Its Just a Typo

 When you're trying to win a deal, details matter.

https://theworldsgreatestnegotiator.com/its-just-a-typo/

The World's Greatest Negotiator

 Dear Friends,

After 10 years of writing the Deal Whisperer, I decided to freshen up my blogging experience with a new site and a new purpose:

The World's Greatest Negotiator

https://theworldsgreatestnegotiator.com/

This is not a statement of fact (i.e. I do not believe I am the world's greatest negotiator) but a destination for anyone who strives to be the world's greatest negotiator. (Or at least a better negotiator!)

The site allows you to subscribe for new articles (and houses all of the Deal Whisperer pieces) and also comment in order to build a community of thinking on negotiation practices.

Please come by and subscribe and join the community as we all strive to be...

The World's Greatest Negotiator.

Peace,

John

 

Who Goes First?

 We had $20 million to spend, but the seller hadn’t named the price.

So what should we do? Tell the seller our offer? Or wait and see what price the seller proposed, which might be less than $20 million?

Buyers and sellers often face this conundrum: When the time comes to name a price, who goes first?

Research shows that whoever throws out the first number sets the “anchor,” and the ultimate price agreed upon will be influenced by that anchor. But buyers worry about that anchor being higher than what the seller would have sold for (“What if I offer to pay $100 when he was hoping to get $75?”). And sellers don’t want to set a price that is lower than what the buyer would have paid (“What if I say the price is $75 when she was ready to pay $100?”).

Reflecting back on all the deals I have worked on, I can say with confidence… that I still don’t have the answer.

Sorry.

Like a lot of questions in business, the answer is “it depends.”

In my own case, I advocated for us stating the price first. We were trying to license a proprietary software package. The seller had never licensed its software before, so they really had no idea what to charge us. I knew we had $20 million in the budget, and this software was critical to us winning a $250 million outsourcing deal. The team decided to wait and hear what the seller proposed as the software licensing fee. Maybe the seller would only ask for $10 million, they said, and we would save $10 million!

The seller came back with their proposed price: $57 million. Game over.

Would it have gone differently if we put our offer on the table first? Maybe, maybe not. The seller might have rejected our offer out of hand, or maybe countered with something a little higher. If we left ourselves some room, we could have gotten the license within our budget.

What I can say with confidence is that there really are implications about naming your price first. The problem is you may never know if it was the right decision.

Are We Fighting Our Client?

The difference between success and failure is one degree.

In baseball, that’s the difference between a home run, where a player rounds the bases to the cheers of the crowd, and a collective groan from a pop fly. A baseball player has to hit the ball with a launch angle of 25 degrees to 30 degrees in order to get it roughly 400 feet over the outfield wall. If any one of the multiple mechanical, and mental, processes required is not properly adjusted when the player swings the bat, and he is outside that range by one degree, he will fail.

The ability to make small adjustments impacts our success in business as well. And the most fundamental and impactful adjustment we can make is our attitude.

William James, the philosopher, educator and scientist, considered the father of American psychology, wrote: “The greatest revolution of our generation is the discovery that human beings, by challenging the inner attitudes of their minds, can change the outer aspects of their lives.”

That’s a fancy-pants way of saying, “You change your attitude, you change your life.”

When selling services to a client, that shift in attitude can be as simple as asking yourself, “What are we trying to do in this pursuit?” Win? Sell? Persuade? How do you talk to your team about your mission as you craft your proposal?

Try “help.”

When you change your attitude that your goal is to help the client solve its problems, rather than sell the client your product or service, it changes your discussions from “you and us” to “we.” You start to focus on collaboration, and what both of you can do together. The client gets the sense that you have their best interests in mind first, and yours second. And that builds trust. And trust sells deals.

Here’s a great example of a small shift to start: stop calling it the “war room.” Almost every deal team I work with refers to the conference room where everyone on the team gathers to work on the deal as the “war room.” And I always challenge that term. “Why is this a ‘war’ room? Are we fighting with our client?” Change the team’s attitude: it’s the “deal” room, the “value generation” room, or maybe the “solution” room.

