Negotiation is a skill we all use. Whether it’s in the workplace, at home, with friends, or even way back when we were in the playground. When you break it down, negotiation is persuading and influencing somebody else to agree to something mainly on your terms.
Experienced negotiators will know how to change the direction of another person’s thoughts in any context. But the way they approach and carry out a negotiation will depend on the ‘business’ environment.
Experienced negotiators will know how to change the direction of another person’s thoughts in any context. But the way they approach and carry out a negotiation will depend on the ‘business’ environment.
When I was in London recently, I visited a market selling all kinds of food and drink. Sellers were shouting out their prices to entice customers to their stalls so they could sell them their wares. You may have heard people say ‘everything is negotiable’, but where to negotiate is key. It is more usual to enter into negotiations in a marketplace than in places like Harrods or John Lewis. Similarly, we often take the price offered to us as a given. We think we should either accept it or walk away.
Procurement professionals lose many opportunities this way. They just accept the first offer made to them. Why is this? Maybe they don’t have the experience or knowledge to negotiate. Maybe it’s a cultural or confidence thing. Maybe it’s down to internal policy constraints like UK public procurement. Or maybe they just don’t have the time.
Whatever it is, being aware that there is an opportunity to negotiate is always the first step.
Back to my market experience...
I wanted to buy some spices to take home. I wandered around the market and noticed a number of stalls were selling similar spices. I noted their prices and approached one of the stalls. After a primary discussion, I managed to get 30 per cent off the price originally ‘quoted’. But instead of buying the spices, I went to the other stalls and told them the lowest price I’d been offered. Going full circle, I returned to the first stall and got another 15 per cent off. That’s a 45 per cent discount in total.
This negotiation tactic certainly isn’t new. It’s very well known and used quite often. But it is important to know when you should use this approach. It’s very much a win/lose one. I went home and was soon involved in a negotiation to buy a new filtration unit.
Unlike the spices, where the only variable was price, buying the new unit included many other elements that I could use to get a good deal. Warranties, after sales service and parts, delivery time, detailed terms such as liability and indemnities, and so on.
When you’re negotiating, don’t forget that the relationship is also important. The spice example was a one-off. But the filtration unit is not a single transaction. You may need the filtration supplier’s services later on, so you should treat them differently to the spice seller. In this context, you should take more of a win/win approach.
Finally, a word of warning. Be wary of people who treat every negotiation as a competition to get the best price for that one transaction. Don’t follow their example.
Until next time, good luck in your negotiations.
Procurement professionals lose many opportunities this way. They just accept the first offer made to them. Why is this? Maybe they don’t have the experience or knowledge to negotiate. Maybe it’s a cultural or confidence thing. Maybe it’s down to internal policy constraints like UK public procurement. Or maybe they just don’t have the time.
Whatever it is, being aware that there is an opportunity to negotiate is always the first step.
Back to my market experience...
I wanted to buy some spices to take home. I wandered around the market and noticed a number of stalls were selling similar spices. I noted their prices and approached one of the stalls. After a primary discussion, I managed to get 30 per cent off the price originally ‘quoted’. But instead of buying the spices, I went to the other stalls and told them the lowest price I’d been offered. Going full circle, I returned to the first stall and got another 15 per cent off. That’s a 45 per cent discount in total.
This negotiation tactic certainly isn’t new. It’s very well known and used quite often. But it is important to know when you should use this approach. It’s very much a win/lose one. I went home and was soon involved in a negotiation to buy a new filtration unit.
Unlike the spices, where the only variable was price, buying the new unit included many other elements that I could use to get a good deal. Warranties, after sales service and parts, delivery time, detailed terms such as liability and indemnities, and so on.
When you’re negotiating, don’t forget that the relationship is also important. The spice example was a one-off. But the filtration unit is not a single transaction. You may need the filtration supplier’s services later on, so you should treat them differently to the spice seller. In this context, you should take more of a win/win approach.
Finally, a word of warning. Be wary of people who treat every negotiation as a competition to get the best price for that one transaction. Don’t follow their example.
Until next time, good luck in your negotiations.