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Negotiating with Vendors

cutmoney Are you a business owner who frequently works with suppliers to run the day-to-day operations of your business? If so, have you seriously considered whether or not you are getting the best deal? Despite how minor some transactions may seem, such as purchasing office supplies, these expenses add up fast and could mean a big swing either way to your bottom line.

All businesses, no matter what the size, should regularly take a look at their budget to identify areas which can be cut back through the almighty power of negotiation. To start the process, ask yourself the following questions about each of your suppliers:

What is your relationship?

If you have been working with a particular vendor for a while and have established an amicable relationship, setting the stage for a discount can be made easier. State that you have been a regular customer for X amount of time, you are happy with the service and products they have provided and you are committed to keeping your business with them—but you think that your loyalty could be rewarded by a discount on future orders.

In most industry’s it cost approximately 10x’s more to attract new business than to keep current customer’s happy. Most likely, it will be beneficial for you supplier to cut you a deal rather than get another client to replace your business.

For example, I recently needed to purchase 10,000 business card magnets to market a project I am working with, but my budget for this need was not quite enough to purchase them from my regular promotional magnet supplier, AdvertisingMagnets.net. Since I have worked with this company in the past and developed friendly rapport with the owner, I decided to bring my problem to him. He was glad to accommodate my request of cutting the cost by 5%. Like I have mentioned oh-so-many times before, you often get what you want—you just have to ask!

How important is your business?

Is your account keeping your vendor’s business afloat, or are you merely one of many that help to pad your suppliers’ profit margin? How much you spend and how big your vendor’s business goes a long way in determining where your negotiation power.

If your business means beans to them, spending the time negotiating with you could cost more than keeping you as a customer. Your position in this case is precarious, at best. Although, if you are working with a local company that counts on your business to bring home the bacon, you can bet that they will do whatever they can to keep you from taking your business elsewhere, including offering you a hefty discount.

Who are their competitors?

In today’s internet era of e-commerce, it is easy to be constantly finding companies willing to undercut competition for a shot at making a new customer happy. Capitalism has done wonders for ensuring that companies offer quality goods at rock bottom prices. You will find this is true for MOST products you require, but NOT ALL. If your supplier has a virtual monopoly on an industry or provides highly specialized goods specific to your trade, they have little incentive to negotiate with the likes of you.

For example, my husband has one client who specializes in selling wingtips to the airlines industry and they have not other competition to speak of—primarily because they are the only ones with the patent on this product and it solves the problem of reducing fuel costs better than any other available on the market today. I would imagine that they are in a position of supreme negotiating power because they can offer this product, which others cannot, and save their clients big bucks on fuel in the process.

Is non-monetary compensation an option?

If you are really keen on cutting down your cost of doing business, consider trading your services for a discount on supplies. The trick to making this arrangement work is to frame your offer in a way that is a win-win for both sides. If you have a website designing business, you can offer to improve the look of your vendor’s site for a trade of goods.

Do you have any suggestions on negotiating with vendors? Let us know so others can learn from your experience.

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By jennifer – March 13, 2010

Negotiating with Comcast for Triple Play

Comcast recently had a great deal, sign up for Triple Play (Phone, Cable with HBO, and Internet) for $100 a month for 2-years. Really a great offer compared to what I was paying. Of course this offer was limited to new customers only. Easy to get around conditions like that.

Here is how I did it:
Negotiation Research: What special offers are the competitors offering? Dish Network is offering a similar deal for new customers. Sure I don’t want to switch and think their service is weaker than Comcast, but Comcast doesn’t know that.

BATNA: What is my Best Alternative to No Agreement? Well I already have Comcast service and I am happy with it, I am just paying a bit too much for it. So really my alternative to having Comcast sign me up for their program is to maintain the Status Quo. It is not like they are going to cancel my service for trying to negotiate with them. I really have nothing to lose. They don’t have to know that I really don’t plan on switching to Dish Network.

Making the Call: 1-800-COM-CAST (I hate mnemonic phone numbers!) and ask for customer service. Once I get a representative I tell them how much I like the new offer and that I am interested in signing up for it. I already know I don’t qualify but I want them to starting trying to help me out. The Customer Service Representative(CSR) tells me that the offer is only for new customers or existing customers that don’t already have all three services. I politely ask if there is anything they can do. Of course the answer is “no”, but hey the first line usually doesn’t have the authority.

