Supplier Negotiation Tactics: The PROBE Method

Tuesday 18 October, 2011

by Tony Gattari

A lot of people say that business is always about selling. But it is also about buying. If you know how to buy well, you can make a fierce amount of money in business. Applying the PROBE technique will not only help you negotiate with suppliers, it will also build the strength of your business.

Let's go through each of the PROBE steps to successful negotiation:

1. Preparation
   
   Sometimes I prepare for a negotiation two or three months beforehand. Preparation in negotiation is learning an enormous amount about the other party. How would I go about this? In the current day and age of the Internet, nothing is sacred. I would do Google searches, LinkedIn searches; in fact I would go deep down the rabbit hole. Remember - information is power. My aim is to generate as much information as possible prior to the negotiation. I want the other party at the negotiation to say "Wow, how did you find out about that?".
   
2. Rapport
   
   Rapport is making the other party feel at ease. It sets the stage for the rest of the negotiation. If I want to create a positive environment, I may position the chairs strategically in order to create the best environment. If I do not want a confrontational meeting, I might offer to have the meeting over a cup of coffee. I may use a round table or use humour at the beginning.
   
   All of this is a type of body language that helps present a good image of me. Of course, not all meetings are set up to build long term relationships, and in this context I may come on much harder and focus more on completing the transaction.
   
3. Opening
   
   The opening is really important. It sets the scene. The key here is that I want to be the one that drives the agenda. If I drive the agenda, then there will be a greater likelihood that I will be able to steer it where I want it to go. I may be upfront and state that I want to come to such and such an agreement and if we cannot come to an agreement, let's set a rule that we do nothing at all. This just told the other party that I am willing to walk away. This just helped me to make sure that I do not get emotionally attached to the negotiation. That is the worst thing I could do - get emotionally involved. If I am afraid of the possibility of not getting what I want at the beginning, then it creates anxiety and weakens the negotiation process.
   
4. Bargaining
   
   There are a couple of things that you have to understand about bargaining. When I am bargaining, I will occasionally ask for all these things to be included in the agreement, even though I do not really need all of these things. I have a list of these things, so that if I reach a point that I need to change the deal to seal the transaction, I can release some of the items in the agreement. This is called making concessions. The reason that I have introduced them, though they mean nothing to me, is that I have set a precedent that if I am willing to give them away; you will too.
   
   Another form of bargaining is the flinch. This is where you exaggerate your disgust of the terms. Something like, "You are insane. You have to do better than that. That is a ridiculous price."
   
   Other forms of bargaining include pitting your competitors against each other in a sly fashion. I would schedule several days of meetings with suppliers; scheduling one right after the other. I would then make sure that the competitors were scheduled in back to back appointments. Then, when the meetings would hold over, and I would make sure that they did, each of the competitors would see each other.
   
5. End
   
   The end is very important. I have seen many negotiations falter because they have just taken a verbal agreement. I would strongly suggest that when you do get an agreement, put it in writing. In fact I often send an email within 24 hours confirming the terms of that agreement. It is simply amazing what can be accomplished when a negotiation is put in writing. 

Source:ceoonline.com