Having sat on the “dark side” of the desk for many years as a buyer for one of the UKs largest retailers I have seen the good, bad and ugly of companies trying to sell their products.
I hear many suppliers complaining that they are subject to unreasonable demands and just plain bullying from customers but does anyone stop to think why they are behaving like this?
Sometimes buyers’ actions seem illogical or just plain bonkers and sometime they are! But in the majority of cases there is a good business need being addressed by these actions.
By understanding your buyer better than they know themselves you will put yourself in a stronger negotiating position and be able to get what you need to drive your sales and profit forward.
Here are three things to consider:
- Knowledge is power: by knowing the buyers KPIs and objectives for their category and also the company’s corporate strategy (to become the number 1 retailer in the UK) a supplier of own label lemonade was able to present a solution to drive sales that meant incremental growth for the category and moved the buyer towards their target Market Share. The negotiation was well prepared, met the needs of the buyer and provided some much needed innovation into the category.
- Know your buyers KPI’s: cost inflation is a subject most buyers want to avoid at all costs! A large international branded company was able to successfully negotiate a cost increase because they understood how the buyer’s budget worked. By proposing the cost increase before the year end this gave the buyer sufficient time to plan the increase into the following year’s budget. The company worked with the buyer to provide all the information they required internally to gain agreement from their bosses and was successful in gaining the increase they needed.
- Check assumptions... always! : Suppliers make plenty of assumptions when preparing for negotiations but very rarely test them out. I had proposed tendering a large piece of business to the two current suppliers. There was a clear brief outlining what the volume benefits could be if a lower cost was delivered. One of the suppliers assumed I would be prepared to discuss higher costs than the ones they currently charged due to certain market forces in play at the time and submitted higher costs than I was currently paying. They didn’t check if I had the same view on the market forces. I didn’t and they lost the business.
So what can be learnt from this?
Preparing your people with good quality training for negotiation skills including the skills to gain true insight into how buyer think is crucial if you want them to be able to deliver the sales and profits for your company.
When buyers meet with well informed, prepared and flexible negotiators then deals can be done that will benefit both parties. It can be a rare thing!
Article by Hazel Stride