How To Negotiate Directly With Shippers
Since 2009, there has been an industry-wide shift away from broker services which mean carriers are negotiating directly with shippers. The good news is: you don’t have to be Steve Jobs or Warren Buffett to negotiate business discussions successfully. The art of the deal is just like any other skill and can be learned, refined, and mastered. If you think about a negotiation for what it is, a conversation to reach an agreement, it suddenly becomes less intimidating. You’re not attempting to slight or shortchange anyone; you’re just trying to avoid being taken advantage of by your counterpart. Good negotiation skills can mean the difference between your fleet’s success or failure. Here are seven ways that you can use to improve your negotiation skills, receive better prices on loads, and build long-term relationships with shippers
Build trust by creating a personal connection.
Most negotiations boil down to two parties, made up of people, connecting with the goal of establishing a mutually beneficial arrangement. Whenever possible, connect at the personal level and build rapport and trust. Ask questions about their life and experiences. After all, you’re in the same industry so it should be relatively easy to discover common ground (you can always lament rising fuel prices). Use inclusive language like that helps them picture themselves doing business with you. It’s not all about you; it’s all about both of you.
Come prepared with an understanding of their perspective.
Know thyself, know thy enemy. A thousand battles, a thousand victories. ~ Sun Tzu
To find common ground and come to a mutually beneficial arrangement, you must first know what the other side wants and more importantly why they want it. Place yourself in their shoes and attempt to view your business relationship from their perspective. If you can understand their pressures, concerns, and goals, and empathize with them, you will have a much better idea of what is motivating them. Once you understand your counterpart’s perspective, you’re able to tailor your proposition to meet their needs.
Don’t Be Afraid to Share information
The more details you share, the more credible you appear. Your goal is to build a relationship of trust with your shippers. If your vendors trust you, they’ll not only be easier to work with now, but they’ll also be more inclined to want to work with you in the future. This is your chance to educate your customers and help them understand how you arrived at your numbers. If the economy is affecting logistics, let them know. If changing fuel prices are a factor, communicate that. Have you implemented service upgrades or new features that impact your bottom line? Talk about them! Demonstrate that you’ve thought things through and are in the position of power when it comes to information.
Don’t Lowball Your Initial Offer
A common mistake in negotiations is to ask for your minimum requirements out of fear that asking for too much might kill the deal early on. Asking for the minimum upfront gives you no room to negotiate and can hamstring your leverage. Instead, have a clear understanding of your bottom-line number and include an initial markup that gives you room to maneuver during the negotiation. You are working towards a win-win scenario and lowballing upfront can rapidly move you from a winning position to a losing one.
Remember, Money Isn’t Everything – When negotiating, it’s easy to get caught up in the “big blocks” of the deal. Revenue, Products, Services, etc. However, there may be intangibles that can help provide better balance in the deal. Terms of delivery, flexible payment terms, and other “non-dollar amount” elements can be used as negotiation tools.
Keep Doors Open – Never deliver ultimatums.
Ultimatums and deadlines often cause irritation and irrationality. By playing hardball and forcing your counterpart into a corner, you may blow a deal that would have otherwise been successful. Your #1 priority during a negotiation is to maintain and build long-term relationships with your shippers. You might have to pass on today’s negotiation, but if you’ve been intentional about building the relationship, you may be able to do business down the road.
Know your bottom-line number and Always be prepared to walk away.
Sometimes, deals just aren’t meant to be made. Respect that. Always have a firm grasp on your absolute rock bottom number. For most carriers negotiating deals, that number is the Total Cost Per Mile required to maintain profitability (don’t forget to calculate your Variable Cost Per Mile as well). If the negotiations reach that number, cut your losses and walk away from the deal.
Negotiation is an art form. Just like any other medium, to become proficient in it, you must hone it. The more experience you obtain, the easier and more effective you’ll be. With a little practice, a lot of preparation, and a genuine desire to seek win-win scenarios, you’ll be ready to negotiate like a pro.