Printers: three negotiation skills that will raise your profit margins by over 5%

Posted by Matthew Parker

Do your print sales team negotiate as well as they should do?

I remember meeting the director of a printing company.  He had asked me train his print sales team in negotiation.  “Matthew,” he said, “they give way too easily.”

The sales team were allowed to negotiate to a certain level.  And the director was fed up of seeing prices booked in at the lowest price.  The print sales team assured him that they had to negotiate this far to win the jobs.  But the director wasn’t so sure.

So one day he raised the minimum negotiation level by 5%.  But he didn’t tell the sales team.  And they booked almost as much work as they had before the prices were raised.

And these jobs all had an extra 5%.  An extra 5% which went straight on to the profit margin.  And all because the print sales team had been a little tougher in their negotiation.

Print companies that use good negotiation skills achieve more

Negotiation target

Printers: use the right negotiation skills to make sure your profits are on target

They are more in control of the pricing they charge.  And they know how to get the best out of a deal by using factors other than price.  And they have an additional advantage:  because they negotiate well, they often forge better relationships with their clients.

Print sales people who do not focus on negotiating do not forge good relationships with their clients.  These clients often see the print sales person as someone who can easily be beaten down on price.  Discussions focus on price only.  And clients are swift to move to other print suppliers.  The sales people usually struggle to meet their print sales targets.

To meet your print sales targets you need to be a skilled negotiator

So here are three strategies that I believe all printers and print sales people should practice.

And the first strategy is one that need only take five minutes.

Always prepare before negotiating

Preparation gives a negotiator a real edge.  It can be very tempting to get involved in a negotiation straight away.  But even five minutes preparation can make a real difference to the outcome of a negotiation.

For major negotiations I have a checklist of 21 areas that I will consider preparing for.  And I will work on those areas before I talk seriously to the other party.  Or before I set my goals.

And goal setting is another important strategy for those who negotiate in the print industry.

Set goals that focus on more than just price

Print sales people who focus only on price end up selling print as a commodity.  But many people set a price goal and nothing else.  And that means that a negotiation will remain stuck on price.

In order to be able to open up other areas of negotiation you need flexible goals.  I use a system of goal setting called NICE.  It allows me to make sure that I know exactly all the different factors that I can bring into play.  It allows me to move the other party away from price.  And it allows me to set goals which get me a good deal, even if I have to move on price.

Goal setting and preparation are important areas to focus on.  But you need to be able to manage the other party as well.  And that’s where the third strategy comes in.

Manage the opening of a negotiation

The first few seconds of a negotiation give you the chance to take control.  And then the other party are forced to follow your lead.  And to react to your strategies.

However, I find that it is extremely rare for people that I negotiate with to manage the opening.  And that always makes the negotiation easier for me. And it will make the negotiation easier for you too if you take control at the opening.

The opening, goal setting and preparation are all early on in the negotiation process.  So I know what some of you must be thinking.

Why isn’t there a trading strategy?

Trading is another vital element of negotiation.  But your trading won’t work well for you unless you are prepared, have proper goals and have taken control of the negotiation process.

Most people think that negotiation focusses on proposals and trading.  But just as much care must be taken in the early parts of the negotiation.  I wanted this article to concentrate on these areas.  Jumping straight in with trading will lead to problems in a negotiation.

Don’t forget that negotiation is a complex process

Negotiations fall into seven separate phases.  You need to make sure that all the right pieces are in place before you start a negotiation.

But you also need to make sure that you do everything correctly at the end of a negotiation.  A negotiation doesn’t end as soon as you shake hands on a deal.

All print companies should focus closely on negotiation

Remember that everything you gain through a good negotiation goes straight to the bottom line.  Good negotiation leads to increased profit margins.

Here are three action points for you to get going on your negotiation skills:

  1. Discuss how you go about negotiation as a team or a company
  2. Set yourselves some company targets for negotiation
  3. Start reading up more about negotiation skills

So don’t give way too easily

Remember the print sales team that I trained.  They were giving away more than they should have.

But after their training they took pride in achieving as much profit as possible.  The profit margins of the printing company improved by over 5%.

And your profit margins could improve in the same way if you focus more on negotiation.
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P.S. I have just published The Print Industry Negotiation Handbook.  It’s a great place to find out more about negotiation skills that are really relevant to the print industry.  And, right now, there’s a special launch price.  But this is only for a limited time.  So head over and purchase your copy now.

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2 Responses to Printers: three negotiation skills that will raise your profit margins by over 5%

  • Mark Reid says:

    Before training a sales team in negotiation skills, first check that the prices they are negotiating are correct. A key to achieving the correct price is to include value add percentage in the commission formula.
    This simple device means the sales person and the company have a common cause, making it less likely that a sales person would talk the price down.
    But for reasons that are hard to fathom, very few printing companies make the link.

    • Matthew Parker says:

      Thanks for your comments Mark. It is important that any negotiator understands the correct price structure. And I also agree that everyone would be better focussed if sales people were commissioned on profit.

      Matthew

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