Negotiation: Getting More Strategic

I just received a copy of Improving Corporate Negotiation Performance, a new study published by UK-based Huthwaite International and Connecticut-based IACCM—International Association for Contract and Commercial Management.  Huthwaite, along with other leaders in the area of negotiation like Think Inc! and The Bay Group,  vigilantly drive the critical point that negotiation shouldn’t begin when a company has been selected in a customer buying process.  Unfortunately few companies on the sell-side see things the same way.

Huthwaite and IACCM have a set forth a 5-phase Negotiation Maturity Model along with the percentages of respondent companies at each phase.  If you haven’t seen studies on this topic, the results will be sobering:  80% of the companies surveyed have no formal negotiation process.  The project team looked at companies’ negotiation processes, cross-organizational collaboration, data collection and analysis, preparation and planning, approval and escalation systems, training, success measurement, and other factors.  If you’re getting dizzy right about now, you should probably consider yourself among the 80%.

It’s my job to be skeptical when vendors publish research reports covering areas where they have something to sell.  However, during the past 10 years, ESR has seen procurement, sourcing and buyer departments get considerably more strategic when it comes to negotiating with suppliers.  Selling organizations are being overpowered, out-strategized, and often just plain beat up by their customers.  Not enough selling organizations are doing much about it.  At least not in any way that has significant, measurable impact.

ESR has done sales effectiveness audits and assessments for companies that have taken a strategic approach to negotiation on the sell-side.  There is no question in our mind that many of these companies are not giving up millions, or in many cases tens of millions and more per year in revenues and costs.

If you’ve just slammed your hand down on the desk and said, “I’ve had enough.  We’re going forward with a strategic approach to negotiation, starting tomorrow,” hold on a second.  I appreciate your intent, but it’s not so simple.

The best implementations of strategic negotiation ESR has seen is when it is integrated with the company’s sales methodology.  If you don’t have a sales methodology, build that first.

Note: ESR has not formally evaluated Huthwaite’s negotiation approach, content, or delivery.  At this point we’re only recommending you get your hands on the study from Huthwaite International’s website.

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