2017 Secrets Revealed: How to Negotiate the Best Deal for Your Organization - by Brady Bragg, CRCR, Litmos Healthcare
Organizations waste billions of dollars every year as a result of poor negotiation and purchasing habits. By seeking to understand more about sales processes and people, you can leverage that knowledge for a net positive purchasing experience as well as recognition for negotiating the best possible deal for your organization.
Tip #1: Identify and communicate clearly with your vendor sales professional, whether you are in an exploratory phase or in serious pursuit to purchase. While it may be obvious to some, it is important to know what phase you are in. Ask yourself: “Do I have a budget, a clear timeline/deadline and, finally, the authority to make a purchase?" If all three questions aren’t a definite yes, you are only exploring. It is best to be honest with a company representative about where you are in the process. This will position you in a favorable light when the time comes.
Tip #2: Never begin by asking for a price. While it is understandable that you may be looking for information to submit for budget, asking for pricing without understanding the value a product or service may bring to your organization, tells a vendor that you aren’t serious about purchasing from them. It’s a sure sign of a “window shopper”, and they will more than likely quote a higher price. Better to investigate and get a price concurrently or delay the price question until later.
Tip #3: Be honestly curious in your exploration. A sales professional is an expert on their product or service and an open mind may lead to a trove of information you might not be able to ascertain on your own.
Tip #4: Silence is not golden. The more communication the better when you are seriously engaged in a buying process, and even when you have decided not to purchase. To avoid e-mail or phone call overload, set clear expectations with a sales representative with how you like to receive communication and how often. It is likely that a vendor representative will test the limits now and then because it is part of their job to keep things moving. Try not to take this personally and remind them that it’s not the time yet. Nothing drives a sales representative to distraction more than silence. You will earn “brownie points” now or later for your candor and responsiveness.
Tip #5: If you do not have organizational authority to purchase yourself or the clear blessing of those that do, it is better not to pretend that you do. Always try to enlist an executive sponsor (Director or Vice President for example) to help champion your cause. Having an executive on board, even during an exploratory process, will position you for success when you are ready to make your move. If possible, involve the executive sponsor in some of your meetings so that you don’t have to convey value and ROI second hand to them. This will also demonstrate good faith and convey seriousness to the prospective vendor.
Tip #6: Timing is everything. Sales people, particularly those employed by publicly traded companies, are under considerable pressure to garner new business, often measured monthly, with particular concentration at the end of each calendar quarter – March, June, September and December. You will be in a better position to ask for concessions near the end of a month or quarter when you are ready to purchase.
Tip #7: Ask for what you want and you might well get it! As you shift from research mode and move toward purchasing in thirty to sixty days, schedule a friendly negotiation meeting. Don’t make a commitment to purchase until you are sure the offer meets your needs. For larger purchases over $25,000, a sales representative may have considerable latitude in what they can offer to their favorite prospects. If you think of something extra and have the authority to purchase, don’t be shy about asking for it – nicely. You might even use humor to frame it, or a test question …. “I wonder if it might be possible….” As long as your request is reasonable, it is likely that the vendor representative will at least put in a good word for you.
Tip #8: Is it time for a meeting? If you are only in the early stages of your process and your purchase is less than $50,000, schedule a virtual meeting to start, particularly if the representative is not located nearby. If you are prepared to move to negotiations and are seriously considering a purchase from the vendor, you may be ready to schedule a face-to-face meeting. Consider that representatives do not always have the discretion to travel or may have strict travel policies. Try to be flexible. For purchases over $50,000, an on-site meeting is usually a reasonable expectation.
Tip #9: All too often, large organizations are prone to work in silos. Consider the possibility of collaboration and coordination across your company’s silos, which may position your organization for bulk purchase discounts, similar to shopping at a Sam’s Club or Costco. Survey others in your organization to determine whether the product or service may be useful to others and bring them into the process as early as possible. Multiple budgets, a broader need and more supportive voices may build a convincing business case for final approval.
Tip #10: Ask your rep to help you prepare a business case and return on investment (ROI) data to present to those making the final decision to purchase or not to purchase. This might include charts, case studies, positive financial or process improvements, etc… The vendor knows the value of their product or service better than anyone. If you are considering a competitor product, have them prepare side by side comparisons for your top ten product or service related priorities. Remember, however, that not all products are precisely comparable. If you are comparing a chicken nugget to a filet mignon, there may be little fair comparison.
Brady Bragg, a sometimes writer and twenty year sales and management veteran, lives in Pflugerville, Texas with his dog, Lucy. For the past three and a half years, he has helped healthcare organizations improve their training processes and KPI outcomes as a part of Litmos Healthcare. Brady spent the first half of his career working with major non-profit organizations, including Mercy Ships International, Give Kids the World and The American Cancer Society. He has traveled to over forty countries and is conversational in three languages.