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MDC Partners Donald Lee is not new to the Procurement Game, but the 15-year veteran is relatively new to the agency side of the equation. Previously, he wrote about how procurement, the client and the agency can work better together. In this article, he looks at the art of negotiating without leverage.

My daughter is a fearless negotiator, continuously inquisitive when she is denied what she wants. If she asks for ice cream and I say no, she doesn’t end the conversation there. Instead, she’ll ask why and, regardless of my response, she has a counter-question and comment to match my responses. Her tenacious focus on getting the ice cream and her conviction to the idea that she deserves it, while tiring for me as a parent, is inspiring.

Of course, negotiation on the job is a higher-stakes situation; your business partners are depending on you to close. Sometimes, the task seems impossible, because:

• Someone from your side of the table has already expressed that they need the solution
• The vendor has started the work before a price was agreed upon
• The vendor has a monopoly
• Someone on your side of the table has agreed to the solution without understanding all of the costs
• The BATNA (Best Alternative To Negotiated Agreement) is horrible

These situations can all be resolved through negotiation. However, the ability to create leverage during negotiation can be one of the more challenging skills to master. If you have never created leverage, the first step is to change your mindset.

Have you been empowered to make strategic business decisions? Or have you been provided with a list of requirements and told to get the product/service at the best cost possible? Do your stakeholders trust you to close the deal, and do they include you in the inception of the idea?

You need to be involved in the process early on. This allows you to understand how requirements are utilized throughout the life cycle. This additional insight allows you to help the business in making strategic decisions affecting the total supply chain and the total cost of ownership.

How to get into the strategic planning room

Building trust within your stakeholder community will allow you to move deeper into the business unit to understand its needs. Your goal should be to get visibility into the entire process. Ask your clients and stakeholders the right questions so you can understand their process. Become their strategic partner by beating the existing benchmarks, learning from vendors offering solutions and learn your stakeholder and client’s business needs.

Once your partners give you the green light to make the deal and negotiate on their behalf, change the rules of engagement. If you are negotiating against someone who cannot close the deal, it’s time to change that. Otherwise, you are wasting your time with someone who’s messaging is being filtered. Don’t be afraid to elevate discussions to a decision maker. Even if the decision is made by committee, there will be someone in charge. Speaking to the decision maker gives you a chance to accelerate the deal and push for mutual resolution.

How to create leverage

Companies are in business to make money with the services or goods they provide. You are negotiating on your company’s interest for the good or service. These goods and services have a market price and when negotiation begins, almost anything is possible. When negotiating, have a position A, B, and C. Go in and read who you are negotiating with, check their body language, use dramatic pauses. Get to your A position quickly and hold that position with your research. If the company is selling, chances are they need your business to make a quota. This is why you are talking to the decision makers – they can maximize your value and make it up with another company that didn’t do their homework like you did.

Last resort

If you are not making progress, begin to wrap up the discussion while you pack your bag. Let them talk you down and acquiesce. If they don’t, let’s hope your BATNA was not that bad after all.

The truth is not every negotiation works out in your favour. When it doesn’t, I suggest comforting yourself with some ice cream.

Donald Lee is Director, Strategic Sourcing, at advertising holding company MDC Partners. Previously, he was a Senior Sourcing Manager supporting Marketing and Advertising at The Walt Disney Company. Before Disney, he was in procurement at Mars Inc., working on supply chain solutions in co-manufacturing and co-packing.