Purchasing and Negotiation Training

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

Editor’s note: this is Part I of a three part series on a  score of classic mistakes that mark the user as an amateur.   Part II  and Part III to follow.

In 1979, Royal Little, the 83-year founder of Textron and father of the modern conglomerate, wrote a book titled, How to Lose $100,000,000 And Other Valuable Information.  It chronicled some of his colossal business failures, and how he learned from them.  Mr. Little kept a picture in his office of the yacht on which his company lost millions as a symbol of his foolish mistakes.  His point was that it is often far more beneficial in business, to study what not to do.  Since we cannot possibly live long enough to make all the mistakes ourselves, learning from the mistakes of others is also efficient. 

Applying that wisdom, let’s examine what mistakes to avoid in negotiation.  This list of my top twenty list boners, while no means exhaustive, does highlight many common errors.  See if you can find any of your favorites in the list.

1.  Accepting the first offer.  If you do, it will drive you nuts.  How do you know that you could not have done better?  The buyer has an obligation to beat the price down, no matter how good the first offer.

 2.  Being the first to name the price.  This sets the stage for an auction where price is all that matters.  Kodak sells priceless memories, not low priced film.  The solution to the problem sells far more than does a cheap product or service. 

3.  Being the first to offer to split the difference.  Instead, get the other guy to offer to split the difference.  This tactic transfers veto power to the other side.  I once had a customer who bemoaned the fact that we were so close, and how he hated to see the deal fall apart.  In a misguided gesture of conciliation (without getting conditional agreement first), I offered to split the difference.  The next day, he told me that he had considered my offer, but still could not go along, but we were so close…I offered to split it again, to which he agreed.  He gave 25% and I gave 75%. 

4.  Falling in love with the deal.  Do you love your spouse?  Your kids?  Your pets?  Then why would you ever consider loving anything that cannot love you back?  This trait is not all bad, because it represents our devotion to duty.  Do not let that emotional investment take over rationale thinking.

5.  Inadequate preparation.  Most people mistakenly think that most negotiation activity takes place face to face, and involves high power tactics and counter tactics.  In fact, only about 5% to 10% of the actual negotiation time will be face to face.  The lion’s share of the time is in researching and planning.  Information and a written negotiation organized plan are the hallmarks of the negotiation pro.