Speaker 1: Hi guys, Ian Chonson from Drivesuccess.com. Today I want to talk to you guys about some essential negotiation tips for procurement in terms of purchasing managers, procurement professionals, warehouse employees, inventory managers and what I'm doing today is I'm basically doing it from the mindset of having been a salesperson and I want to discuss the best strategies that have worked against me and I've worked in sales and marketing for 20 years, I've done a lot of different consulting projects and I've done supply chain management consulting projects where I've helped companies identify the ideal supply chain based on their customers, their markets, the types of products they're offering and everything else. So I have a lot of experience in this but what I want to focus on today is I want to focus on five essential tips that I see the best negotiation people use in terms of how they go about purchasing things from me as a salesperson. So the first thing I want to talk to you about is I want you to stop or I want you to avoid broadcasting your needs too soon in the process. So I want you to avoid tipping your hand. So this is stop broadcasting your needs and what do I mean by this? Essentially what I mean is a lot of times in negotiation the individuals that kind of tip their hand too soon in the process allow people like me advance warning in order to be better prepared in terms of how I process the negotiation. What I want you to do is I want you to stop mentioning things too soon in the process that you see as critical to moving forward. What I want you to do is I want you to save those to the end. So you're going to do your typical negotiation in terms of pricing, well this vendor is offering this and that vendor is offering that or you don't mention the vendor's name but you're saying we're seeing this price in the market. Once you nail down a price with your vendor and you're happy with it, once your vendor says here's the final price, this is the final price we're offering, then you start asking for those things that you need. Hey, so this is the final price, what about prepayment? What if we prepay? What if we pay up front? Will you give us a discount? What if we pay within 10 days? Will you give us 1-2% off if we prepay? Will you give us 3% off? Will you give us 5% off? What if we purchase a higher volume? What if we commit to a higher volume? So what I'm trying to do here is I want you to basically wait until that final price, do your standard negotiation in terms of this is what we're seeing, wait until they give you that final price and then start to hit these things that you can use to narrow or reduce that price down even further. Focus on that strategy. The second thing I want you to do is I want you to avoid veiled threats. Now what do I mean by veiled threats? These are fake threats. When I get on the phone with a corporate buyer who is constantly screaming or yelling or basically boasting about how they're going to take their business elsewhere and they never do, I can't take it seriously. So avoid using veiled threats. If you're going to use a threat, then basically follow through with some kind of consequence. But don't start using all kinds of veiled threats that have no meaning because guys like me, I know when you're playing a game and I know exactly when you're serious and when you're not serious. So don't do it. The third thing I want you to do is I want you to match a concession for a concession in negotiation. Now, a concession. A concession is essentially these things up here. These are your concessions. I want you to focus on high-value concession for a high-value concession. So if you're a customer, sorry, if the salesperson you're buying from says, okay, well, I can give you 1%, whatever, and they come back and say, but you'll have to buy a higher volume. I want you to follow up that high-value concession request of higher volume with one of equal value. I want you to focus as much as possible on trading a high-value request from your salesperson with a high-value request of your own. What you can do is you can actually generate a list of first-tier concessions. Make a box. Come up with a box. These are my number one-tier concessions. These are the things that are really important after I've gotten the price. Number two. These are the kind of concessions that maybe aren't as important, but I'd still like to kind of use them to my own benefit, and maybe even a third box in terms of your concessions. And what I want you to focus on, get the offer, don't use veiled threats, match a high-value concession for a high-value concession, come up with a list, and focus on a trade-off. The fourth thing I want you to do is I want you to add a personal touch to this whole process. Now, I do this in sales, and it's something that I do with my corporate customers. A lot of times I have a corporate customer who wants to push out a shipment. I basically appeal to their better judgment. I say, listen, I understand you want to push out a shipment because you're worried about your inventory, but please understand, we got this ready for you. We did this. We did that. It's got my name on it. We've gone to great lengths to get this ready. So I want you to basically understand as a purchasing person, I want you to get the salespeople that you deal with to understand your pressure, to understand your situation and why you have to do certain things. When they can associate with what you're going through as a corporate buyer, they'll separate the individual concerns that you have from your responsibilities, and they won't come to villainize you and see you as a bad individual. They'll understand that you're working under the same kind of constraints they are. It's a great way to build connection. The fifth thing I want you to do is I want you to focus on keeping vendors honest. What does that mean? You may have a great vendor. You may have the best price, the best delivery, the best terms. You may have all those things, but it is natural and human nature for individuals and salespeople to become complacent and somewhat take advantage. What I mean by keeping a vendor honest is I want you to continually search for outside bids just to make sure that your main source or your main vendor is in line with what the market is. Now don't play games with an honest vendor. Guys like myself, I know what the market pricing is, I know how good our deal is, I know how great everything is. I know what you're getting. If you're getting a good deal from me, I know it. So if you come after me and I know that we're still good and we're still in line with the market and you come after me with a bunch of stuff that I know is not true, I'm going to be able to call you on it. But if you do your homework and you find out that we're not in line, that as a salesperson or a company we're not doing the right things and you come at me with this stuff, then I know you've done your homework and I'm caught. Do not get upset with a company if this has happened. It's human nature. Just keep them honest. Keep them aware that you're checking up on pricing in the market. Keep them aware that you know what's going on in the market. If they think that you know about things and you're constantly on the ball, they'll be proactive and maybe they'll give you a price discount in advance of you having to ask for one. So business to business procurement negotiation tips from the mind of a salesperson dealing with the best people in terms of corporate buyers. Avoid tipping your hand. Stop broadcasting your needs too soon in the process. Save it after you get the final price. Do your standard negotiation but then start knocking them down systematically with these requests after you get the price. What about this? What if we do this? What if we do that? And each one you should try and get a little bit of a price off of it or some kind of a concession. Avoid using veiled threats. Don't fake your threats. Don't use, you know, threats that don't have any meaning because it's not going to work because when you're really serious they're not going to be able to tell the difference. Match a high value concession for a high value concession. Come up with a list. Come up with a list so that you're better prepared for this portion of the negotiation. Add a personal touch. Make the guy understand or the girl, the salesperson or the saleswoman, understand what you're going through. Okay? What the pressures you have to deal with as a procurement professional. And keep them honest. Make them know that you know what's going on in the market. And that's it. Business to business procurement negotiation tips. Ian Johnson, DriveSuccess.com. Bye bye.