Escalation: I then ask who would have the authority to make a change, especially if I am thinking of changing my service provider? The CSR immediately transfers me to a resolution manager. BINGO! Someone who can actually help. Ok so these resolution managers(or whatever they are called) actually get paid to keep you as a customer but also get a commission for not giving in to your demands. If they give in the make a less commission, if they lose you as a customer they make less than if they give in. So their ultimate goals is to keep you at the status quo but give in before losing you as a customer. I start all over with this Resolution Manager. I tell them I really like the offer and ask if I qualify. Again the answer is “No, it is only for new customers.” I then stay really polite but mention the offer from Dish Network. I then ask them “Why shouldn’t I make the switch to the other company?” Ball game changes!

First Offer: They offer me the plan without some of the bells and whistles. The Resolution Manager is at this point trying to hang on to some of her extra commission for not giving totally in to my requests. My goal here is to stay nice and keep her happy with me but be frank about my willingness to leave(not really.) I tell her that I have some friends that really love Dish Network and that their offer is really enticing. I also tell her that I am a long time customer and have always been really happy with the service that Comcast has given me. Hook Set!

Next Offer: She offers me the plan as advertised. BINGO! I have achieved my goal. I thank the rep for her help(Always have your opponent leave happy) and tell her how happy I am to be able to keep Comcast.

Have you ever had to negotiate with your Cable company? What was your experience?

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By Jonathan – February 13, 2010

25 Ways to Become a Networking Superstar

networking Have you ever noticed that most powerful negotiators are also superstar networkers? Since all negotiations are personal experiences, the image that you reflect to the other party is vitally important. If you have a reputation for being well liked and well connected, you may achieve a position of power before the negotiation ever begins.

Get Connected

To begin networking you can almost start anywhere. Depending on your goals for becoming more socially connected, there countless ways in which to network—from your hometown to across the globe. Here are 25 suggestions to get you started:

  1. Join a business networking group, i.e. BNI or Le Tip

  2. Attend conferences and workshops in your industry

  3. Become a regular at a local coffee shop or bar and get to know those who frequent the establishment

  4. Use social media, such as Facebook, Twitter, or Linked-In, to build an online community

  5. Contribute to online forums and make connections through common interests.

  6. Join a sports team, such as intramural softball

  7. If the opportunity arises, become a member on a board

  8. Join a private club, gym, or golf course and get to know the members

  9. Become a leader on your neighborhood watch

  10. Throw parties frequently and invite everyone you know

  11. Connect others

  12. Stay in touch with your network

  13. Practice altruism

  14. Request introductions to grow your network

  15. Send Birthday and Christmas cards

  16. Be a good listener and friend

  17. Never gossip, it will get around

  18. Invite people out

  19. Befriend extroverts with many connections

  20. Befriend introverts who will appreciate your acquaintance

  21. Always be sincere

  22. Take a class of interest, like cooking, dancing, or creative writing where you will meet others

  23. Talk to people everywhere you go, you never know who you might meet

  24. Always carry business cards, or other form of contact information, with you at all times

  25. Don’t be afraid to for something, they can always say no!

What is your favorite way to network?

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By jennifer – December 2, 2009

Negotiation Ethics

ethics-sign1 I was in business school right around the same time the Enron scandal broke out. Cooperate corruption in the media seemed to explode like the waters breaking from a dam. I blame all the two-faced businessmen who made their way onto the nightly news for the reason why ethics was so purposefully beaten into us at school.

When you really think about it, ethics should be a disciple that deserves our attention, especially for those of the business world. After all, if you are in a position of supreme power, like so many scandalous CEO’s, your moral compass should point true.

One area of particular ethical concern is in negotiation. The line between right and wrong can often be hard to find when the pressures on and the stakes are high. How should you go about walking this tightrope of ethical negotiation? Read the following guidelines on negotiation ethics for a start:

Interests of Others

When faced with an ethical dilemma in a negotiation situation the first question you should ask yourself is, “Who and how will my actions affect?” If using questionable tactics in negotiation will have a negative impact on one or more parties, take this time for a detour to explore your next step. It is oaky to take a break during a negotiation if you need time to clear your head to find a better solution.

