These five rules apply to everything from negotiating the price you’ll pay for your next car to getting a better deal on the donuts you’re bringing into the office on Friday. When applied to negotiating your parcel carrier contracts however, following these rules may save you enough to buy a fleet of cars, or enough donuts for your whole office building.
Have a plan.
This seems like a logical statement, but most negotiators fall well short of actually having a plan. Just knowing what you want to achieve is not enough. A real plan, and one that will have the best chance of being successful will include the exact steps you will take to get it! When it comes to parcel carrier contracts, a well strategized plan backed up with in-depth analytics will always lead to reduced parcel carrier rates.
Know your adversary.
While the person with whom you’re negotiating may not be your “adversary” in reality; in negotiation it is a fitting term. Every negotiation involves two sides and each side wants a specific (and likely, different) outcome. Both sides will make judgements throughout the process. To be effective, understand the motivations and behaviors of your counterpart. This will help you communicate effectively and, in the end, convince them that what you want to achieve is reasonable. FedEx and UPS might be daunting adversaries when it comes to parcel carrier contract negotiations but with the help of experienced third-party vendors, you will know all their tactics.
Negotiation is NOT a zero-sum game.
Negotiations work best when both sides of the negotiation actually get what they want. Instead of focusing only on your position and then giving ground until you reach a compromise, really listen to the other party. Understanding what is important to them is essential to getting what you want out of the discussion. They may be perfectly willing to give you everything you want in exchange for something they want (and that “something’ may be something you would give anyway)! When negotiating with UPS and FedEx, listen to what they have to say. To get the discounts you want on your parcel carrier contract, you have to give a little somewhere to achieve the greatest discounts on the rates you want.
Have a backup plan.
Going in, know exactly what your WAWA point is (Walk Away Without Anything). Chances are, if you are willing to walk away from a negotiated agreement you are in a far better position to actually negotiate a favorable one! You won’t convince your counterpart (if necessary) that you are willing to walk away unless you have thought about it and have a backup plan. During a parcel carrier contract negotiation, you have to be willing to switch shipping allegiance from the incumbent to the other party. Whether you are with UPS or FedEx, a smart negotiator will be willing to walk away and utilize another parcel carrier in order to have leverage to gain the discounts they want.
Don’t be evil.
Yes, I know, this sounds like a Google phrase (it is one, actually) but it is a good one. If you are negotiating an agreement, you will be working with the other party for quite some time and it is better if both sides support the agreement you worked hard to achieve. Even if the negotiation is a one-time deal, karma is real.
When negotiating price with your carrier partners, understand that while you negotiate this agreement every couple of years, the carrier has done this thousands of times since you last talked about it with your representative. They’ve learned along the way and they typically know far more about your business than you know about theirs. Having experts on your side of the negotiation table literally pays (see Rule #1 and Rule #2).