When it comes to dealing with freight brokers, negotiating is going to be an everyday occurrence for your freight business. It’s not the easiest thing to do either. – Negotiating with freight brokers can be tough and can possibly even get heated at times. If you’re looking to make the negotiating process with freight brokers an easier and more friendly experience, what do you need to do?How do you effectively negotiate with freight brokers in a friendly and peaceful manner? To make the negotiating with a freight broker more effective and friendly, focus on these particular service points to service your potential client:
- Identify how the client will benefit from purchasing services from you.
- Know and understand your value proposition to the prospect.
- Understand where the person you are dealing with stacks up in the company chain of command.
- Identify how the prospect or individual you are speaking with perceives you. (Do they like you?)
- Do you know their timetable? How soon do they need to make a purchase?
- Have you taken the time to develop a good relationship with the prospective client?
While logistics, by nature, is a cut-throat business and negotiations with freight brokers can be agitating at times, it doesn’t have to be that way. Within this guide, we are going to provide you with all the tips and tricks that we have up our sleeves from years of working within the logistics industry to make your experience significantly more pleasant when it comes to your next freight broker negotiation.
Understanding What Exactly Freight Brokers Do and How it Helps You to Know
In the logistics industry, freight brokers are in a unique position within the business. They are going to function as both the buyer and seller of transportation services. When it comes to selling services, their objective is to sell the services you are offering at top dollar to increase their company’s profit margin.
On the flip side of that same coin, when they are purchasing services from your business, their goal is to get it at the lowest cost they can reasonably attain. This is to promote the same function as selling services of increasing company profit margin by having a lower expense of paying out for the services rendered by your business.
It is important to understand what lowest cost that can be reasonably attained means. What this means is that freight brokers want to get the best service they can attain at the best cost. Just because ABC Logistics offered to run a load for six-hundred dollars a day and you quote seven-hundred and fifty dollars a day doesn’t necessarily mean that they will be awarded the contract over your company.
Why is that even though the cost is lower? It is determined upon a few factors that were introduced earlier in this guide, but we will explain in detail how each of these factors affects how your business will perform when it comes to negotiating the prices with the freight broker. Due to the nature of the logistics business, understanding how freight brokers think and operate can significantly help your business.
How Does Identifying the Potential Benefits to the Customer Help With Negotiations
Negotiating is a situation that is going to be unavoidable when it comes to dealing with freight brokers. No matter how you shake it, you are going to have to do some haggling with a lot of people within this line of business. However, if you can provide the potential customer with the potential benefits of working with you that they are looking for, the negotiation can be a lot faster and friendly.
When you speak with a freight broker, whether they contacted you or visa-versa, it is important to understand your potential customer’s needs. Knowing this is what we like to call “identifying the X-Factor or pain points.” It is also Sales 101. Which means this is a skill that anyone who sells anything needs to have in order to be successful and have smooth sales transactions.
When speaking with a freight broker, before getting into pricing, the logistic salesperson needs to identify what the freight broker is looking for. To figure out the X-Factor or pain point, you need to ask the following questions to get the freight broker more comfortable and easier to close:
- What type of delivery service do they need?
- What kind of loads do they need to move?
- What are the problems that they have had with other carrier companies?
- What are you looking to gain from finding a logistic service provider?
These questions are important for two reasons. The first reason is that it warms up the freight broker to make them more comfortable to talk to you and provide you with the information you need to determine a competitive price that helps your business become profitable and also makes it hard for them to turn you down.
The second reason is to determine their X-Factor or pain points. If you know the problems and issues that the freight broker has had with previous companies and you can demonstrate the competence to prevent your business from having the same issues within your response, the conversation is a lot easier. Make sure that you spend more time listening than talking to accomplish this feat.
How Does Knowing and Understanding Your Value Proposition Assist With Negotiations?
For those of you who do not know what the term “value proposition” means, value proposition refers to how attractive your offer of a product or service is to a business or person. In other words, it is how your sales offer is received by the people you are trying to sell to.
When you have identified the X-Factor of your prospective client and what exactly the freight broker is looking for when purchasing logistic services, it is significantly easier to go from the tradition of brutally negotiating with a freight broker. That way, you have a greater chance of getting them to buy your services. They will see you as a problem solver who can assist them in solving their issues.
When you speak to a freight broker, it is important to do your research to get a better understanding of the average price a freight broker will be expecting to pay for the type service that you offer. When you have an idea of what the average cost for the type of logistic services that freight brokers are looking for, it is a lot easier to gauge what they are willing to pay.
How Can a Freight Broker’s Previous Experience With Another Logistics Company Make Negotiations Smoother and More Friendly?
If you know to ask the appropriate questions and determine the X-Factor of the freight broker, you should be able to ascertain the nature of their relationship with their previous service providers. You might have learned that the previous logistics business that they worked with couldn’t deliver on the quality of service that they promised to the freight broker.
