Purchasing and Negotiation Training

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

Editors Note:  This two part post specifies how to deploy specific tactics in alignment with your concession strategy.

Plan your concession strategy to enhance sales success and customer satisfaction.  Good concessions are donations of perceived value, not demonstrations of gamesmanship.  Perceived value means the importance the other side attaches to our concession. 

Gift certificates as an example

Merchants love to sell these because they are priced at retail, they bring customers back, and they have a low redemption rate.  As part of a settlement negotiation with an unhappy customer, gift certificates are a common concession.  The customer may never use it, but it satisfies the demand that the “You owe me” debt be paid off.  Thus we concede a high perceived value item at a low actual cost. 

Build concessions into your negotiation plan

The buyer has an emotional imperative to win by beating us down on the price, squeezing an earlier delivery, extending the service warranty, etc.  Knowing the importance that the customer places on each negotiable topic determines which concession to offer.  For example, if we know that price is the hot button, then leave some bargaining room, and plan to give ground on this point.

Give ground reluctantly

It must appear to have value to us to be worth anything to someone else.  A concession must be surrendered reluctantly like a trophy to a victor.  Suppose that we can meet a customer’s time demands without great exertion or expense.  If we proudly answer, “No problem” to his request, that concession has very little perceived value.  The task here is to turn low actual value to us into high perceived value to them. 

“What would you be willing to do for me?”

Include this comeback as part of your built-in concession strategy.  It increases the perceived value and invites get as part of the give.  A clever negotiation tactic is to dangle the concession on the condition that we get something for it in return.  Instead of casually agreeing to a buyer’s offer that we could afford, better to respond, “I do not know if I can get them to go for all of that.  What would you be willing to give me as ammunition so I can sell them on it?” 

Even if you have the authority yourself, work to get a reciprocal concession as ‘payment’ for your reasonableness. 

Your concessions, like the overall negotiation, plan should be in writing.  Prioritize the list of concessions from most to least important to you, and estimate the perceived value to the buyer.  The discipline of listing and prioritizing will help to keep on the path through the smoke and flames of the negotiation process.