For FMCG suppliers trade terms are typically a ‘once a year’ negotiation so a great deal of money and opportunity rest on getting them right. Added to the mix is the challenge of aligning terms across channel – or justifying differences – as well as anticipating and insuring against the impact of market forces. (The current advance in influence of the discounters being an example of this.)
It can be challenging for sales teams to break away from established investment patterns and change the expectations of their buyers, even when the trading landscape has changed. In these, not uncommon, scenarios is where we have seen dramatic results. One example of how this worked with a TN client is described in this month’s newsletter. Take a few moments to read on.
Total Negotiation’s client is a major UK manufacturer in the FMCG sector.
A grocery account team came under pressure from a major grocer during the renewal of annual trade terms. The customer wanted significantly improved funding, yet the client had few options. In addition, any decision would potentially set an unwelcome precedent for negotiations across the sector. The client Account Director needed expert support to explore other options to minimize the impact in this account and also across other grocery accounts.
Objectives of the engagement
Help formulate an aligned strategy to respond to the customer, create a compelling terms investment plan, increase conditionality and build the confidence and capability of the team to deal with the negotiation.
Over a period of two months, TN evaluated the situation and helped the team to create a strategy to approach the customer. This involved a blend of analysis, coaching, challenging discussion and internal alignment. They invested a significant amount of time creating a wide range of variables, understanding their counterpart’s stances and planning their own. TN facilitated role plays in which the client team played out their moves and the anticipated counter moves.
Another significant element of the TN approach was supporting the achievement of robust internal client alignment. In the words of the Account Director, ‘I feel the TN approach is very conducive towards reaching a win-win agreement within a manageable time period. Your pragmatic and highly structured approach to negotiation has helped me enormously in understanding the grocer’s overall game plan and has been invaluable in reaching the agreement that we have struck.’
* Increased conditionality throughout the terms agreement
* Better targeted and more conditional and measurable investment
The client team now invest heavily in preparing their negotiations, to the extent that often 75% of the time is spent in this phase with only 25% in the live negotiation discussions.
Tangible sense of confidence in the team that they can deliver far more commercially beneficial outcomes than in previous years. They feel that, with this improved approach, much of the pressure to agree to sub-optimal terms within account meetings has been removed.