If you are able, open up and be honest with whom you are negotiating. Share your dilemma and work together to find a resolution. Sometimes candor can be the best way to create win-win solutions.

Relationship Value

If you have an established trust with the other side of the negotiation table, the rules of the game change. When negotiating with a stranger, such as when buying a car, it is expected that you may use more harsh tactics to get what you want. If on the other hand you are negotiating with someone whose relationship you value, like a friend or family member, you should respect that trust and be clear about your intentions from the get-go. If you ignore these unspoken rules, you could end up loosing a lot more than the negotiation.

Ethics Gap

An ethical gap is the point at which you question what is right and wrong. Take into consideration what was previously discussed, the interest of others and relationship value, when you encounter a situation that is not black and white. I will restate what I mentioned above, a time-out during the negotiation can bring light to the situation.

If you are still unsure about what road to take, consult an associate that you trust and get their thoughts on the matter. The act of taking through the decision making process in itself can often revel the answers you seek.

Your Moral Compass

When all else fails, listen to you inner conscious. Everyone has variations of what they consider to be ethical, but this innate moral compass is universal in all of humanity. Whether or not we choose to listen to the angel, or the devil, in us is another story…

Note of Irony: When researching for this article I came across a website selling term papers on Ethical Negotiation to college students. Talk about hypocrisy at its core!

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By jennifer – December 1, 2009

Negotiating Banks Fees and Charges

0389190 I recently had an encounter with my bank, the grand ol’ Bank of America, regarding surprise bank fees on my statement. Unlike a party, this surprise was not welcome. The account in question had a balance of $5.00 for over three years and no activity. Now all of a sudden I owe them seventeen bucks and need to pay up NOW or suffer the consequences (more eloquently put, of course). Well I was not about to pay for something in which I was receiving no benefits whatsoever, and had been meaning to cancel anyway.

You may have encountered a similar situation yourself recently. Banks have been inventing new fees left and right to keep the money flowing. They need to do something to stay afloat during this financially tumultuous time. I don’t begrudge their efforts. Like so many Americans in my shoes, I just don’t want to be the one to pay for it!

If you want to join the fight against fees, read the following guide to get started and liberate yourself, and your money, today!

First, Ask Nicely

Sometimes all you need to do is ask nicely. If you’ve had an uneventful history with your bank, they will want to keep their customer happy and most likely fulfill to your request. Why might they be so apt to readily agree to your request? It generally costs 10X more money to attract a new customer than it does to keep a current customer!

So many people would rather not deal with the headache of calling the bank, waiting on hold, and haggling with the customer service rep that they don’t even bother to get their $5 or $10 back. The bank gets away with this sort of thing all the time. Think again next time you just accept new fees as part of your monthly expenses. Ten dollars a month for a year will cost you $120 and $600 in five years. It is probably worth 15 minutes of your times to get your bank bill corrected.

Persistence Pays

If your bank wants to play hardball, don’t give up. Ask to speak with someone else of higher authority that can help you. If speaking with that person doesn’t do the trick, call back the next day and you may hit an immediate homerun with the first person you reach. At some point the bank must consider what it’s costing them to pay their employees to negotiate with you, and the goodwill they’re losing with a customer in the process.

Bluff Your Way Out

The last thing your bank wants to do is lose your business (assuming you’re a customer worth keeping). If your bank flat out refuses to refund the fees, tell them that you are ready to take your business elsewhere if they do not stop with the charges. Most likely they’ll back down at this point and find a solution to ensure you stay a customer. If you do use the bluff tactic in this situation, be prepared to follow through. Have a reputable bank lined up, or better yet a credit union, to open an account.

Join a Credit Union

I mentioned earlier that I have not used my BOA account in several years. This is because I am now a member of a local credit union. The credit union has so far exceeded my expectations of customer service, without the snarky attitude the employees of corporate banks seem to share. Not to mention fees are virtually nonexistent! You are also able to use member credit union’s ATMs for free. Bonus!!!

If all else fails, there is sure to be another financial institution waiting to welcome you with open arms who will offer all the bells and whistles without the costly fees.

Have you negotiated bank fees with Bank of America, Chase, Wells Fargo, Key Bank, or another financial institution lately? What was your experience?

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By jennifer – November 30, 2009