Beyond Negotiation

Unpopular opinion: Negotiation skills are overrated in FMCG key account management.

And I say this as someone who has always enjoyed negotiation. But over time, as I developed a multi-dimensional approach to my role, I found myself relying less and less on negotiation tools—and yet, achieving better business results. When agreeing on JBPs, my objectives evolved from aggressively negotiating favorable deals to assuring my buyers that we were not out to take advantage, influencing them with the bigger picture and the role my brands play in their categories, and really understanding what is critical for my own P&L.

This is because the relationship between large retailers and manufacturers is an ongoing one. JBPs are negotiated every year. And if your brand is worth its salt, you and the retailer are locked in with each other, like it or not.

Imagine if you were an entrepreneur selling your products to your best friend—how would your approach change? Would you still be looking to “never split the difference”?

Negotiations often become detrimental to relationships, leaving a bad taste that lingers for months. And in a business where JBPs are agreed annually, a few months is a long time.

You end up showing your worst side—putting aside everything that’s beneficial for the category and the shopper.

It turns into a transactional, materialistic exercise:

• “I represent my company. You represent yours”.

• “We are working at conflicting purposes”.

• “I am smarter than you”.

It gives the impression that the business relationship is just about short-term profit, even if that comes at the expense of the counterparty—who, ironically, you claim is your partner.

It crystallizes everything wrong with the world: the unhinged pursuit of material gain.

Naval Ravikant once said he loves working with a particular business partner because, over time, he has learned that the person always rounds up in Naval’s favor. He consistently gives Naval slightly more than he keeps for himself. And in return, Naval just gives him business—without thinking.

That’s the power of trust.

The problem is, it requires a leap of faith. There’s always the risk that while you approach the negotiation collaboratively, the other side is bent on winning it all.

We need a culture where negotiation is a defensive skill—something you prepare for just in case the other side’s materialistic instincts take over. Because, let’s be honest, both retailers and suppliers are guilty of it.

Warren Buffett is famous for not negotiating. The book Snowball recalls how he closed a deal without making a second offer. Imagine the cognitive load you’d save if you didn’t have to negotiate at all.

It should be about both parties agreeing on what’s fair—not about maximizing how much they can squeeze out of each other.

It’s almost like a prisoner’s dilemma—collaboration takes a hit.

I don’t know if it’s just me, but I feel negotiation trainings assume the counterparty is an idiot. That they’ll just play to your tune and compromise on their objectives.

Also, real-life negotiations almost never unfold the way they teach you. They are not linear, nor do they constructively move toward closing the “gap” in small, incremental steps. The culture around negotiation—the idea that you should “never split the difference”—creates a combative mindset.

No one is stupid.

Plus, as long as you have an exit clause, you’re never truly trapped in a bad arrangement. In any case, most JBPs have one-year tenures, meaning that any party who feels shortchanged will come back with a vengeance next year. And that’s in no one’s interest.

I had a negotiation once with an international retailer in Pakistan and because I had prepared well and memorized numbers in a complex arrangement, I was able to make my buyer agree to terms which were hugely favourable to me . He soon realized and renegotiated. The only thing i gained was my ego but it came at the cost of time.

For Key Account Management, as important as negotiation skill are selling skills, category management, and commercial acumen.

• If you can convince the retailer that they will lose without your brand and the plans you have for it, agreeing on the commercials doesn’t take much

• Commercial acumen helps you understand what you actually need to drive your P&L forward. It makes very clear your walkaway point

• Understanding the retailer’s P&L doesn’t just help you empathize with them—it allows you to explain why your proposal is also in their best interest.

• It’s about crafting deals that are truly win-win.

  
  

But alas, there will always be the risk that the other person wants to take advantage of you—so you better start negotiating.

At the heart of it is distrust. The belief that the profit motive is devoid of values and empathy. That the other person might take advantage of you. That people are not considerate.

And maybe that’s the real problem.