Every CEO Should Teach Their Team How to Negotiate. Here’s Why
This seems pretty obvious, but it can have huge implications for your business.
PHOTO CREDIT: Getty Images
My team negotiates absolutely everything--no exceptions.
Our company rule is that you never say yes to the first offer put on the table, and you always have to get at least three to five quotes.
Realistically, this is all Negotiation 101, but many people simply aren't used to the practice. For instance, people in production know to negotiate for a better price with manufacturers. Yet some creative departments might not be as focused on getting a better deal when working with an agency.
That's why every company needs to create rules around negotiation and give people a roadmap for what to do.
Negotiating isn't an incredibly difficult skill to learn--it just requires practice. And you should want everyone on your team to get better at it because it can have huge implications for your business.
Here's why you can't skip on negotiating tactics and expect your company to succeed:
Your team has to bring in more money than the company spends.
This seems pretty obvious, I know. But being profitable sets the stage for everything your team does.
There are certain aspects of the business that everyone is thinking about, like top-of-the-funnel tactics for spreading brand awareness and bringing in customers. That's all well and good, but it's not the only part of your finances that will determine success.
You and your team have to keep all expenses in mind--payroll, overhead, vendors--and how much you're actually paying for them. No, these aren't the sexy, exciting things to consider, but they're essential for good business management.
That's why it's crucial everyone has their negotiation hat on at all times, thinking about, "How much am I spending on this? Does it make sense? Would I spend this if it was coming from my own bank account?"
It's very easy for spending to spiral out of control if everyone isn't thinking that way.
People will agree with your team's requests if they have the courage to ask.
It's amazing what you can get just by asking. The problem is, people are often afraid to ask. But the worst thing that can happen is someone will tell you "no."
If you ask in a nice way and explain why you want what you're asking for, people will work with your company more often than not. The trick is to make sure your request doesn't come off as arbitrary.
For example, in the early days of ThirdLove, I was constantly telling vendors or agencies, "We're a ten-person startup, we don't have that kind of money. What kind of break can you give us?"
It was amazing what companies were willing to do for us.
Getting over the fear of negotiation requires practice, which is why you have to encourage your team to role play or walk through a negotiation with a teammate. After a while, it becomes second nature, and no one thinks twice about asking for an updated offer.
Your team understands your business better than any vendor.
Just because someone hands you a contract doesn't mean they understand your business and what's best for you in the long run.
For instance, my team recently negotiated with a photographer over some of the photos from a shoot. Usually, a company only gains access to 20 or so photos. For a traditional retail company, that's plenty. But as a completely online company, we use images in everything we do. Emails, product pages, social, you name it--we need a lot of content.
Instead of demanding the images, we told the photographer why we needed the images and then asked if they could work out a different agreement for us. Since we went the distance to explain our reasoning, they agreed.
Your team knows your business better than any outside partners, so they should use that to explain and negotiate the best possible terms.
You want to set the right kinds of expectations with vendors.
Being crystal clear in negotiations and taking the time to edit every contract is more than just common sense--it shows the vendor your team cares and your company will be a good partner.
You want everyone to know what the relationship will be like, and that starts with setting the right expectations. That means being very clear on the outputs, reading the contract thoroughly, and understanding what you're signing.
All that attention to detail sets the stage, ensuring the other side knows you're paying attention to what's going on. While it may take some back-and-forth, there's value in making sure both sides are happy before anything is finalized.
Negotiating is difficult for everyone at first, but it's actually a bit like exercising. Taking the first step is the daunting part. Once you get started, you realize it's not that difficult to keep going when you know the work will pay off.