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Negotiation skill | The “4+4” rule of negotiation that buyers must know!
Negotiation is one of the critical activities of the buyer. In the process of corporate purchasing, due to the different nature of the company and service characteristics, the procurement strategies and methods used for procurement are also different. Nowadays, the purchasing requirements of enterprises are complex. Considering the supplier certification, quality control, and cooperative relations, frequent supplier replacement will only bring more difficulties in purchasing. Therefore, it is very important for buyers to master the purchasing negotiation skills and establish long-term and stable cooperative relations with suppliers!
We will introduce the four primary negotiation techniques and four concession rules (collectively referred to as the “4+4” rule) that we commonly use to get suppliers. According to this routine, you will be able to achieve your goals when negotiating with suppliers.
4 negotiation skills
1. Intersection of Interests
This method is recommended first. If you want to master the real win-win solution method of negotiating with suppliers, it is recommended that buyers must take it seriously!
The essence of this method is “not talking about positions, but about interests.” When negotiating with others, don’t insist on what each other superficially requires, but find out the true needs of each other.
For example, if you ask your boss to take a two-day off a week, but the boss still insists on working overtime on Saturday. Judging from each other’s superficial requirements, employees want two-day off a week but the boss does not. How can this be a win-win situation? It seems that there is no chance at all. However, let’s change our approach and think about the real needs of both parties: employees want two days off a week to improve their quality of life, while bosses wants to ensure the company’s profits. In fact, the interests of both parties can absolutely coexist, then the thinking direction of solving the problem should be towards finding the best of both worlds. For example, the employee can go to work for five days a week, but the working hours are extended by one hour each day, which takes care of leisure life and guarantees work performance, a compromise solution come out. This is a win-win solution.
2. Collective linkage
Assuming that there are five items to be negotiated： ABCDE, instead of discussing them one by one, you might as well try to combine them.
For example, A, D and E can be discussed together, so that the power of negotiation will be greatly increased. For example, when negotiating a contract, you can discuss the delivery date, price, and after-sales service (“If we pay in this way, then you will provide…service…”). The collective linkage method can expand resources and increase flexibility, and the probability of successful negotiation will naturally increase.
3. Problem dicomposition
Divide a major issue into several smaller issues to discuss, thus widening the space for the two sides to exchange interests, thereby reaching consensus.
For example, the supervisor suddenly wants you to join another working group. This big issue of “go or not” can be divided into “when to go”, “to be what role”, “how long to go” and “how to arrange the aftermath”.
Similarly, if you want to ask your boss for a 5% salary increase, you can also divide it into topics such as “when to increase”, “add several times”, and “under what premise to start increasing”.
When there is only one issue in the negotiation, the problem decomposition becomes the most important problem-solving work. Therefore, when buyers negotiate with suppliers, they can switch their minds and decompose the main points of the purchasing negotiations. This kind of negotiation rule will definitely make you more effective!
4. Balanced Exchange
If there are several major issues that the buyer and the supplier need to discuss, and both of them have some issues that they care about the most, then these issues can be pulled out first and negotiated using the principle of exchange and concession.
For example, if the funder makes concessions in the calculation of overtime pay, the labor side will also compromise on the number of days off. This “give me what I want, and I give you what you want” parallel exchange method allows both parties to gain something at the beginning of the negotiation, which will establish a good interaction atmosphere for the negotiation and contribute to the success of the entire negotiation.
4 major concessions rules
1. Range of Concession
Take an example that everyone will encounter. When buying home appliances and furniture, we often encounter this situation. The salesperson bids $10000, and then gives way to $9000, then $8500, and then $8300. You can see that the salesperson’s concessions are 1000 dollars, 500 dollars, 200 dollars, and the concessions are diminishing, and the range is getting smaller and smaller.
This creates the feeling for buyers that it is getting harder and harder to make concessions, getting closer and closer to the bottom line, and it is impossible to make concessions later. Imagine that if you make a concession of $200 first, then $500, and then $1,000, it is easy to create the impression that your concessions are getting easier and easier. The later negotiations, the more the buyer will think that you have more room for concessions. .
To achieve a diminishing range of concessions, we must grasp the first step of concession. Generally speaking, the first concession is the largest, and the subsequent concessions become smaller and smaller.
2. Concession time
In addition to the range of the concession, it is also necessary to grasp the time of the concession. It should be noted in the negotiation that concessions should be slower and slower. In other words, the time from the 2nd concession to the 3rd concession is longer than the time from the 1st concession to the 2nd concession. If you don’t grasp the time of concession well, the other party will think that it is easy for you to give in, but it may increase his expectations and raise his requirements.
For example, in the purchasing negotiations of engineering products, the supplier requires the buyer to make a down payment of 50%, while the buyer insists on 30%. It took two hours for the purchaser to make concessions to 35%, and then the time for the purchaser to make a concession to 38% should be at least two hours . This makes the supplier feel that it is getting harder for the purchaser to make concessions.
Time is a very important factor, and every purchaser must learn to control and use it consciously flexibly.
3. The bottom line of concession
In the negotiation, you need always to evaluate your negotiation results. Can I hold the bottom line? Ask yourself this question before the negotiation, monitor it in real-time during the negotiation, and review it after the negotiation.
If you have reached your bottom line during the negotiation, there are several ways to help us sort out the pace of the negotiation, so as not to make mistakes.
First, take a break appropriately. Walk outside the negotiation room, calm your mind and thoughts, and review whether you have got what you want and whether you have penetrated your bottom line.
Secondly, there is a colleague as the supervisor during the negotiation. Use the records and verbal actions in the negotiation to remind you where our bottom line is and which ones have exceeded the company’s requirements.
Third, keep records. Prepare a notebook during the negotiation, record your own commitment and the suppliers commitment, and then compare the standards and bottom-line you set before the negotiation.
4. Number of concessions
In the negotiation, how many concessions should be made? Answer: The number of concessions should not exceed three.
Take a case: In a sales negotiation, you make a one-off profit of $20,000, which is very different from a ten-time profit of $2,000. Why do we say that, for example, in the negotiation, the supplier lasted to the end and let $20,000. The purchaser will think: Well, it is already very difficult for him to make concessions for the $20,000, so let’s decide the price. If they makea concession of $2,000 10 times, you will think the supplier still has 11 times, 12 times concession.
Therefore, the number of concessions should generally not exceed 3 times, otherwise it will make others think that you can give up again.
We have found that in many cases, if you do not master the rules and techniques of negotiation and concession, some negotiation traps will be dug for yourself. As a result, you will fall into the pit you dug and lose your bottom line. Therefore, the “4+4” rule, the purchase must be kept in mind, it is absolutely useful!