Friday, August 17, 2012
Tuesday, August 14, 2012
The Honorable Negotiator
Why is negotiating and haggling such an unpopular concept and dreaded process? The term "haggling" alone brings to mind nefarious individuals in the back room of a used car lot. Why does it only exist in certain industries? It has almost disappeared altogether in the retail industry, is rapidly losing popularity on new and used car lots, one of the last bastions and havens of the skilled negotiator. "Boy, I say Boy", it is alive and well in our industry! Our profits are defined by it more and more everyday. How do you train your planners, dispatchers, brokers?
Negotiating one of the top ten fears in this country. Is it the fear of personal rejection? Is it the fear of being considered greedy? Have no fear, because you're selling yourself, your company and your excellent service.
Some many years ago, I was trying to help educate a young group of planners in my operations department on the importance of getting better backhauls out of certain regions. These were regions where we had no customer freight nearby and we quoted the rates high to go there just for that reason. It wasn't a bad area of the country, in the midwest, rates from brokers should be decent until we find some better paying customer freight or not... It is always a good idea to have a healthy percentage of your freight obtained from the spot market. Sure enough, with the higher rates going into this area, I found my planners taking cheaper than usual backhauls out of there, and justifying on the round trip rates being above our target revenue per mile averages. Oy! Let's not be afraid of additional profit!
Needless to say, I was shocked that this group of planners, who were far above average, were not extracting higher rates from brokers for the use of our precious assets. The reasons I heard were ones I'm sure everyone has heard time and time again. "That's all they will pay, it's broker freight, and on and on. Why is it that some of the best people don't like to negotiate for higher rates? Is it hereditary? Is it a character issue? I think it's a little bit of everything. Our culture, our deep rooted religious and moral beliefs.
John Wanamaker invented the price tag in 1869. Thus began the end of retail negotiations. He felt that all men are equal before God and all men should be equal before price. This sounds silly at first, but upon further review it makes sense. Mr. Wannamaker was a devout Christian and viewed, as most people still do, that negotiating creates an environment of taking advantage of people, people of lesser intelligence, less informed people, less crafty people. The biggest fear this creates is the fact that we are not sure which one of these people we are. Are being taken advantage of or are we taking advantage? Are we the less informed or more informed? Are we the smarter ones or are they? It presents a serious challenge to ones self worth. Are we winning or losing? As soon as we hang up the phone do we feel remorse for giving too much or not getting enough?
These are all important questions, but the Honorable negotiator knows they don't matter. These insecurities and questions must be removed from the process. The only thing that matters is that you get the price you want in an honest way. Once you understand and follow the process on an honorable path to its successful conclusion, you will enjoy it and succeed at it. You will no longer find fear in it, nor be uncomfortable with the process of negotiation.
People relate negotiating to underhanded tactics, un Christian! Hence the Price Tag. Low and behold everyone loved it and they came and they came and they came. With Mr. Wannamaker's invention, it brought him much success with his department stores, but he also became a beloved man in the community. How do we overcome this fear, this disdain for negotiating? Like it or not, this is a needed skill in the transportation industry. Here is how we do it, and win, and feel good. We do it in an honest, honorable way every time. These are all important questions, but the Honorable negotiator knows they don't matter. These insecurities and questions must be removed from the process. The only thing that matters is that you get the price you want in an honest way. Once you understand and follow the process on an honorable path to its successful conclusion, you will enjoy it and succeed at it. You will no longer find fear in it, nor be uncomfortable with the process of negotiation.
Popular reading for both Brokers and Trucking Companies -
Negotiating with Freight Brokers - Purchase below!
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