing.
Before negotiating, they consider the states of the purchaser's
company and the industry. While negotiating, they evaluate the
body language of the purchasing |
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manager.
Certain actions may signal a dishonest representation, such as:
* Keeping the hand over the mouth
* Scratching the nose
* Failing to make eye contact
There are really two lessons to be learned with regard to body
language:
A. The purchasing manager must be aware of her mannerisms, as
they may be being interpreted by the salesperson; and
B. The purchasing manager should also observe the salesperson's
body language
"One of the things that I coach clients on is that you should
always take someone into the sales call with you because they're
observing while you're trying to present," explains Knudsen.
"Most purchasing managers try to (negotiate) one-on-one or
one-on-two" and, therefore, fail to be as effective at observing
the supplier's body language.
To Knudsen, an indicator that the purchasing manager is
interested in a long-term relationship is the manner in which
the purchasing manager communicates. I pointed out that
purchasing managers often open a sales call or a negotiating
session with a phrase like "You have five minutes, what do you
got?" Knudsen identified that as one of many "red flags" that
positions the purchasing manager as a "short timer" and compels
the salesperson to withhold better deals. |
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Knudsen acknowledges that one of the salesperson's objectives is to
get the purchasing manager to talk, but also says "Most purchasing
managers should try to get the salesperson to talk more." By
learning about a salesperson's objectives, the purchasing manager
can uncover opportunities for good deals that the supplier is
withholding for potential long-term relationships or "reference
accounts." Sometimes, salespeople are sent into a meeting with the
instructions: "Price is not an issue. Get the account." But
purchasing managers risk never discovering that if they don't foster
an open dialogue.
Purchasing managers are often reluctant to share information,
and Knudsen sees that as a barrier to their success in
negotiating. |
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He says that the sharing of information is often important for a
salesperson to be able to go back to her management for approval
to offer a better deal.
I agree, but I also feel that purchasing managers need to be
proficient at distinguishing good-intentioned salespeople from
unscrupulous ones who are just seeking a negotiating
advantage. So, no single rule applies to the sharing of information
in a negotiating situation. The purchasing manager has to make the
decision that is right for the specific circumstances.
More open communication may make some purchasing managers nervous as
some feel that developing a relationship plays to the salesperson's
advantage and to the purchasing manager's disadvantage. That does
not have to be the case.
By communicating openly, the purchasing manager can learn the
objectives of both the salesperson and the supplier and how a
win-win result can be achieved. And a relationship-building demeanor
has many times influenced Knudsen to believe in a higher probability
of a long-term relationship which gave him the "ammunition to go
back to my boss or my boss' boss or the company to help (the
purchasing manager's company)."
So, to summarize the negotiating principles that arose from my
discussion with Mr. Knudsen:
1. Salespeople often enter negotiating situations with available
improvements in their "back pockets."
2. A significant motivator for salespeople to offer improvements is
the potential for a long-term relationship.
3. Skilled salespeople evaluate your body language as well as your
openness and friendliness in communicating in determining the
likelihood of a long-term relationship and, therefore, how much
improvement to make to their offers.
4. Purchasing managers should observe, or have a colleague observe,
suppliers' body language in negotiating situations.
5. By asking questions and getting a salesperson to talk, you may
uncover available opportunities for better deals.
6. Sharing information is critical to developing the long-term
relationships that result in good deals. But you have to be careful
to distinguish good-intentioned sales people from unscrupulous ones
and share or withhold information as dictated by the specific
situation.
7. The belief that developing a relationship plays to the
salesperson's advantage and to the purchasing manager's disadvantage
is a myth. By having an open relationship, the purchasing manager
can learn a lot about the objectives of the salesperson and the
supplier and can be better positioned to achieve better deals and a
win-win situation.
8. A relationship-building demeanor on your part may compel the
salesperson to seek a better deal from management. |
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