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Sure long-term relationships are pretty, but are they a good idea?

Is A Long-Term Relationship The Right Thing For You?

Man, what a hassle negotiating is. If you have to negotiate every single vendor relationship each time you need to have something done, it sure seems like you’re going to end up spending your time negotiating and won’t have any time left over to do everything else. There has got to be a better way!

Maybe the right thing to do is to pick a vendor and enter into a long-term relationship with them. That could be the answer that you’ve been looking for: do the heavy negotiating once and then you can move on and feel comfortable that at least this relationship is in the bag. Or is it?

The Advantages Of A Long-Term Relationship

On the surface it sure seems like a good idea. Constantly having to create a list of suppliers, evaluate them based on where they stand in the market, financial stability (especially these days!), reputation, etc. takes a lot of your time. If you can find a vendor who does a good job, then you’ve solved this problem.

Maintaining a relationship with one firm over time can be very beneficial. You will come to know who you are dealing with, you’ll understand what they can and cannot do, and you’ll be able to build up a two-way trusting relationship. If nothing else, a long-term relationship can simplify your life because you’ll have one less thing to worry about.

If you are a buyer, then an additional advantage of being in a long-term relationship with a supplier is that you may get preferential treatment if supplies of a particular part become scarce some day. If you are a seller, then the beauty of a long-term relationship is that it takes a great deal less effort to maintain an existing relationship instead of trying to grow a new one.

The Disadvantage Of A Long-Term Relationship

As good as a long-term relationship may seem, there are disadvantages to these types of relationships also. One of the biggest issues is that as a negotiator, you are giving up a lot of your bargaining power when you sit down at the table with a long-term partner.

Much of your power as a negotiator comes from the simple fact that the other side of the table has very little information on you and your situation. However, when you are dealing with a long-term partner, clearly this is not the case.

In addition to the large amounts of information about both you and your company that your long-term partner may have, there is also the issue of personal relationships. It can be very difficult to drive a hard bargain with someone that know well and hope to continue to have an ongoing relationship with.

What All Of This Means For You

Clearly there are both advantages and disadvantages to being in a long-term business relationship with another firm. The stability and knowledge of who you are dealing with can eliminate many of the issues that arise in most dealings with other firms.

However, you may find yourself at a disadvantage when it comes time to negotiate a new agreement – the other side of the table knows too much about you. Additionally, studies have shown that over time this type of relationship does not continue to stand on equal footing – one of the two sides will start to take advantage of the other side over time.

In the end, some long-term relationships are probably necessary if for no other reason than providing you with the free time to focus on other work. My recommendation is that you try to minimize the number of these relationships that you get yourself into and when you do, you watch them carefully to make sure that you are getting what you bargained for!

Do you think that long-term relationships are a good thing for the way that your company does business?

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What We’ll Be Talking About Next Time

That Howard Stern is famous, nobody can deny. That he is paid a lot of money is another indisputable fact. Where things get interesting (from a negotiating point of view) is what happens when his current contract runs out…

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Post tags: less effort to maintain an old account, long-term relationship, more effort to develop a new account, one side begins to benefit more, parts shortage, peace of mind, personal convenience, proper distance, reliability friendship, stability

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Sole-Source Suppliers Pose A Special Problem For Negotiators

Having a single supplier for something that you want is the best thing in the world. “What?” you say, they’ve got me over a barrel , they can dictate any price or any conditions on a deal that they want because I have no other alternative.

Well, ok, that’s one way to look at it if you want to be all negative and such. However, there’s a different way to see things and when you look at the situation this way you’ll see that it’s you who has them over a barrel. Let me explain.

How’d You Get Into This Situation?

When we are starting a project, creating a new product, or we just find something that we just HAVE TO have, we can suddenly discover a big BLAM! This occurs when there is some component of our plan that is controlled by someone else. When that thing is the ONE thing that we must have to make our plan succeed. They are a sole supplier. Sure looks like we’re in a bind here.

Options, Options, Options

The first thing that you need to realize is that you are only in a pickle if you think that you are. This type of situation calls for some problem solving. What’s the one thing that all sales negotiators know: it’s all about power , the more that you have, the better the outcome of the sales negotiation will be for you. Feeling powerless is not a good way to start any negotiating relationship!

You always have what I like to refer to as the “nuclear option”. What this means is that if you can’t reach an agreement with the person who has control over the one thing that you need, then you can always chose option B: “make” your own.

In business this could mean that you’d set up a factory to make your own version of whatever part the supplier is controlling. In your personal life, if the seller of the house that you just must have won’t sell to you at a reasonable price, then you can always go out and build your own house that looks just like his.

Build Your Own Competition

Although there may not be other sources for the thing that you want, another option that you can bring to the table is to create competition between the supplier and himself. You’ve got to realize that he’s got both short term and long term goals.

You’ve actually got a lot of control over the deal. You can control how much you are willing to buy, when you’ll take delivery of it, and (most importantly) when you’ll pay and in what amounts you’ll pay. Both pre-paying and delaying payments can have a significant impact on the other side’s tax situation, etc. and you hold the keys to when this will happen.

Creating A Second Source

Negotiation tactics can be used to give you more negotiating power in a single supplier situation like this. One such tactic is to actively create a second supplier. Even if such a supplier does not currently exist, you can approach a potential firm and find out if the offer of some or all of your business would motivate them to become a supplier of the needed item.

If you are able to convince them to do this, then you will have created true competition. However, you will need to make sure that you don’t get locked into this second supplier as your only source of the item!

