Negotiating in Life, Business Negotiation October 15, 2009

Wise Negotiations

Sales perspective:

Today’s economy makes deals harder to close and margins tighter. Buyers are tough today. It is never easy to make a sale, but now it is harder than any time in recent years. Now you really have to negotiate.

Buyer’s perspective:

Procurement and supply chain managers are under tremendous demands to reduce costs. A recent study by Purchasing Magazine indicates purchasing professionals today are more focused on cost-reduction strategies than on other issues such as supplier capacity, finances or consolidation of suppliers.

Results show 48% of buyers polled said negotiating lower prices for products and services with their suppliers is their biggest priority right now. Other supplier-facing priorities ranked in order of importance included supplier consolidations (15%), ensuring the financial health of suppliers (14%), getting suppliers more involved with product development (12%) and, lastly, ensuring suppliers have the capacity to ramp up production when the economy recovers (11%).

Cost Savings Example:

Consider this example which illustrates the true business impact of negotiating better pricing from suppliers.

In 2008 ABC Inc. sold $987.4 Million and made a net profit of $81.4 Million, That’s about 8.2% net margin. This means, if an ABC Buyer can save $100,000 by being a better negotiator, this contributes just as much profit as if ABC could increase their total sales revenue by $1,219,512. And in today’s markets most companies are finding it rather difficult to increase sales.

So for ABC Inc. $100,000 in cost savings has the same impact as a $1,219,512 increase in sales.

Negotiating the Deal:

At the same time more organizations are pushing buyers to reduced costs, other organizations are pushing salespeople to increase sales—at higher margins. All this makes for some really tough negotiating.

So, what should salespeople do when negotiating prices with buyers that are on a price cutting mission?

Buyer’s must remain aware, and sometimes need to be reminded, that the cheapest per unit cost can often end up being the most expensive ‘total cost’ decision.

Switch from ‘Price’ to ‘Total-Cost’

Sellers must get buyers engaged in a ‘total-cost’ analysis. And it is in the buyer’s own best interest to do exactly that. This is really the only way a buyer is going to be able to discover, document, and get credit for ‘real cost savings.’ The blending of a buyer’s expertise on what they need, with a seller’s expertise on what is possible, provides a route to true cost savings. Best of all, during this discovery and analysis process, relationships are built which lays the groundwork for future business.

Satisfaction

The outcome of your negotiations must be a mutually agreed upon result that creates a Both-Win atmosphere rather than a one-win atmosphere. Satisfaction of both parties is key, and determines future business opportunities between the parties.

THE PROGRAM WAS GREAT! MY SEMINAR LEADER AND THE STRUCTURE OF THE COURSE KEPT ME CONSTANTLY STIMULATED. I NOW AM BETTER PREPARED TO GO INTO AN IMPORTANT NEGOTIATION MEETING AND STAY IN CONTROL, WHILE FINISHING THE MEETING SATISFIED.

Deanna D.
CASE MANAGER at THE JACKSON LABORATORY

IF YOU HAVE THE TRAINING BUDGET AND TWO DAYS TO SPARE, YOU'LL STRUGGLE TO FIND A PROGRAM MORE FAR-REACHING, ON-POINT, AND INSTANTLY IMPLEMENTABLE.

Jeff G.
BUSINESS DEVELOPMENT MANAGER at THE M.K. MORSE COMPANY

EXCELLENT COURSE, BRINGS MORE CONFIDENCE IN MY ABILITY TO NEGOTIATE. I THINK THIS COURSE IS A MUST FOR ALL EMPLOYEES WHO DEAL WITH CUSTOMERS.

John S.
CHIEF ENGINEERING MANAGER at EXXONMOBIL

THIS WAS VERY EFFECTIVE WITH A STRONG FOCUS ON BOTH-WIN NEGOTIATING.

Kathleen L.
SENIOR ANALYST at BLUE CROSS/BLUE SHIELD OF MICHIGAN

THE KARRASS CLASS WAS THE SINGLE BEST TRAINING CLASS/SEMINAR I HAVE EVER ATTENDED. EVERY TIME WE DID AN EXERCISE IT TAUGHT YOU WHAT TO DO DIFFERENTLY NEXT TIME. THANKS.

Kim C.
PROCUREMENT at AMERICAN EXPRESS

THIS PROGRAM HAS GREATLY INCREASED MY CONFIDENCE AND ABILITY TO NEGOTIATE FOR MYSELF AS WELL AS MY COMPANY.

LaDonna E.
SENIOR STRATEGIC BUYER at HALLMARK

THE NEGOTIATING CLASS WAS VERY INFORMATIVE. THE INSTRUCTOR PROVIDED AN INSPIRATIONAL MESSAGE THAT CAN BE APPLIED TO EVERYDAY LIFE.

Mary S.
INTERNATIONAL SOURCING at FMC TECHNOLOGIES

WE NEGOTIATE EVERY DAY OF OUR LIVES, BOTH PERSONALLY AND PROFESSIONALLY. THIS COURSE DEFINES THE PROCESS AND PROVIDES TECHNIQUES TO ACHIEVE SUCCESSFUL RESULTS.

Phillip H.
VICE PRESIDENT at GE

PRIOR TO THIS CLASS I FELT AS THOUGH I WAS GETTING EATEN ALIVE BY INTERNAL NEGOTIATIONS WITH SALES REPS. NOW I FEEL PREPARED TO CHALLENGE WHAT THEY ARE SAYING AND BET TO THEIR REAL NEEDS.

Steve Q.
PLANNER at HONEYWELL

MANY PEOPLE FAIL TO ACHIEVE THEIR POTENTIAL BECAUSE THEY DON’T SEE THE OPPORTUNITIES TO NEGOTIATE A WIN/WIN AGREEMENT WITH THEIR COLLEAGUES. THIS CLASS IS AN EYE OPENER TO THIS DYNAMIC..

Stuart B.
CONTRACTS MANAGER at HEWLETT-PACKARD
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