Sales and revenue growth are super important for all business owners, but what about tactics that can help reduce costs and improve profits?
Here are 6 ways to negotiate better terms with your suppliers to drive growth in 2020
The beginning of the year is always a great time to reflect on your business and where you can make small improvements that will have a big impact – especially on your profit margins.
Focusing on increasing sales and strengthening your relationships with loyal customers is the obvious first move, but have you also considered a few ways to bring down your expenses?
Renegotiating prices with your suppliers is one of the best ways to bring your costs down and improve your profit margins. Here are 6 ways to get the best deal for your business.
- Offer more business in exchange for better terms
Your suppliers are just like you – they’re business owners who want to increase their sales and work with loyal customers. Long-term contracts in particular are valuable because they provide the company with a guarantee of future business.
So, how can you use this to your advantage? First, make sure your supplier knows that you want to give them as much repeat business as possible. Share your sales projection plan, and convince them that if you work together, you’ll both win. Second, offer to sign a long-term contract in exchange for a better deal.
Finally, you could even offer a large deposit in exchange for a discount. Your suppliers are also concerned about their cash flow, and a discount will offer them better peace of mind.
- Get creative if you can’t negotiate on price
Some suppliers won’t budge on price, but that doesn’t mean the negotiation is over. Perhaps they will agree to longer payment terms, giving you 30, 60 or even 90 days to pay for your items. Extended payment terms will improve your cash flow.
Similarly, you can ask for a discount if you pay your invoices early, or for bulk orders and request faster delivery times, all of which will help to reduce your expenses.
- Get busy negotiating
Your relationship with your suppliers is just like any other business dealing: open to negotiation. The first rule of all negotiations is to never accept the first offer – a first offer is simply the starting point for both parties. Instead, give a counter offer requesting a better price. Justify it with your own offer for a long-term partnership.
You should also interrogate why you’re being quoted a particular price – for example, does it include features or services that you don’t need or won’t use? This could also impact the final price you agree on.
Just be careful not to push too hard that you erode goodwill between yourself and your supplier, or get them to agree to a price that they can’t actually afford. It doesn’t do you any good if they go out of business.
- Create a bit of healthy competition
Your goal is to secure a competitive price, and sometimes the best way to achieve that is by speaking to more than one supplier. Be transparent about what you’re doing and let the different suppliers know that you’re negotiating and will choose the company that offers you the best deal and service.
Just be careful though – you don’t want to compromise quality for price. The aim is to get the best deal for your business without damaging your ability to serve your customers.
- Give all of your business to a few select suppliers
As we’ve mentioned, the more business you give to a supplier, the more likely you are to receive a better deal. Many business owners source products from multiple suppliers when they could transfer all of their business to just one or two suppliers.
While this does come with some risk – particularly if something happens to your supplier – it could also lead to a great long-term partnership with preferential pricing that works for everyone.
- Be a business that suppliers love and trust
We’re all familiar with dream customers and problem customers. There are customers who you probably love hearing from, and others that just cause headaches. If you’re a great customer that suppliers want to do business with, they’ll be more likely to work hard to keep you – even going so far as to agree to better terms.
Great customers honour their promises, are never late with payments and even add value to their partners in other ways outside of specific deals. Perhaps you can make a few good introductions or offer a key referral or two? Treat the relationship with your suppliers as a partnership and your businesses will both flourish.
Price is important, but ultimately your goal should be to build a relationship with your suppliers based on a win-win basis.
The more business you give them, the more they’ll grow. At the same time, if they give you better terms – from discounts to faster delivery times to better payment terms – you’ll be able to service your customers better, leading to more business and repeat customers flowing in.
DO YOU WANT TO BOOST CUSTOMER SATISFACTION AND DRIVE LOYALTY?
Talk to Sureswipe about a cost-effective Loyalty programme. We can assist in customer retention through a platform that helps you communicate directly with customers through email and SMS. Call 0860 200 111 or fill in your details here and we’ll call you.