Thirteen Strategies for Improved Negotiations

By Michael C. Dennis

Negotiating with customers can be a complex and challenging process, but mastering the art of negotiation can lead to more successful business interactions. Here are thirteen tips to help you negotiate with your customers more effectively:

1. Avoid Assumptions

Never assume that your customer holds the stronger negotiating position. Assumptions can be misleading, and it's important to approach negotiations with an open mind.

2. Assess Mutual Need

Consider that your customers may need your goods and services as much as you need their business. Recognizing mutual dependencies can create a more balanced negotiation environment.

3. Harness the Power of Knowledge

Knowledge is a formidable tool in negotiations. Understanding who you are negotiating with, whether it's an Officer or the business owner, can provide an insight that you can leverage to your advantage.

4. Analyze Payment History

Knowing a customer's history of payment commitments can be invaluable. Understand how frequently, on which dates, and for what amounts payment commitments were broken. This data empowers you during negotiations.

5. Comparative Insights

Comparing your customer's payment behavior with other vendors can be enlightening. If your company is experiencing payment issues while other suppliers are not, this information can be a powerful negotiating point.

6. Encourage Their Proposal

Request that the customer makes the first proposal. Their offer may exceed your expectations or reveal their financial situation, providing valuable insights into the severity of the issue and their concern about retaining you as a supplier.

7. Evaluate Best and Final Offers

When you receive the customer's best and final offer, take your time to carefully evaluate it. Use this moment to assess risks, explore alternative options, consult with senior management, and determine the most appropriate course of action.

8. Leverage Your Options

Your negotiating power lies in your ability to select from various options, such as withdrawing open-account terms, initiating third-party debt collection, placing orders on credit hold, or suspending production on orders pending.

9. Gain Confidence through Experience

Confidence is a key element of negotiating power. The more experience you gain in negotiations, the more self-assured you become, which can positively impact your ability to negotiate effectively.

10. Art of Persuasion

Effective negotiation involves not only pointing out the benefits of cooperation and compromise but also highlighting the risks and consequences of non-cooperation and non-payment.

11. Communication Skills

Strong communication skills, including active listening, clear descriptions of your position, and understanding the customer's perspective, are essential for successful negotiations.

12. Build Relationships

Establishing and nurturing relationships with your customers can create a more cooperative and understanding negotiation environment. A positive working relationship can lead to better outcomes.

13. Continuous Learning

Negotiation is a dynamic skill that can always be improved through study, practice and learning.? Consider seeking out resources and training to enhance your negotiation abilities.

By implementing these strategies and staying informed, you can enhance your negotiation skills, leading to more favorable outcomes in your interactions with customers, including past-due customers.