Maybe the previous logistics company had a few drop loads, and that has hurt the reputation of the company that the freight broker is representing. Maybe you learned that the freight broker and the previous logistics company owner or salesman had a bit of a turbulent relationship and were in a combative relationship.
Knowing what the relationship consisted of between the previous logistics provider and freight broker can help you to put them at ease. While it is unprofessional and unwise to talk down about another company, use your newly gained knowledge of their previous experiences with other companies to present them with a solution and service that is difficult to say no to.
Identify What the Freight Broker is Looking to Gain By Hiring You as a Service Provider
Knowing what the freight broker and the company that they represent are looking to gain from a service provider is a sure way to make negotiations go by a lot faster and easier to get the desired result that you wish to achieve. By knowing what the freight broker is looking for, you will be able to put together an offer that addresses their wants and needs while at the same time, increase your business’s revenue.
Let’s say, in the past, the company that the freight broker represents has had to deal with companies that could not quite deliver on the promises that they gave to the freight broker and their company. Due to this inability to provide the promised services regardless of the reasoning behind it, drop loads occurred. In the logistics industry, everyone knows that drop loads cost everyone money.
When looking for a new service provider to pick up this particular route, the freight broker is going to be looking for some guarantees to ensure that drop loads are not going to happen. Be prepared with answers to questions like these:
- What does your company offer that other logistics companies don’t that will prevent drop loads from happening and keep the business secure and profitable?
- Do you use technology that other companies do not use to keep track of the loads that need to be delivered?
- Is there is a system in place to keep drivers accountable for their loads?
- What does your company do to ensure that a load will still go out on time in the event of a driver not being able to arrive on-site to run a delivery?
What your company offers that the competition doesn’t can help negotiations tremendously.
How Can Else Can I Make Negotiations With a Freight Broker More Effective and Friendlier?
While the above tips provided can drastically alter the sales process with a freight broker and make a more friendly and civilized process by empathizing with them and understanding what they need from a service provider, it is also important to delve into these other aspects of the negotiation process with a freight broker to help further guarantee the results you are looking to attain.
If you are wondering how negotiations with freight brokers can become heated at times, it is important to keep this one important fact in mind. Every person who works in sales can attest to this fact: the process of buying and selling anything is an emotional one. The one thing that can make a person emotional is their timeline. With that in mind, we think it’s best to discuss the freight broker’s urgency.
What Part Does Urgency Play in the Freight Broker Negotiation Process?
When you speak to a freight broker about a route or a load, it is important to understand their urgency in the matter. The sooner you can identify when they are looking to begin using a service provider to take care of a specific route that you have your eye on, the sooner you can begin negotiating a price that you both can agree on.
When talking to the freight broker, talk to them about their urgency and discover how soon they are looking to engage in receiving services from a logistics service provider. Depending on how soon they need this order to be filled, it could potentially play right into your hands in getting the business that you are looking to acquire.
When urgency is focused on as the pain point, you remove the need for the freight broker to attempt to have long and drawn-out negotiations with you. If they need to get a route picked up as soon as possible due to the route being dropped due to the previous company’s personal reasons or a business dispute, you may luck out, and they might even accept whatever reasonable price that you have quoted them.
Another important aspect of determining the urgency of the freight broker is it provides you with a guideline to adhere to if you did your due diligence and researched the average cost of the logistic service you are attempting to sell to the freight broker.
If you know the average cost that the freight broker is willing to pay for your services and have a high urgency, you can bypass a lot of the negotiating and get straight to figuring out the day the freight broker needs your company to begin providing services. To make the process even more streamlined, make sure you can identify where on the chain of command the freight broker sits.
How Does the Rank of the Freight Broker Affect the Negotiation Process?
When it comes to sales of any sort, it is important that you, as the business owner, speak to the right person. If they do not make the ultimate decision in making a purchase, you could run into the issue of dealing with someone that cannot make things happen.
When you end up dealing with the wrong person, you run into the issue of having a stalemate in negotiations, and they can have the potential to deteriorate quickly if you and the freight broker cannot come to terms, and both of you perceive the offer as unreasonable or unfair.
This is where it is important to know who is going to be the key decision-maker in the purchasing process. That person is going to have a better understanding of the company’s bottom line and profit/ loss margins. If they have been experiencing some difficult procuring services for a particular load or route, the appropriate person may negotiate with you in a more reasonable manner.
Why is that? As a freight broker and decision-maker, it is in their best interest to ensure that their clients can be serviced properly. Situations such as indecisiveness and pushing for too low of a price can be detrimental to a freight broker in this position.
If a route or load does not get picked up due to this, their company can potentially lose a customer. They understand this and will be easier to worth with as a result. Speaking with the person who is the true decision-maker can also lead to building a strong relationship.
How Does the Strength of the Relationship You Have With The Freight Broker Help With Keeping Negotiations Friendly?