Yes, it’s a minor change. And there are so many more to discuss. But to be successful selling in this highly-competitive world, we constantly have to self-assess and adjust. The small changes, when you’re getting ready to swing, will impact your ability to achieve success 400 feet away.

I Have Power

“We really like what you’re offering, but just so you know, we are also talking to your competition.”

This statement from a client can send salespeople into a tailspin.

“What? They’re talking to the competition? Lower the price! Lower the price!”

Take a deep breath and don’t panic. This statement is straight out of the sourcing playbook, and you should understand that:

1. The client is stating the obvious. We should always assume that they are talking to the competition (because they are).

2. The client is giving a little flash of its BATNA. This is how the client says, “You may have something I really want; but I have power. I have alternatives I can go to. Your solution is not the only answer to my problems.”

So what is the best way to respond to a client’s exertion of its power?

One of the most fundamental emotional desires we have is to be appreciated and respected. With the existence of our “self” comes the feeling that our “self” matters. We see this often in the news when people act out; they want the attention, and for people to know “I matter.”

So the way to handle someone asserting their power or authority in a sales situation is to overtly recognize it in your response. This statement of power is one that comes, more than anything, out of emotion. You can defuse and calm that emotion by acknowledging the assertion for its legitimate purpose: the client wants you to know they want the best deal possible.

One potential response: “It sounds like you’re focused on making the best decision possible for the company. It makes a lot of sense for you to get other points of view. This is an important decision and I know I would want a point of comparison as well. My goal is to work collaboratively with you to understand the outcomes your company wants to achieve so we can present a proposal that provides greater value than any other alternative you have.”

And that is now your sales strategy! Articulate how your value proposition is greater than the competition.  Because the client will only exercise its BATNA power when it perceives that what the competition is offering is better than what you’ve said you will do. Provide more options. Bring unique capabilities. If you truly understand the client’s interests and goals, you should be able to offer different ways that you can achieve those goals, and more, together.

Next Time, They’ll Screw Me. That’s Business

Years ago, I was conducting a negotiation training session for a group of two dozen executives, and a comment from someone attending the session took me by surprise.

We were debriefing on an exercise where three people, representing Company A, Company B and Company C, try to collaborate and maximize the value of a transaction for themselves. As we went over the results, one group in particular seemed to have had a difficult time getting to an outcome.

Among the three people in the group, one took a highly positional approach to the negotiation. Rather than trying to find way for all three parties to benefit and, potentially, work together in the future, this person wanted to have the best outcome at all costs, even if that meant alienating the other executives.

In the scenario, there is a potential outcome where A, B and C each get value from the deal, based on principles of legitimacy. In negotiating for Company A, this executive seemed to have no regard for legitimacy and interests to achieve a fair outcome that would open the door to a future relationship.

I asked the individual about the strategy for Company A to take such a hardline approach with the other two companies, B and C, to “win” and deny them any real value in the deal.

The executive said, “This time, I screwed them. Next time, they’ll screw me. That’s business.”

What stands out most from that statement, even a decade later, is the fact that an individual could have that view of “business.” Can anyone optimize their outcomes in business, politics or their personal life if their strategy is to screw and be screwed?

Unfortunately, that is the reality we face sometimes in business and in some people’s view of the world. For some people, not only is it about me, and not about you, but it is about me to the exclusion of you.

One thing 30 years of negotiations has taught me: collaboration will always bring greater outcomes than competition. While I am seeing greater signs of collaboration at the negotiation table, I am seeing less of it in our public discourse. Our world is closed system (we only have what we have) and we have limited time (about 78 years, if you’re lucky). We could all generate so much more value and productivity to this world, and happiness to ourselves, if we engaged more in understanding other people’s interests and generating options to resolve differences, rather than anchoring ourselves to positions and refusing to budge.

You Have to Sell Before You Sell

Note that the journey from prospecting to close is called a sales “process.”

That’s because to close a deal, a salesperson has to follow a series of steps. Successfully completing one step allows you to continue the process. Failing in a step can be the end of the pursuit.

One of those first steps is getting a meeting with a potential client to introduce them to who you are and what you have to offer. The process of getting the meeting is, itself, a sale. You are trying to offer something of value (information) and get the potential client to buy it with his or her most precious commodity: time. If we look at the request for a meeting from the client’s perspective, what is being offered in exchange for time has to have clear and immediate value.

