How to practice profitable negotiations

Jan. 1, 2020
Understand the other side's position to improve your relations and make negotiating less stressful.

I recently facilitated a seminar at NACE about negotiations where I described how to negotiate more successfully and increase profits. The key factors were building relationships with those you do business with and developing an understanding of their focus in the negotiation.

Regardless if you are dealing with a vehicle owner, insurance adjuster or a vendor the process should be the same. You must involve yourself enough with the other party to understand what their goal is as it is just as important as knowing what your goals are. It is pointless to try to negotiate for something the other party is not capable of providing.

To begin the process you will need to know your limitations, which should be governed by your core values. You should never negotiate against your core values, mission statement or company vision. Doing so would tarnish those values and diminish your credibility with business partners. Once they learn your values can be manipulated you become vulnerable to increased accommodations.

Whether it is a paint contract or a repair appraisal you should be aware of the things you can live with and the things that should be changed. You should read the contract or appraisal with the mindset that you want a win-win and look for opportunities to offer trade-offs for things you find unacceptable. Becoming familiar with the other party and learning about their core values or vision helps with this process.

I always find it helpful to talk to an insurance adjuster and find out what their targets were early in the process. Finding out what an adjuster is getting measured on helped me negotiate a profitable appraisal. If I knew for instance that a target was to reduce blending I would write "blend within panel" where possible but add time necessary to bring a repaired panel to blend standards. The additional time required to take a panel that was repaired to 320 grit to 1000 grit blend standard was put on a separate line with an appropriate line note. The adjuster met his target and I received what I deserved for repairing the panel, a win-win if you will.

Similar tactics could be used with a vendor. A parts vendor would probably like to make a minimum number of trips to your shop and you would like to have all the parts for a repair delivered at one time. But if you two do not talk to each other and determine what each other needs, you will be wondering why they deliver a couple parts at a time instead of the entire order. One key factor is the parts vendor gets paid for each individual invoice and they have always delivered a part when it comes in thinking that is what you want. If you sit down and negotiate a delivery process you both will understand that one trip really works better for both of you. A simple written agreement that explains each side's responsibilities will make your parts purchasing a smooth process.

Negotiating a repair with a vehicle owner must include knowing what they expect out of a repair. You as a repairer know how you want to repair the vehicle but does that meet the vehicle owner's needs? Learning about the vehicle owner and how they use their vehicle is an important first step.

I once had a customer who had an older vehicle that sustained damage that made the vehicle an economic total loss. The vehicle did not have considerable damage but the value of the vehicle could not support the repair. The customer was an elderly gentleman who only used the vehicle for short trips. I was able to work with the insurance company and negotiate a repair that would meet the customer's needs as well as fit into the insurer's parameters.

My thought throughout the process was that the customer's current vehicle was all the vehicle the customer needed and he certainly did not need or want a car payment on a new car. Understanding the customer's needs and being able to relay that information to the insurer enabled us to provide a safe repair and stay within the repair thresholds.

By following these simple tactics you will find that your negotiations go smoother and you are able to create profitable agreements with your business partners. Additionally by taking a little time to understand the other side's position you will improve your relations making your bargaining less stressful. More profit and less stress is a win-win situation.