- The Deck Is Stacked Against You As a small company (meaning your company has proportionally fewer resources, less revenue and less power than your negotiating partner), it often feels as if the deck is stacked against you. In many ways, it is.I recently conducted a survey of 35 companies ranging in size from a few employees to several hundred. Ninety percent of them reported similar challenges when negotiating with larger companies, including these three:
- Time is on a multinational’s side. The number one complaint reported by respondents was the amount of time involved in negotiating deals with large corporations. There seem to be never-ending, inexplicable delays, complicated by the fact that almost everyone in a large corporation has the ability to say “no” while hardly anyone has the authority to say “yes.”
- Pressure to reduce prices. Another common complaint was the ongoing demand to provide an ever cheaper product or service. Despite the substantial evidence that superior products and services are being offered at the best value, the role of the purchasing department is to always grind down the price just a bit more.
- Constantly changing players. The third most common problem involved the difficulty in developing lasting relationships with purchasers at large companies. Corporations are constantly reorganizing their departments. As a result, building and keeping relationships is frequently not possible.
- Two Most Underestimated Impediments In addition to being the most consistently mentioned by the surveyed companies, these above-listed challenges are also the most obvious. The next two impediments only revealed themselves only after further probing on my part.
- The poker faces. To dig deeper, I asked the survey respondents, “If you had a magic wand, what one thing would give you more confidence in your next negotiation?” The majority stated they would appreciate the ability to see past the poker faces. Most respondents felt that despite any traditional efforts of asking the right questions, unearthing the motivation of a large corporation for initiating the contract was nearly impossible.
- Non-negotiable terms. Although the previously described issues of corporate bureaucracy are frustrating, they only mask the deeper issue at hand. The most overlooked and most serious mistake small companies make in dealing with a big corporation is believing that the terms and conditions put on the table are non-negotiable. The most successful deals always involve the negotiation of terms and conditions. Unless you are a subcontractor coming in under the auspices of a contract with the federal government, terms and conditions are always negotiable.
- You Have Powerful Cards – So Play Them! You may not think of yourself as a negotiator, but when you enter into a deal with a large organization, you are viewed as just that.Not only do you, as one of the “little guys,” need to address the five problems outlined above, you must also improve your bargaining power by stepping into and owning your role as negotiator. In my 12+ years as a negotiator and mediator, I have identified five simple yet effective tactics for improving your position as a negotiator:
- Ask clarifying questions. The most powerful tactic you can immediately implement is to ask a lot of clarifying questions. Pose questions that seek to clarify facts or figures in an open-ended and non-judgmental manner.
- Actively listen. Masterful negotiators listen between the lines for what is being conveyed by word choice, tone and inflection. Actively listening also involves listening for what is not being said.
- Address the customer’s bottom line. Another simple, but imperative tactic is knowing exactly how your products and services will improve the customer’s bottom line. Rather than defending a price with references to your profit margin, be prepared to demonstrate with facts and figures the ways in which your products or services will increase the customer’s profitability.
- Initiate the bidding. Whenever possible, make the opening offer. There is a strong psychological tendency that comes into play when someone makes the opening offer. In effect, the person who throws out the first number anchors the negotiations. The person who waits to counter-offer faces an uphill battle of negotiating to a higher price.
- Develop relationships in unusual places. Many small companies find tremendous benefit from developing internal champions within multinational corporations. Someone not directly involved in the negotiations is more likely to give you important insider information that will help you make decisions and counter-offers.
- Becoming A Master Negotiator Working with large corporations can be rewarding and profitable once you master the negotiating process. However, like a tough game of poker, you can’t just hope to get dealt a good hand; you must practice playing the game.The primary difference between savvy negotiators and the folks who leave the meeting scratching their heads in exasperation is that the successful players have fully embraced and mastered the negotiation process.
Are you ready to up the ante?
Jeanette Nyden is president of J. Nyden & Co., a consulting firm that helps to level the negotiations playing field for small- to midsized companies.