Data analytics might still be under appreciated as a valuable negotiation tool, yet more and more decision-makers are waking up to the power of data at the negotiating table. A recent report by Barclays outlines how decision-makers across generations perceive and utilize data to negotiate betterYou might not be surprised to learn that older decision-makers (over 55) are far more likely to prefer face-to-face negotiations. In comparison, younger decision-makers (18–34) are more likely to use online tools such as supplier management portals and video conferencing to help with negotiations.
But what’s most interesting — and perhaps most important — are the areas of agreement. Decision-makers agree that access to supplier data during negotiations can work in their favor, and almost 80% look to data analytics as a powerful tool to negotiate better.
Data analytics facilitates transparency between you and your suppliers
Though it’s unrealistic to know everything about everyone involved in a negotiation, openness to sharing data is a step in the right direction. But data alone doesn’t provide transparency. Rather, negotiating parties must use each other’s data and insights as a starting point for a dialog, and understand where interests and priorities overlap if they want to increase the value of negotiations.
That said, a common mistake is to consider only poor supplier performance data as negotiating leverage. But being open to analyzing and sharing all supplier performance metrics is a sure way to build a stronger relationship with your suppliers. The more suppliers know about how you rate their performance, the better they’ll understand your priorities and expectations.
Good data can shorten negotiations
Closing a major contract can take months of negotiations and meetings, but having the right data — that is, actionable data — can significantly decrease negotiating time. How?
First, effective negotiation requires that each side be clear on their own priorities, benchmarks, and goals. Having good internal data on your company’s history and interaction with a supplier and its competitors will help you understand objectively how much the supplier helps your company achieve its strategic goals.
By making data-driven decisions on price limits and contract terms, you’ll arrive at the negotiating table with a stronger sense of what you need to communicate to your supplier — and when to walk away.
Second, gathering valuable external data on your suppliers helps you understand their own competitive landscape and adjust your expectations at the negotiating table. Knowing your suppliers’ influences, pressures, and market position will help you better understand the negotiation from their point of view. The better data you have on your supplier, the better you can anticipate their responses to your offers and objections. In short, good data helps you negotiate better and with fewer meetings.
How Phocas can facilitate collaboration
Better communication and collaboration in your organization might seem like a lofty goal, but it doesn’t have to be. Modern leaders turn to new technologies that facilitate the sharing of information such as profit, loss, and variance among key departments. That means an end to the days of relying on static spreadsheets and long-winded financial statements weighted down with irrelevant information.
A digital solution like Phocas budgeting, forecasting and reporting software can provide a single source of truth for cross-functional teams. With built-in dynamic financial reporting, these software tools allow everyone to view the same data and make data-driven decisions that benefit the entire organization. This leads to a truly collaborative process, since teams can view data from every aspect of the company and make stronger, more informed decisions.
Data as part of your negotiation toolbox
The right data at the right time can be a powerful negotiating tool, but having data alone isn’t enough. Instead, your data needs to be systematically integrated with your negotiation strategy to bring the most value to your company and help you negotiate better.
To learn more about using your business data to better negotiate better with suppliers, download our ebook: Modern financial planning and analysis.