I recently developed a model to demonstrate the power of insight to a customer. Primarily, the business I work in provides customers with analysis of their own data. The key to our business is having a lot of data from a lot of different customers — pertaining to the same items. We use customer pricing data in a large quantity to tell customers’ peers what we believe they should be paying for a given part (this is a very simplified explanation of what we’re actually doing).
In general we work with executives and decision makers in some of the world’s largest electronics manufacturers. They will pass off the masses of pricing data we provide them and have teams isolate price savings to work towards with suppliers. The strength of negotiations is directly related to the depth of insight into their own data. There is a proven lever/data point for negotiators to lean on when confronted with skepticism.
From the quadrant above, we can identify where our negotiators lie in terms of effectiveness as a result of information. The prime quarter (top right) is to be informed and efficient. I would argue that the top left quarter is underachieving. Although they are negotiating effectively, they could push the bounds even further through introducing data-based levers.
The extent of insight is often limited, depending on a negotiators’ industry, current data sources available, seniority and access — among other factors. Within our business, we have the luxury of insight into an otherwise highly confidential set of information. We are the trusted source that anonymizes data and makes it available for many.
Negotiators should look at their own business processes, get familiar with their own resources and define useful data sources that they can use to hit the informed and effective negotiator quarter of our model above. After all, who knows more about your business; you the member, or your negotiating opponent; the supplier?