So, you have to sell before you sell.

When reaching out to potential clients just to get a meeting, the offer has to include “what’s in it for them.” For example: “Hi, would you have 30 minutes to hear about how our products can help your business?” (No. I have no sense what you’re offering and whether this will be worth my time.)

Versus: “Hi, do you want to keep wasting money on marketing and CRM programs that provide little results in actual leads? I’d like to share some simple and cost-effective CRM strategies that others in your industry are using to increase sales. Is this a bad time for a quick 15-minute overview?” (No, let’s talk.)

In the second introduction, the salesperson suggested a possible issue, and information on something the competition is using to solve that issue. Now, the potential client has a sense of urgency: what is everyone else doing that I am not?

A successful sales process must provide a continuum of value to the client as they will keep asking themselves, “Is this still worth it?” The process will continue as long as the answer is always “yes.”

The Secrets of Great Negotiators, REVEALED!

It is, by far, the teaser that makes me smile most: anything claiming to be a “secret” which is published in a news article, book or on an online platform used by millions of people.

Ever see a headline that broadcasts something like, “This restaurant is Milwaukee’s best kept secret!” First of all, if it was a secret, it’s not anymore; and second, what restaurant owner wants her place to be a secret?

But I’ll play along and here it is: The secrets of great negotiators, revealed! The secret is there are no secrets. Everything anyone has had to say about negotiations is in the marketplace as an article, book, video or training. And the best, most disciplined negotiators have read and watched as much of it as they can and leveraged it to make themselves better.  

What I will tell you, that you may not know, is that there is a misconception about how experienced business negotiators view their counterparts and the goal of the negotiations: the truth is, we don’t want to win.

The best negotiators in the business want to solve problems. And what we hope we will see on the other side of the table is another problem solver. Why? Problem solvers get better results for themselves and the other party. They create outcomes that maximize the potential value of the engagement and, in the end, build better relationships between the parties.

I would rather work with a negotiator who knows as much or more than I do about disciplined negotiations than deal with an inexperienced, positional bargainer who is trying to “break my bottom line” and “win.” That may be fun when buying a car and walking away from the dealership. But in the services business, in which the relationship is ongoing, both parties benefit from the strength and depth of a trusted relationship, not a transactional relationship. Focusing on “beating" the other party does not build trust.

Which is why I write these articles. My goal is to help everyone get better at selling, negotiating and deal-making, so when I sit across the table from someone, we can collaborate and drive greater efficiency and value generation for our companies and our clients. 

Now you know my secret!

It's Not About You (Even When It's About You)

When I was considering working with a financial planner some years ago, I identified three of the top money managers in my network and asked to have a phone interview.

I expected them to show up with information about themselves, their firms, other people they represented that I might know, and an analysis of my potential profile and investment suggestions they had, given where I was in my career. And they did.

Almost.

Two of the managers gave a brief pitch about themselves, their investment strategy and where they saw the market going. Then they got to the most important part of the conversation: me.

The third manager talked about himself, his 30 years in the business, what he had accomplished, how he was ranked against other wealth managers, his awards, and a list of satisfied customers. All of this accompanied by a giant PDF he had sent with the details and certificates of achievement. It was impressive, for 10 minutes, and I was sold. After another 20 minutes, I wasn’t MORE sold and, in fact, was growing tired of the self-promotion.

When the time came for this uber-investment whiz to discuss the market, he began looking at some reports his assistant had prepared (he had not read them in advance). And then he whiffed.

He did not have any sense of what sort of strategy would make sense for me. The reason? He had no information about me. He hadn’t asked a single question. He was more interested in telling me about himself.

In other words, the one thing I was most interested in, “How should I invest my money?” is the one thing he was not prepared to discuss. He said he would get back to me with “a plan.”

To be a truly great sales person, the primary focus is “how do I help the client.” If you are in front of a client, you got there because you met the table stakes of being worth talking to. It’s OK to credentialize yourself a bit before asking questions to understand the client’s interests. But in the interview, you’re not selling yourself; you’re selling what you can do to make the client more successful based on your talent and experience. It’s never about you, even when it’s about you.

