Negotiating a better deal is an ongoing process, not an isolated event. One of the steps you can use to turn the process to your advantage is to get a vendor presentation. Savvy IT managers usually require vendors to make presentations of their proposed solutions. A vendor presentation can be an excellent opportunity to gain concessions well before the formal face-to-face bargaining starts. Here’s how: Make it very clear to the potential suppliers that to remain in competition for your business, they must formally present substantive recommendations that prove that they understand your requirements. Also, they must show that they have confidence in their ability to perform and deliver a solution that meets or exceeds your stated requirements. At this point, you are in a position of strength, because a given vendor has yet to win the deal, and vendors will tend to maximize their representations of benefits to you.
To your advantage, vendors will usually make assertions during their presentations to convince you of their capabilities and ability to deliver. Take good notes on who says what.
For example, a vendor once told me during his presentation that “satisfaction is guaranteed.” Later, during face-to-face negotiations, we pressed for a “satisfaction guarantee or our money back” warranty, citing the promise made (and by whom) during the vendor’s presentation. The vendor was in the unenviable position of having to make good on that promise or lose face and credibility by reneging.
Vendors that are still in their sales mode during presentations tend to embellish their qualifications while sometimes forgetting that negotiations are proceeding. This gives you a great opportunity to position yourself for valuable concessions.
But at this critical juncture, it’s also easy to lose your negotiating leverage. If your team gets noticeably excited about a vendor’s offering, the vendor will think it has the deal in the bag and become less inclined to offer more assurances or indulgences to win your business.
Remember that vendor representatives are trained in every aspect of account control. They’ll pick up on signs of an excited customer and change their stance accordingly by reinforcing a customer’s hot buttons while deflecting attention from any areas where their company’s offering is weak.
The key to successfully using a vendor presentation for leverage is to become a sponge and soak up information, ask probing questions, verify the answers provided in the vendor’s proposal and never show a lot of enthusiasm for a deal.
Vendor presentations may seem mundane (and in IT deals, very technical), but they create equal opportunities to either improve or erode your position. Remember that the vendor is still basically selling while you’re actually negotiating, and that creates a great opportunity to turn some sales promises into contract realities.
Avoid Attractive Lease Packaging
Translating a package of prices into “one low monthly payment” is a favorite ploy of many technology equipment vendors. Car dealers have used it for decades on eager, naive customers.
In either setting, if the salesperson can get a customer to focus on an all-inclusive low monthly price (magically within the customer’s budget), there’s a good chance he can land the deal quickly without much analysis by the customer.
For lessees, the first step is to separate the equipment price from the financing. Focusing on the all-inclusive lease quote—instead of optimizing each part by negotiating a purchase and separately negotiating financial arrangements—can be costly. Under the package price, you don’t know what the true cost of the equipment is. Second, you don’t know the true financing cost. Third, you can’t make a fact-based decision about whether purchasing or leasing gets you the better deal.
Attractive lease packaging can be very expensive. Break the deal apart, negotiate each part and line item, and then assemble the negotiated parts. You’ll find that the sum of the parts will total a lot less than the original lease package price.
JOE AUER is president of International Computer Negotiations Inc. (www.dobetterdeals.com), a Winter Park, Fla., consultancy that educates users on high-tech procurement. ICN sponsors CAUCUS: The Association of High Tech Acquisition Professionals. Contact him at email@example.com.
Copyright by Computerworld, Inc., 500 Old Connecticut Path, Framingham, MA 01701. Reprinted by permission of Computerworld.