Making A Deal With The Devil
Updated: Jan 29, 2019
One of my favorite movies is “The Devil’s Advocate”. In one of the big scenes, Keanu Reeves playing a young fabulously talented lawyer asks Al Pacino “are we negotiating?” to which Al replies with Pacinoesque flamboyance: “ALWAYS!” Pacino was playing the role of the devil; who’s work I’m sure never sleeps. But while most of your time as a paint dealer won’t be as corybantic as the life of the devil surely is, still in Al’s words: we are always negotiating!
Not long ago during a conversation about studying abroad, my daughter insisted that this spring semester was perfectly timed for her to go.
As we got deeper into the discussion she shared her singular reason: she couldn’t go during the fall semester because she wasn’t going to miss the football season at Ohio State! “I didn’t know you go to the games?” I asked. “I don’t!” she replied. “But I love the tailgates!” It was time for some parenting I thought. She thought: “Are we negotiating?”
My arguments were the better ones: we have already paid her rent for her apartment for this coming semester so going now was like tossing $4K down the toilet. Also, it turns out they don’t offer journalism in the abroad program in the spring semester so she would fall behind I explained. Four thousand dollars AND falling behind were too much to give up in exchange for a few tailgates obviously, so going a different semester was a slam-dunk win for dad!
I drove her to the airport last Thursday!
Unlike a parent or even the devil (which my daughter may argue is one role played by the same actor), as a paint dealer, most of my time I am not negotiating. Like you, I place orders to fill my shelves, call people to remind them to pay their bills, tell the driver which deliveries to make first etc.
But there are times when I AM negotiating and it’s important to me that I identify those situations and react to them accordingly.
Our vendors like us to think that they treat us all the same. It’s part of a negotiating strategy that they employ, bringing you to the table thinking: “this is the same deal everyone else gets.” But you thinking that does not mean it’s so! We all have the ability to strike our own deals with our vendors.
We were looking for a new line of latex floor paint recently. I went to a few different vendors and asked about what they could offer us.
I was surprised at what I learned. One of the lines we considered was available to me for 20% less than I knew my pricing to otherwise be. From a vendor I don’t generally think of as being negotiable. TWENTY PERCENT! And the only reason I found that out was that I was prepared not to buy this particular vendor’s line…. so they lowered their price to entice me.
What made that all possible was the leverage created by the fact that they had to fight for this sale! When I am considering something like a new line, I make sure that all sides I’m speaking to know: I have choices! If I can’t create that leverage, then it’s like negotiating travel abroad plans with my daughter: a losing proposition.
It’s important to know what the other side can offer during a negotiation. I like to speak to other dealers first, asking around if anyone has knowledge of special deals on a certain product line. In my experience, dealers are willing to share this with other dealers.
You also have to know what the other side needs or wants to be effective. In this example when we are negotiating over adding a new line it’s pretty simple: they want more volume. But what does the added volume really mean to the rep you are dealing with? Because I want to frame the conversation in a way that entices them!
Adding a few thousand gallons of volume to a company selling millions of gallons may not move the needle much. But if I frame the conversation as: “If I take in this line, my volume next year will likely be up 10%” it sets the tone and lets them know what their upside is. Establishing aspirations like this can get their attention off the price list and onto the aspiration: growing your business 10%.
It creates leverage and in a negotiation leverage always comes in handy.
Always, when you are negotiating highlight the aspiration and think big! Ask for what you want, don’t say yes too quickly and when you need to concede don’t do that too quickly either! Probe for information to use against them and always BE PREPARED.
It’s hard to cover a topic in a five-minute read that has had thousands of books written about. But the lesson here is that as an independent retailer you do need to work on your negotiating skills.
Since my daughter can’t teach a class on the subject from her spring semester barstool or beach in Barcelona, you were stuck having to learn that from me!