The current state of affairs: the crisis of COVID-19, the economic downturn and the collapse of the oil market, highlights this more than ever.

Everybody has been impacted in some way or another, including service providers. And top service providers know this is the time to jump into action and show clients they are ready to help.

Contrary to what the pundits on the business channels are saying about this being a “business opportunity,” trying to “sell” in a crisis stinks of self-interest and opportunism. In times of trouble the best companies show up and say, “We’re in this together. What can we do for you?” Yes, the crisis presents an opportunity: to build relationships and show our clients it’s always about them.

If You Give a Mouse a Cookie...

Being a dealmaker for almost 30 (!) years now, I have received, displayed, broken, and discarded many mementos of the deals I have worked on along the way. The fun ones are called “deal toys,” and the glass monuments, with details engraved, are called “tombstones” (which is an odd term for something memorializing the beginning of a relationship, not the end).

My favorite deal toy (and it really is a toy) is a little figurine of the mouse from the children’s book, “If You Give a Mouse a Cookie,” by Laura Numeroff. I especially like it because the figure itself is so charming, and because the executive who gave it to me did so to reflect the valuable lesson he learned on the deal we closed together.

If you aren’t familiar with "If You Give a Mouse a Cookie," it’s a “slippery slope” story of what happens when you give a mouse a cookie: then he wants some milk, then a straw, then a napkin, and, before you know it, he wants to take a nap, gets thirsty, wants some more milk and then asks for another cookie. (I guess I should have announced “spoiler alert.”) In other words, you give him a cookie, he will keep asking for cookies.

During our negotiation, when the client would ask for a concession, members of the team would suggest we give as a sign of our “good faith.” I would tell them that giving concessions without anything in return is not a sign of good faith. It’s a sign of naiveté. Then I’d explain that “naiveté” is a nice French word for “stupidity.”  

I then asked if anyone was familiar with the book, “If You Give a Mouse a Cookie,” and we discussed what happens when we give in on price or terms without an exchange of value (lower scope/lower risk). The client just keeps asking for more. Why wouldn’t they? It’s worked out pretty well! And before you know it, you’re out of cookies and you have to say “no.” And you still get the deal, but with much less contingency and higher risk.

Why didn’t you say “no” in the first place?

So the mouse sits on my desk as a reminder not to give anything away, but to exchange value with a client. Giving money away is called “charity.” Exchanging value is called “business.”

It's Easy to Move a Piano Down a Flight of Stairs

We all suffer from the challenge of “preception.” This is the condition where we make up our minds about something by placing what we see into the context of what we have experienced before. Think of the notion of “judging a book by its cover.”

But it’s more than just appearances. Preception involves reaching a conclusion of what someone is saying or trying to accomplish without taking the time to listen, ask questions, or consider a different point of view. Preception can be caused by comments we hear from others, stereotypes, or gross assumptions that we haven’t validated.

Years ago, I had to get an old upright piano out of my house. The piano mover came with two other people, put the piano on a dolly and rolled it to my front door. Then, they lifted the piano and carried it down the staircase to the front walkway.

When he had the piano safely secured in his truck, and I was paying the bill, I said, “It must be really hard to move a piano down a flight of stairs.”

He looked at me and smiled. “No, it’s easy to move a piano down a flight of stairs,” he said. “It’s hard to stop a piano from going down a flight of stairs.”

Same situation; different perspective.

It made me aware that I had to be more attentive to the possibilities that people who I deal with in my personal and professional life, especially in sales, often look at a situation from a completely different angle than I do. I needed to be more careful about not operating on the basis of preceptions. I thought about moving pianos from the top down. A piano mover is thinking from the bottom up.

The same is true in a client conversation. When we are trying to engage a client with our services, we often look at the client from the view of what we want to sell, not what the client needs to buy. You may have a terrific product or service that can bring the client tremendous benefits. But is that what they need now? Take some time to listen to the areas they focus on in discussions with you. Whatever they talk about most is likely where they need help. Find a solution to that problem and you’ve started a journey to being an attentive and trusted business partner.

Like the piano mover, it’s not about getting something from the top to the bottom; it’s about focusing on a big problem and using experience to help prevent a disaster.