Businesses face a critical moment as 2022 ends and 2023 begins. Inflation from the past year has driven up organizational costs, forcing sales teams to push for steep price increases to offset these expenses. Yet, many companies have struggled to secure these hikes, resulting in shrinking profit margins.
Management now confronts the stark reality of a declining bottom line, with shareholders demanding swift action. In response, procurement teams might be directed to cut costs, while sales teams may be pressured to seek even higher price adjustments. This clash creates a volatile environment in 2023, as procurement and sales teams find themselves at odds.
In preparation, management must ask tough questions: Are your sales teams ready to stand firm against procurement’s push for price cuts while still implementing necessary price increases? And, conversely, are your procurement teams equipped to lower spending and resist further price hikes when sales counter their moves?
Navigating these challenges hinges on effective negotiation. Research underscores that thorough preparation stands at the core of successful negotiation. It takes time to ready your teams for what lies ahead, so delaying action could prove costly.
To tackle these pressures, businesses can lean on negotiation experts who offer guidance on managing negotiation dynamics, handling requests for price reductions, and adapting to shifts in power. One effective strategy is to identify and rank the key issues at stake. When you know what matters most to every party involved, you can craft a clear, targeted negotiation plan. Recognize potential power imbalances, and work actively to level the playing field.
When faced with price decrease requests, delve into the reasons behind them and collaborate with the other side to forge solutions that benefit everyone. For instance, if a drop in demand underpins the request, consider strategies—such as ramping up marketing efforts—to boost demand.
Finally, maintain a pulse on the negotiation landscape by routinely reviewing your strategy. Monitor both your organization’s performance and that of your competitors, and adjust your approach as the market evolves.
In short, preparing for the commercial challenges of 2023 means mastering negotiation pressures, addressing price decrease requests, and adapting to shifts in power. By consulting with negotiation experts and deploying smart, proactive strategies, businesses can navigate these turbulent times and safeguard their bottom line.
Martin Pilch 