In sales of all types, we don’t purchase a product or service from someone because we need it. We were already looking for it. When it comes to negotiating with potential customers, especially freight brokers, you must have a strong relationship with them, and they need to like you. Think about it, nine times out of ten, you purchased a major product or service from a person because you happened to like them.
When it comes to dealing and negotiating with freight brokers, make sure you have a strong relationship with them. This relationship can make it significantly less difficult to pitch them your services at a price that you feel is reasonable for your bottom line. It also reduces the unnecessary risk of negotiations becoming less productive, hostile, and aggressive.
When talking to a freight broker, we have found it best to discover common ground by engaging in small talk, telling “stories,” and jokes to the individual that you are dealing with. You have no idea how their day was going before you contacted them, and putting them at ease and helping them to relax before you begin speaking about pricing can keep things peaceful and yield better outcomes.
Confidence is Everything! Have You Proven Your Value Beyond Your Competition?
Being confident going into a negotiation with a freight broker is everything. Making sure that you have confidence and can prove and provide that exceeds that of your competition without speaking negatively about them can provide dividends in your negotiations with freight brokers. More importantly, it begins placing some of their buying power in your hands.
Here, we are going back to the subject of identifying what you can offer that the competition doesn’t. If you employ innovative uses of technology, provide twenty-four-seven hour support to customers, online customer portals, etc., you can provide the freight broker with information and services that other logistics companies don’t have access to, or are unwilling to provide.
Proving to the freight broker that your company stands out among the rest of the companies is going to be essential in the negotiations that you have with a freight broker. Knowing that you have services and technology that the other logistics companies do not and being able to prove to be useful and may even turn a negotiation into a business deal. Along with that, you need to build trust with the prospect.
Building Trust With a Freight Broker and Its Effect on Negotiations
For the most part, most freight brokers that you come across will be self-employed. With this in mind, it is important to ensure that you take the time to build trust with the freight broker. Trust is a currency that can go a long way if used properly, and it will allow you and the freight brokers to grow your businesses if enough trust has been built between the two of you.
Think about the previous clients that you are currently dealing with or have dealt with in the past. Did you build up trust with those clients? If you did, you might have noticed that the clients you were dealing with asked your business to pick up extra routes, increase your pay, etc. Building trust with a freight broker can lead to similar results.
When it comes to building trust with a freight broker, we got you covered. Look at these tips to make sure that you can build trust and deliver on the promises that you are making the freight broker. It is important! Your individual success depends on each other!
Eight Tips to Follow to Build Trust With Your Freight Broker
- Avoid selling a solution that isn’t going to help the customer. When it comes to building trust with a freight broker, it is important to be honest about what you can and cannot do. If you cannot provide a solution to a problem that they have right now, don’t say you can just to get a sale. It is best to be honest with your clients. They will appreciate you for it.
- Be honest about the services you can offer. Freight brokers depend on reliable service providers to pick up the loads that they have available. If you cannot deliver one hundred percent on what you offer to your clients, you will have an unhappy client and may find that it will hurt your logistics business’s reputation.
- Don’t compromise on service. This means learning to say no. A lot of people looking to sell a service have a bad habit of saying yes to everything that the prospect says they need. This is a bad practice. If it disrupts your operations or how you conduct business, do not tell the prospect yes. Be honest and learn to say to demands that don’t fit your business model.
- Keep pricing consistent across the board. While negotiations can affect the overall price, it is important to keep your base pricing consistent with freight brokers. If they notice that you are charging significantly different prices among your customers, this can destroy the relationship and trust that you have built, and you may lose them as a means of acquiring business.
- Avoid making excuses. No matter how prepared any logistics business may be, some things are going to go wrong at times. Instead of placing blame and making excuses for why things went wrong, focus on providing the freight broker with solutions to the problem.
- Tell the freight broker everything, including the bad news. Just as important it is not to make excuses and place blame for things that go wrong, it is also important to be forthcoming about everything regarding the loads, including anything wrong. It is better to hear from you directly when you notice there is a problem than them finding out another way down the road.
- When talking about the competition, be respectful, and don’t put them down. Trash talking the competition is not the best route to take when it comes to building trust with your prospective clients. While your service may be better than that of your competitors, it is important to avoid looking immature and petty in the eyes of your freight broker.
- Always honor the relationships that others back built with their clients. Even if you are a business owner and had individuals working on sales to acquire routes from freight brokers, it is essential to honor the agreements and accounts that your sales professionals have established. In other words, do not steal accounts and sales from your sales team.
Negotiating with a freight broker is truly no different than selling a service to any other potential customer. As you may have learned, the negotiation and sales process and deteriorate quickly if you don’t identify the pain points and build trust with the freight broker you are trying to do business with. Take the time to get to know them and provide solutions by listening instead of arguing and haggling.
With the information that we have given to you within this guide, you now have the tools at your disposal to engage in friendlier, more productive negotiations with your freight broker and continue growing your business. Takes for picking up this guide and happy trucking!