A few years ago, I was working on a project where we wanted to conduct direct negotiations with our client's incumbent agency. The client had built a strong partnership with the agency over the years and was hesitant to engage in any discussions around price or contracts out of fear of impacting the relationship they had built.
This fear is understandable.
Having an outsider come in and tell you they want to negotiate rates with a supplier who you see as a true partner to your business can be a scary concept. You don’t want them to potentially damage the relationship you’ve spent years building or lose out of the value and level of service you have been receiving because of that relationship. However, this doesn’t necessarily mean that you shouldn’t still take the opportunity to review those aspects of the relationship, especially if pricing and contracts have become status-quo over the years.
In this situation, we had benchmark data to justify our desire to negotiate with the agency. In order to over to overcome the stakeholder teams uncertainty, a colleague suggested that we create a negotiationplaybook.
At the time, I had no idea what he was referring to, but after doing some research and talking to other team members, I realized that he wanted to build out a deliverable that clearly demonstrated the why and how for negotiating with this agency. By leveraging the playbook to detail our plan for the negotiation process and clearly highlighting the anticipated results from our efforts, we were able to give the stakeholder team peace of mind to proceed with the strategy and achieved significant savings. After that project, the negotiation playbook became one of my go-to tools when communicating our strategies with clients.
The negotiation playbook will take different forms depending on the project and the message you are trying to convey to the team. Based on my experience, there are a few key components that should be included in a playbook to achieve the best results.
Demonstrate your understanding of the current state
This is especially important if your stakeholder group is apprehensive about moving forward with a negotiation. By detailing the various aspects of the relationship, the value-add services, how they work with the different teams, etc. you are showing the team that you understand the importance and complexity of the relationship.
Present the benchmark data
It is always helpful to lean on facts and figures to justify your strategy. The more benchmark data you are able to show your stakeholders to explain where the opportunity may exist, the better. In some cases, it may be helpful to conduct a bidding exercise so that your benchmark data is an apples-to-apples comparison of the pricing. This will also be helpful when conducting the negotiation. You will be able to communicate with the supplier that you have market pricing to justify your targets.
Develop scenarios for the negotiation process
While you can’t predict how a supplier will react to your negotiation targets, it can be a useful exercise to build out different scenarios for how the negotiation may progress. For example, building out different high, medium, and low likelihood scenarios so you understand what the best/worst case results may be. You can also use this as an opportunity to present your stakeholders with options based on most aggressive to least aggressive so that they are able to contribute to the specific targets you are giving the supplier.
Quantify the opportunity
Finally, and most important, you want to make sure to quantify the opportunity for the team. If you are able to point to a specific result that you anticipate producing for the team, they will be able to do their own cost/benefit analysis for why they should proceed with your strategy.
Overall, the intention of the playbook is to build your case for executing the negotiation, while simultaneously providing the team with the details so they know what to expect through the process. The negotiation playbook is a great tool for sourcing professionals to communicate your strategy with your stakeholder teams.