11 Successful Tips for Winning Supplier Negotiation
The 35th US President, John F Kennedy during his inaugural address, said, “Let us never negotiate out of fear. But let us never fear to negotiate.” As a procurement professional in this competitive world, Kennedy’s mention of “negotiation” reminds us of how supplier negotiation is an essential skill. In this article, you’ll learn about eleven successful tips for winning supplier negotiation.
1. Build your Rapport
In business, building rapport plays a prime role. Excellent rapport manifests excellent communication helps negotiate better. By being communicative; attentive, responsive, and approachable, professionals can build rapport with suppliers and gain a competitive advantage over decision making.
2. Reach out for More
When you are looking to buy a service/product, reach out to more than one supplier. Ask each one of them to give you their best price while informing them about the other suppliers you have contacted. This way, each supplier will know that they have to provide you with their best to be able to win a contract with your organization.
3. Know their Customers
Depending on your bandwidth, figure out your supplier’s existing or past list of customers. Reach out to those customers for their feedback. If the customer is happy with your supplier, you will know how best to amend your offer. If the customer isn’t pleased, and you are determined to work with the supplier, you can be at an advantage on the negotiation table.
4. Cost to Supplier
On the negotiation table, be in the know of the actual cost of the product/service you are trying to buy. By figuring out the cost incurred to make the product, you have a much better idea of how less you can expect from the seller.
5. Build on the Offer Price
Inquire the supplier for the best price for a large quantity. Once you get the price, you can then go for the exact amount you need with an offer that is neither hurts you nor the seller. In this attempt, be reasonable to offer a sensible price that doesn’t trigger a loss to the seller.
6. Flex your Finance
When you come to the negotiation table, come with a cash reserve. The higher advance you can afford, the more command you can have over the whole negotiation. It will flaunt your financial strength and sustainability on which the supplier can bank for a long time. Ensure you clear about the payment terms beforehand and make more than half of the total price as a deposit.
7. Mental Math
In most buyer-supplier negotiations, a supplier is willing to work with the buyer who wants it the least (kind of mental game). Be like Tom in Huckleberry Finn; show your unwillingness on the face and keep willingness to the heart. A general disinterest will intrigue your supplier to consider your offer and be your supplier-of-choice.
8. Find your Sweet Spot
Have you a record of working with great suppliers, have you stories where your suppliers have praised you for your timely payment? You can include such anecdotes in your negotiation to position yourself as a buyer of choice. A supplier would love to consider a long term business deal even if it is asking for a significant cut in price.
9. Be Empathetic
Do proper research on your supplier’s business goals, which will help you draw on your common interests and build empathy. Supplier may refuse the price you offer, but an empathetic approach may help you negotiate with the down payment, after-sales service, or product warranty period, etc.
10. A Friend Indeed
As talks advance and you are to finalize a deal, do not forget your requirement is not one time. So, be mindful about sustaining the relationship. To add value and enrich your supplier’s work experience with you, offer strategic advice that will help them control cost and increase efficiency. Remember, if they can procure better, you get a better deal.
11. Brag your Credibility
The best way to win a supplier is to think like a supplier. Try their shoes and understand that they have the product to sell but need credibility to earn a long-term business deal. Likewise, as a buyer present your credibility, that’ll build trust and competitive rates.
Supplier Negotiation: Conclusion
The above strategies are not only useful in supplier negotiation but in business negotiations as well. Whatever be your strategy, do not forget your long term goals and never to burn a bridge with a supplier. Even if you are not going to be doing business with a particular supplier, be polite in your dealings.