in your working relationship. There may be 100 parameters on which you could negotiate, but it is most usual to focus on only 3–5 of them. The packaging may be an important issue, as it generates expensive waste you need to take care of. Or the payment terms may have a significant effect on liquidity. Think creatively.
4. Avoid the ‘Alpha male’ pitfall
Resist the temptation to fight too hard for ‘the first victory’ in the negotiations. Most negotiators fall into this trap and it can halt the process dead in its tracks.
Begin by allowing your counterpart to enjoy a small victory – and then watch the negotiations progress smoothly. Do your ‘homework’ thoroughly and be clear about the concessions you are prepared to make. This will allow you to control the process.
5. Consider: What does your level of service cost?
Service level is often on the agenda at negotiations. But what will it cost you, if you choose to raise the level of service you provide for your customers? And what is it worth?
It is expensive to provide a high level of service (e.g. on time delivery), and you should only prioritise this for your high-frequency products with stable turnover (AA products) – and certainly not for all of your products. Use ABC Analyzer to identify the products and to determine which of your lesser products can ‘make do’ with a lower level of service.
6. Nobel prize winner: your gut feeling is based on bad calculations
Did you know that people typically accept a higher risk for losing money than for earning money? Daniel Kahneman won a Nobel prize in economics for his studies of share trading. He describes how our brains instinctively calculate incorrectly when trying to assess a risk. So bring your pocket calculator with you to your next negotiations so you can be sure of calculating correctly when your counterpart suggests something unexpected – your gut feeling is far from reliable.
7. Know when to stop
Avoid costly ‘last minute concessions’ at the negotiation table. Stop when you have agreed on the most important parameters, or ask for time to calculate the financial consequences you hadn’t taken into consideration before the meeting.
About ABC Softwork’s courses in negotiation technique
In collaboration with negotiation expert Christian Bryde-Nielsen, ABC Softwork runs workshops in both Kolding and Copenhagen, Denmark, where you can learn to increase your skills as a negotiator. In addition to negotiation expert Christian Bryde-Nielsen, the workshop is held by ABC consultant Troels Kyhn Jakobsen. For details, see http://abcsoftwork.com/event