Procurement Template – Ultimate 3 Step Negotation Script
The negotiation script
Looking for a procurement template? Have you been wondering what the perfect negotiation looks like?
- This template includes useful tips on how to prepare for your negotiation.
- I will also discuss actionable strategies which will help any procurement professional to get better deals.
Every negotiation-process starts with preparation, followed by conducting a sharp strategy, and last but least: the negotiation itself. This article will guide you through all three steps!
First: what is the definition of a negotiation?
Before we explain the three steps that will help you achieve better deals, we start with some context regarding the definition of negotiations. Ultimately, any negotiation is simply about the exchange of variables (in proposals), where it is often the case that the variables do not have exactly the same value for the parties at the table.
What are the key steps in any negotiation preparation?
The most important thing in preparing for a negotiation is to gather as much information as possible for yourself in order to be able to estimate the interdependence as well as possible (1) to make a good overview of the deal variables (2) and their importance for both parties (3), and then to think about what (4) and especially how you want to achieve your goal (5).
The Data-Driven Procurement Certificate program teaches you the skills needed to drive better, fact-based decisions that ultimately benefit both organizations and its employees. As a data-driven procurement manager, you will have a comprehensive analytics skill set that will enable you to replace gut feeling with crystal clear analysis and help to achieve deals with results you have been dreaming of.
Step 1: Which questions are important to get answered? [Preparation]
Below I’ll take you through the steps above from my perspective, hopefully, it helps you.
- Who are you at the table negotiating with: are these just implementers, or can they really make decisions in the conversation about whether – let’s name it – the price can also become 10% lower?
- The decision-making authority at the table has no influence on your conversation, but it does on the negotiation. When the other side of the table can’t decide, engage in the conversation and put your demand on the table, but don’t have the illusion that it’s already going to be a negotiation.
- Do you know other people or companies that procure the same product or service? What do they pay? The more information the better, because with this you can put facts on the table without having to convince (I will come back to this later)
- How long have you been paying the current prices? Until when does your current contract run, or do you renegotiate every year? If it is an ongoing contract (to say it in football terms): just change the rules of the game while the match is in progress – is of course legally impossible.
- Power relationship: the fact that you outperform other branches is a negotiating advantage: it is easier to negotiate when the interdependence – for whatever reason – is high. Nice bridge to the next one:
- Replaceability: How easily can you replace your supplier and vice versa? This also says something about your position. The harder it is for them to replace you, the stronger your position and vice versa.
- Open every negotiation and start discussing all variables: what are the things that you have actually wanted to include in the contract for a long time, but that were never possible? Remember: which things are important to you? Which variable less? Which are important to them? Give that away ‘easily’.
- Risk: which party is exposed to more risk in this contract with a % of the sale? The writer or the publisher?
- Breakpoint: which deal are you satisfied with? Determine this in advance. So: what is your actual wanted outcome of the negotiation, are you satisfied when you improve, or also when you keep compensation equal to current?
- Always try to move in the head of your negotiating partner on the other side of the table: when is he/she satisfied? What is his / her breaking point?
Focus before every meeting on what is most important for the person’s company I am negotiating with? Make a long list of variables that are important for both you and the company you are negotiating with. The more variables on your list, the better. Rank them before you start negotiation in importance for you and your counterpart. Best deals are created when you exchange the variables with a low value to you and high for the other versus the ones with a high value to you and low for the other one.
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Step 2: What does a perfect negotiation process look like? [Strategy]
- Gather information
- Decide if you want to make a proposal first, or let the other to
- After ranking the variables, determine your like, intent and breakpoint: when are you satisfied? For inspiration & help, see here-under
- Determine your own opening bid and determine when you want to put this on the table
- Ask as many questions as possible at the table to understand their opening bid (at the table much more information will come your way than in writing, use this)
- In the negotiation -if necessary-, give away important or unimportant variables in small steps. Be unpredictable!
- Does the deal tend to go below your breaking point? Don’t close the deal!
Step 3: Which tips should I as a Procurement professional apply? [Negotiation]
I often write down all possible variables on an a-4 before starting and rank them first in terms of importance for myself, and then for the counterparty. If you come up with a variable that is less important to you and important to them, the game is to play this variable up in the negotiation, pretend it is important to you, and eventually exchange it for something important to you.
Ask as many questions as possible that you cannot find out for yourself. Finds the other side of the table annoying, and strengthens your position (because: you can make a better counter-proposal in the end).
Although it is important to make your point, taking care is not just to ‘convince’ the other side of the table that you are right: first try to find out if you can convince the other side of your position without negotiating, but the fact that you are at the table on Thursday implies the opposite. So: make sure you know in advance what you want to achieve (what are the most important variables) and how (based on proposals).
Two important tips for every negotiation: try – if reasonable on the other side of the table – to always keep the conversation going and always make proposals conditional: “I am willing to agree with X if you agree with Y and Z. “
"Very useful course, many actionable strategies"
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