Experience From The Plastics Industry – A CEO’s Perspective
Closing the Deal
Over the last few weeks I’ve talked about various tactics in getting the very best deal from your vendors. This week, I’m going to cover the top ways to get the best deal when closing.
- Play the local vs off-shore card. If your preferred supplier is local and there is an off-shore vendor (and make sure you know of at least one), you’ll want to indicate that you’d really like to purchase local, but they’ll need to move on their price some more. Sales people are all too aware of the intense off-shore competition and it’s a big motivator to make a better deal.
- Ask for payment-term discounts. Prepaid discounts, or 2% discount for Net 10 day payments are the most common. Cash is king and you’d be amazed at the deep discounts you can get by having it at the ready. If there are no terms-discounts available, ask for extended payment terms, 60+ days is a good starting point. Companies with over-extended lines of credit or who have third parties collecting customer payments are more likely to give worthwhile incentives for quick or pre-payments. You can figure this out by looking at their previous invoice and seeing if the “Remit To” is the same as the company address. If not, the company may be in some financial trouble and might be more flexible with their pricing.
- If it’s a big capital purchase, tie in the final payment with performance criteria. i.e. it must perform according to an agreed to specification to have the final payment released. This often allows you to get an additional discount if the product under-performs.
- Give them a referral. Tell the sales rep that they can use your name as a referral if the sales process has been exceptional. “Keep me happy and I’ll spread the good word about you” or like you on Facebook etc. Be explicit that your testimonial will be based on your level of overall satisfaction: price, terms, quality, service, delivery, and performance. Don’t underestimate the value of a testimonial – its massive, and companies are willing to go to great lengths to get stellar testimonials they can use for marketing.
- Refuse to accept any personal gratuities, kick-backs, referral fees or gifts. This actually reduces your ability to negotiate a better deal and usually has less value than the discount. Suggest that they reduce the cost of the purchase by the equivalent $ amount, or apply it to your next purchase. In any case, most companies don’t sanction gratuities in the performance of your paid work. I don’t know how many sports tickets I turned down, but I did get hundreds of thousands in discounts.
- Get suppliers to email (or fax) you their quote. If it is verbal, you should write it down in your daily journal with product specs, names, phone numbers, pricing etc. A paper trail is your ammunition to show your manager or purchasing agent you’ve done your homework and is your clout for future orders.
- Always stay cool and friendly. Be confident. Stay focused. Negotiating with a hot head is a sure way to spend more money than you need to.
- And finally, you’ll be surprised to find out that even retail and big box stores will cut deals for overstock, out of box items or just because…
Remember that no purchase is too small to negotiate a better price or terms and delivery. Don’t be embarrassed to ask. Remember that the list price and terms are ALWAYS negotiable – but you have to ASK (with confidence).
Bottom line: Asking is the best way to get a better deal!
If you’ve read this far, my personal challenge to you is to contact our sales department and see if you can swing a better deal from us using some of these techniques – but shhhhh don’t let them know you read my blog!