The Lever of Information

The less your negotiating partner knows about you and your constraints and needs, the better for you. The issue of information has different aspects. It is about the needs of the party on the other side, and the individual needs and constraints of your direct interlocutor. Are there performance indicators that that must be met? What does his current compliance with these performance indicators look like? For example, are turnaround times measured in financial accounting? Do complaints about invoices have to be closed as quickly as possible? If this is the case, it may well be that your counterpart on the other side simply gives in so that a complaint case that has been festering for a long time is finally off the table. Are there incentives/bonus arrangements that particularly motivate your negotiating partner?

A very exciting aspect of the information lever is that it usually allows a more differentiated view of the structure of the various levers of negotiating power with relatively little expenditure of time and other resources. One’s own alternatives may not be as good as originally assumed, but at the same time the timeline on the negotiating partner’s side is much tighter than one originally assumed. One gets a deeper insight into the constraints and needs of the negotiating partner.

This differentiated overview of the strengths and weaknesses of one’s own and the other party makes it possible to focus attention during the negotiation on the weaknesses of the other side or one’s own strengths. Due to the great importance of anxiety for human decisions and behaviours, it is usually more effective for one’s own cause to draw attention to the weaknesses of the other side than to one’s own strengths

Working on the lever of information:

In times of the Internet, you can considerably increase your level of information about the other party and your direct interlocutors even with a manageable investment of time. In addition to the internet, common sources of information are the mail traffic that has accumulated so far, the negotiating partner’s administrators who are not aware of the significance of the information they are passing on, high-ranking executives who send signals about the negotiating strength and the current needs of their own company in a completely different context. Industry and professional networks such as Xing or LinkedIn can also be worth their weight in gold when it comes to gathering information.

How well is the information on business partners and special interlocutors prepared in your companies? Well-structured and generally accessible information increases the success of negotiations. Are there well-structured project files where everyone can quickly find their way through? Could it help if you have additional reading permissions?

The lever of information in procurement:

  • What is my supplier’s cost breakdown?
  • Can I estimate my supplier’s cost breakdown using public sources?
  • How much information do I have about my supplier’s sales targets and the status of achievement?
  • How well do I know the remuneration system in my supplier’s sales department and about the status of achievement? Are there bonus systems? When are the accounts settled, monthly, quarterly, half-yearly, yearly?
  • How well or how inadequately is your supplier’s sales pipeline filled?
  • How good or how inadequate is the general economic situation of your supplier? A supplier who is not doing so well economically is certainly prepared to make more concessions in negotiations. A supplier who is in serious economic difficulties could be a risk for your supply chain.

The lever of information in sales:

  • How well do I know my client’s margins and the underlying cost structures of my client?
  • What do I know about my client’s purchasing goals? Is there information about the status of target achievement?
  • Are there bonus systems for my customer’s purchasing department? For which commodities   does the bonus system apply?
  • What is the current capacity of the customer’s purchasing department? What capacities are available for the preparation and implementation of the negotiation?
  • How well or how bad is the general economic situation of my customer? A client who generates a high return on investment should be more willing to compromise in negotiations. Generally, if the customer’s order book is full the focus will be more on delivery reliability and service quality. A client who is struggling may not have the capacity to negotiate tough. Perhaps he is no longer being supplied by competitors, or only against advance payment. Maybe you must take similar actions.
  • What are the client’s current goals and strategies? What are the successes or failures in implementing these goals and strategies?

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