What This All Means For You

The worst thing in the world that can happen to a sales negotiator is that you find yourself in a negotiation where you have no negotiating power. In a situation like this you’ll end up just having to agree to whatever the other side proposes.

However, you should realize that no negotiation ever has to be like this. Instead, you have to realize that you always have options. Even in a situation where you need to have something that someone else controls, you still have options. You can always choose to build your own option, you can cause the other side to compete with themselves, or you can go out and work with another supplier to create true competition.

No matter how you choose to handle it, you will have taken some of the power that seemed to all start on the other side of the table and then you were able to bring it over to your side. Now doesn’t that make you happier?

What do you think the best way to handle a sole source vendor is in order to prevent them from taking advantage of you?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

Having some bargaining power when you are involved in a sales negotiation is a good thing. Have super bargaining power is much, much better. Most of us do a few things to prepare for a negotiating session, but are we doing enough? The answer in most cases is no. Let me tell you what you can do to fix this…

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Post tags: cold calling, communications skills sales, conflict negotiation skills, create competition, effective negotiation skills, external competition, internal competition, make decision, negotiating skills sales, negotiation seminars, negotiation skills seminar, negotiation skills tactics, negotiation skills training, negotiation tactics, no competition, partnership, problem solving negotiating, sales negotiation, sales negotiation definition, sales negotiations tips, sole source, strong seller, superior bargaining position, training seminars

Welcome to the new world order: consumers are learning to haggle. In the extended global economic recession, consumers who never used to even think about bargaining are suddenly starting to haggle over every deal. Is this a good thing or a bad thing?

What Businesses Are Being Hit?

As you might expect, haggling has arrived first at the firms that have been the hardest hit by the recession. This includes the hotel business as well as clothes and electronics stores. All three of these firms are very interested in moving merchandise as quickly as possible. That’s why they are now open to making deals with their customers.

The market research firm America’s Research Group has just completed a study that shows that 72% of American consumers reported that they had haggled in the past four months. This is up from 56% just a year ago. What’s really telling is that the same consumers report that they have been successful in getting a better deal 80% of the time.

Different Approaches Seem To Be Working

Consumers are discovering that negotiating for a better deal seems to work with just about any business transaction. Formerly off-limits firms including the New York Plaza hotel and Nordstrom are starting to warm to the idea of having their customers bargain with them for the best deal.

Customers are finding that they may not always be able to get a discount on an item that they are interested in buying. However, getting the seller to cover shipping or the sales tax seems to work. If that fails, then having the seller include an additional item in order to complete the deal has also proven to be successful.

Secrets To Successful Haggling

Many firms are creating programs to deal with consumers who want a better deal. However, in order to protect their margins, they are not advertising these programs – they only offer them when the consumer pushes them.

Credit card companies are notorious for doing this. They are willing to negotiate on interest rates and late fees. However, the only way customers can find out where the companies are flexible are by asking.

Final Thoughts

The arrival of the new style of haggling for better deals is showing up in the hardest hit industries: cars, real estate, etc. However, we should expect this to spread quickly to other industries.

The big question will be whether or not this marks a fundamental change in how consumers go shopping: are they going to expect to have to bargain for everything in the future? No matter what the answer is, in the short term this type of sales negotiating is bound to boost sales. Sales negotiators who learn how to take advantage of this new style of buying will be able to close better deals and close them quicker.

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

Recently I was talking with some friends of mine who are planning on using the current depressed real estate market to “trade up” and get a bigger / better house. What they wanted to do was use that “win-win” technique that they had heard others talking about and they wanted me to teach them how…

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Post tags: America's Research Group, bargain shopping, cars, deal, discount, haggling, negotiate, New York Plaza, Nordstrom, real estate, sales negotiator, seller

So you want to sell something (perhaps yourself for a new job?) and you feel that the other side (the buyer) has all the power. Ok, you’re right – just give up and stop reading right now.

Hmm, you’re still reading. Perhaps although it looks like the buyer has all the power, this really is not the case. Let’s take a careful look at what is really going on here and perhaps we can boost your self confidence just a bit.

First a quick review is probably called for. In negotiating, power is all in your head. We imagine that there are many sources of power and they can be based on resources, regulations, laws, or even psychological factors. In the end, we all have different views of just exactly what power means. Most of these views only exist in our heads and they form a critical part of what can be called our inner reality.

Given all that, what can we as a seller in a negotiation do to minimize the buyer’s power while maximizing our own? Let’s take a look at common sources of power and see how we can gain the upper hand:

• Organizational Time: the buyer may be under the gun because he/she needs what we have to sell in order to meet a demand that his organization is putting on him: “Fill that position NOW!”

• Personal Time: the buyer may have poor time management skills and has painted himself into a corner so that he needs to make a purchase NOW!
• Specifications: the product that you are offering (yes, even if it’s just you) may be the only one that fits the requirements that he’s trying to fill.
• Location: the closer your product is to where the customer needs it to be the better.
• Re-Validation: does the buyer have the time/energy/budget to re-validate another supplier if he doesn’t select your product?
• Warranty: does your product come with a better warranty than any other offers that the buyer has?

In any negotiating situation not all of these sources of power are going to be valid. However, I’m willing to bet you that at least some of them will be. If you spend just a bit of time thinking about it before you enter into a situation where you are going to be selling something, I think that you’ll find that you really have much more power than you thought that you did!

Tags: sales, deals, buyer, power, planning

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