29 Nov Three steps to a more effective supplier-retailer negotiation
An AFGC poll of top FMCG executives showed negotiation skills is the number one capability they value most highly in their people.
Negotiation skills are an essential capability for people in client-facing positions. It’s a skill we dedicate a lot of time to when we’re training our FMCG clients in customer management. We operate big businesses and there are billions of dollars at stake. So why are so many FMCGs unprepared for these conversations with their retail partners, leading to a breakdown in the process?
We believe it’s about making sure your people have all the necessary tools to deliver for the business, the retailer, the shopper, and the consumer.
Here are our three steps to more effective negotiations:
1. Get in the right mindset
In our experience, most suppliers underestimate their value to retailers. They forget that retailers need suppliers to achieve their objectives. It’s important you understand the role you play, and that your retailer is open to commercial conversations.
But this isn’t always the mindset or experience of some companies. Some are scarred from previous experience or have an ingrained perception.
Fundamentally, selling is about understanding and solving problems. The objective of any negotiation should be to create value for both parties and find the zone for a potential agreement. Our job is to work together for mutual profitable, sustainable growth.
By approaching a negotiation in this mindset, you’re not coming from a position of fear, and the outcome is far more likely to be a positive one.
2. Find mutual objectives
The right mindset allows you to focus on following a process to achieve mutual objectives and deliver value for both parties. We use tools to help you do this. What’s going on in your category for this retailer? What are your buyer’s pain points right now? These are questions you need to answer.
Ensure you look at things from both perspectives and challenge yourself to be able to help your customers deliver what’s important to them. Then look at variables to expand the value on the table, for both parties… Look at low-cost, high-value tradeables. Make sure concessions are meticulously planned – and always concessional.
3. Develop your story
A well-prepared negotiator, who knows his client’s objectives and pain points will have a great narrative with key supporting messages.
Make the negotiation and the variables ultimately about the things you have in common… the consumer, the shopper, the category, growth, and your ability to add value.
Completer these three steps to be more confident in your position because of your preparation and your focus on creating value for both parties. Engage, be constructive but stick to the process.
If you’re looking to build your team’s negotiation skills, don’t miss our Advanced Customer Management training, taking place on 25-27 February in Melbourne.
The AGA Advanced Customer Management training is created and delivered by Real World Marketing, who are leaders in FMCG consulting and Learning & Development, and endorsed by the Australian Food and Grocery Council (AFGC). It is designed for future leaders within our industry and attended by leading Australian FMGC suppliers. It’s highly practical, using simple but impactful tools and frameworks coupled with our industry-leading experts, to help build capability within your teams.