Negotiation Secrets for Small Companies
— Part One
You Have Powerful Cards — So Play Them!
You may not think of yourself as a negotiator, but when you enter into a deal with a large organization, you are viewed as just that. Not only do you, as one of the "little guys," need to address the five problems outlined above, you must improve your bargaining power by stepping into, and owning your role as negotiator. These five simple, yet effective, tactics are a culmination of the 12 plus years I've spent in the role of negotiator and mediator.
1 Ask Clarifying Questions
The most powerful tactic you can immediately implement is to ask lots Ã¢â‚¬â€ and I mean lotsÃ¢â‚¬â€ of clarifying questions. Pose questions that seek to clarify facts or figures in an open-ended and non-judgmental manner. Masterful negotiators will tell you that whenever they are at all uncertain about anything Ã¢â‚¬â€ no matter how trifle Ã¢â‚¬â€ they ask clarifying questions.
Mediocre negotiators may seem inquisitive, but often their questions leave purchasing agents on the defensive. For instance, a poor negotiator might ask, "How did you come up with that number?" while a masterful negotiator slides out questions like a poker player with an ace up his sleeve. Rather than cross-examining, the questions build on the relationship. For example "Can you tell me more about how you arrived at that figure?" is an invitation to continue the dialogue. Because people are generally eager to talk about what they think is important, you will also gain valuable insight into their decision-making process.
2 Actively Listen
The problem many people have when they are listening to someone with whom they are negotiating is that they are listening to respond and sell. In other words, they are not really listening at all. The truth is, most people are simply waiting for the perfect moment to jump in and close the deal.
Masterful negotiators, on the other hand, listen between the lines for what is being conveyed by word choice, tone and inflection. Actively listening also involves listening for what is not being said. One survey participant explained that careful listening helps him to discern the difference between the purchasers who are truly interested in his services, and those who are only trying determine whether the job can be done cheaper in-house.
3 Address The Customer's Bottom Line
Another simple, but imperative tactic is knowing exactly how your products and services will improve the customer's bottom line. Rather than defending a price with references to your profit margin, you must be prepared to demonstrate with facts and figures the ways in which your products or services will increase their profitability.
One respondent, a small business owner previously employed at a Multinational company, reported that people in purchasing departments are often not equipped with the crucial information that would improve their understanding of the financial value of the services in question. Assisting the purchaser by explaining how the intangible, yet important, aspects of your product or service will help save money in the long run will fill in the blanks. Although the intangible benefits, such as on-time delivery, customer service, and warranties, are hard to measure in dollars and cents, they set you apart from your competitors.
4 Initiate the Bidding
There is a strong psychological tendency that comes into play when someone makes the opening offer. Even if the number is completely fictitious or ridiculously low, studies show that the negotiations will revolve around that number. In effect, the person who throws out the first number anchors the negotiations. The person who waits to counter-offer faces an uphill battle of negotiating to a higher price.
From now on, make the opening offer whenever possible. Essentially, you will be stacking the deck in your favor. Do not, however, propose the opening offer without knowing the economic frame of reference for your product or service. Thoroughly familiarize yourself with the market, then initiate the bidding.
5 Develop Relationships In Unusual Places
Many small companies find tremendous benefit from developing internal champions within multinational corporations. Someone not directly involved in the negotiations is more likely to give you important insider information that will help you make decisions and counter-offers.
An internal champion may come in many forms. One client, for example, has its engineers talk to the engineers at the Multinational. Other companies use their inside resource to test the validity of counter-offers, while others have champions speak on their behalf to the real decision maker. Yet another company uses the strategy to learn how to maneuver through the multi-faceted political atmosphere.
Becoming a Master Negotiator
Working with large corporations really can be rewarding and profitable once you master the negotiation process, but similar to a tough game of poker, you can't just hope you'll be dealt a good hand, you have to practice playing the game. The more time you spend addressing the five tactics outlined above, the more successful you will be.
Top poker players share one thing in common: they spend a lot of time thinking about poker away from the table. They ruthlessly critique their own play after the fact and use this process to improve their game, and they play for keeps. By adopting and consistently applying the five negotiation tactics outlined above, you will save time and money, not to mention the frustration of feeling like the underdog. The difference between the savvy negotiators and the folks who leave the meeting scratching their head in exasperation is that the successful players have fully mastered and fully embraced the negotiation process. Are you ready to up the ante?
Return to Part One
Jeanette Nyden is the founder and president of J. Nyden & Co., a Seattle based training and professional speaking company. See: Professional Profile of Jeanette Nyden
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Thomas A. Faulhaber, Editor
Revised: March 15, 2006 TAF
© Copyright 2006 Jeanette Nyden / J. Nyden & Co., Inc., All Rights Reserved