Continual - Institutional Cost Reduction, Business Expense Management
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Continual Insights

What you don't know costs you money.

Negotiating with Vendors, Not Against Them

By Justin O'Rourke, @justino365
VP of Client Development | Continual

The closer you are with your vendor, the more uncomfortable negotiating new agreements, rates, and discounts can be.  Furthermore, if you have one of those great service representatives who responds to you immediately, stops in to ask about the family, and sends a decent bottle of wine at the holidays, you probably prefer to preserve the positive relationship.  Consequently, your desire to engage in negotiations means that both your vendor and service representative are probably going to lose money.  So, how do you self-advocate for your financial best interest without destroying the goodwill between you and your vendor?  Here are a few tips…

1. BE TRANSPARENT

Explain to your service rep that you are engaging in cost-cutting measures and are trying to find ways to keep service with their company, but are also seeking alternatives.  They won’t be excited about it, but this respectfully sets the stage for the vendor to sharpen their pencil, get creative, and find ways for you to save money with their service.

2. ASK A LOT OF QUESTIONS

Rather than storming through the gates and voicing a list of demands, start by asking questions.  Not only will you learn more about the savings possibilities, you will also be able to gauge your service rep’s willingness to get creative.

3. PICK UP THE PHONE

You cannot avoid an uncomfortable discussion by hiding behind the computer.  In fact, lengthy emails bullet-pointing your demands may be the catalyst for an even more contentious relationship.  Too often, negotiating by email makes both parties seem like overzealous litigators.  Additionally, making a call, or holding an in-person conversation allows you to pick up on the verbal and non-verbal cues that do not exist in written communication.

4. JUSTIFY YOUR REQUESTS

Start by getting as much data as possible.  Your negotiation demands will carry a lot more weight if you can justify “why” the request makes sense.  Not only will a dose of logic get you what you want, it will help your rep understand where you are coming from.  Even if they are not able to meet your specific request, understanding your point of view might motivate them to create additional savings elsewhere.

5. INVOLVE EXPERTS

No matter how skilled of a business leader you are, no one person can be a great negotiator unless you fully understand the service that is being negotiated.  Industry-specific third-party negotiation experts are available for almost every expense area imaginable.  By utilizing a third party with a high level of expertise, you can gain high-level insider knowledge, outsource the uncomfortable conversations, and achieve greater savings.

FINAL THOUGHTS

Vendor representatives are often just number gatherers who do not know exactly what their sales managers can do to save an account.  They are the middleman who needs to advocate for both their employer and client.  So, when negotiating, gather all your data, make justified demands, and be respectful.  Don’t shoot the messenger.