CCA 12.3 Lesson 3: Before the Negotiation Meeting

The importance of Preparation 

Preparing is key to the negotiation success. Always make research of the client in advance, this could mean a quick look in their file or a much more extensive review that would require some real research internally and maybe even outside the company to be ready to approach that negotiation effectively. The objective is trying to learn as much as possible about the other side and get accurate information, all documents to substantiate payments should be considered.  Not having precise information can be very embarrassing and could put you in a weak position during the negotiations.  Set some goals, set the agenda, determine the scope of the negotiation, the issues that you’re going to discuss, stay focused and keep the discussion relevant to the key issues that need to be resolved.

 Is there a long term potential relationship with that customer? if there is, then you need to figure out a way of coming up with a settlement that works for everyone if it’s not going to be a long term relationship then you may want to be a little stronger, nevertheless there’s always potential that even a customer who’s doing low volume today has the potential of being a significant and profitable customer tomorrow.  Be aware of that and do your fact finding before you go into that negotiation.

what’s your company’s history with the customer? It’s important to understand the historical relationship between the company and this customer, have you had great relations up till now? has it been problematic? 

If the customer has had a record of slow payments or maybe unwarranted disputes. What has been the relation as your company done things that the customer legitimately can question? wrong invoices, bad delivery practices or quality issues. Weren’t there good relations with this customer or is it always been contentious? understanding that can really help to Predict how will the customer react when you get into that negotiation. 

 Is this a customer that you’ve dealt with for a long time? Have you had a long term history and really understand where they’re coming from and the value of that relationship? It is important to know the customer’s strategic importance to your company. Do they provide a high volume of profitable business whereas a new customer that suddenly done business with the Company, for a month or two and now there’s a big issue, knowing that will help understand how the customer might be trying to manipulate, knowing the facts can overcome that.

 Is it a company that you need to do business with in order to beat competition or be dominant in a certain region or a certain product line? are they a major purchaser of a particular product line?   Is it a very profitable line?  Is it a customized product that you have in stock and they are one of the few clients or the only client that can buy it?  It is important to understand these questions before you walk into the negotiating room or engage in a collection call.

 Are they a primary customer in a particular territory?  Is a competitor knocking their door and can virtually take over that territory or country?  if they’re a very profitable customer and they have the potential of doing ongoing business with your company and even growing, if It’s a customer that produces a decent profit, like your product, buy on a regular basis, then that’s something to be very aware of so that when you need to make choices and maybe tradeoffs you put these things into your consideration. if you’re heavy handed or unreasonable it could make that customer want to go to another source.

Why do you believe is important to prepare?

How to set goals

Set goals, don’t just walk in and see how the wind blows. 

• Determine what to accomplish.  Sometimes it will just take minutes to think about the issues, but some other times it will take involving other stakeholders and other folks to really understand what the goals are and what is truly needed to accomplish. Consider different scenarios; What if this happens? What if that happens? What if this is their position? What if this is their reaction to a demand I make? What are the acceptable outcomes that you’re looking for”?  
• know what tradeoffs or compromises are acceptable to the customer. 
• Try to Come up with options and solutions that will benefit both parties it might not be exactly what you wanted but it’s acceptable to the other side and the company can still do business as normal. Not all negotiations end in a win win situation, sometimes there is just no way to negotiate a settlement. what do you do then? what are your best options? It’s important to know what those things are before you walk into a negotiation. 
•  Decide your primary goal this is the end goal this is what has to happen and if it doesn’t happen an alternative must be developed. For example, the amount ultimately has to be paid or resolved.  if a customer says; “well you know, I don’t have the cash flow to pay this now but can we make some other arrangement and ultimately you’ll be paid in full” then you’re still meeting your primary goal but you may need to do some trading.
•  Decide your secondary goal, this is what can be accepted as successful. It may be that the customer will pay in full, but over time.  The company may enter the negotiation with a very firm position but could find out that the customer has true basis for pushing back. Listen very carefully to make adjustments as they are necessary. what is the company willing to trade off?  The company is willing to release shipments immediately if a partial payment is received and the balance is committed to the end of the month.  A full payment is negotiated, but only after finding options that are acceptable to that customer.