I Hate My Client

“If you don’t walk into the client’s building every day, excited about the opportunity to help solve their problems and make them successful, then you should leave this company.”

I had the privilege of leading a sales training program with Paul Rudolph, a former colleague with over 25 years of experience in sales and client service. That was one of his opening lines to a group of experienced employees.

Not new employees. Experienced employees.

Because Paul knew that new employees are not jaded. They are excited. They have great expectations. They are filled with great ideas.

Experienced employees, who have been on a client account for three years or more, are tired. They are frustrated. And if you were to ask what they thought of their job, many might say, “I hate my client.”

Paul’s point was if you’ve reached a point where you don’t understand the purpose of being a service provider, then go do something else. The client is our lifeblood and the essence of our business was striving to take the client’s breath away with our attitude and performance. Every day.

Often, a long-term relationship between an existing client and a service provider can devolve into what feels like a bad marriage: the parties feel stuck with each other, can’t communicate well and wish there was a way out. In other words, the romance is gone.

To be successful in the services business means to be in the romance business. Keep the spark alive, always making the client feel special, important and loved. Because right outside the door is the competition, with a smiling face, joyful heart and readiness to make this relationship feel amazing.

If you don’t treat an old client like a new client, they’ll soon be an old client.

Does Donald Trump Look Under the Table?

Several times in my career I have been asked to help resolve a particularly difficult situation because the team said they needed “a tough negotiator.”

The notion of the “tough" negotiator has a cache to business folks, fostered by the likes of William Shatner on Priceline commercials, performing karate moves to get the deal he wants. My response has always been to say, “If you’re looking for a tough negotiator, you called the wrong guy. I am a disciplined and collaborative negotiator. I’m not tough.”

Frankly, I don’t know what it means to be a “tough” negotiator. I imagine what people equate with “toughness” is an undisciplined, stubborn, positional negotiator. One who thinks “win-win” means they win twice, and the other side loses twice. One who lacks the creativity and confidence to dig deeper and find hidden opportunity for collaboration in an engagement that would create more value. I have encountered that style at large manufacturing and retail companies that treat all vendors like they are selling commodities. All that matters is price. That shortsightedness is costing them dearly in the marketplace because it limits a service provider’s ability to bring innovation that might provide the client a competitive edge.

The latest poster child for “tough” negotiators is Donald Trump, who fancies himself as a master deal-maker. Mr. Trump has obviously had success. What we don’t know is how much more success he could have had using a different negotiation style. From his outward appearances, Mr. Trump seems to favor a bullying kind of style, one that drives the other party to concessions so he gets what he wants. He proudly stated that he would build a wall between the U.S. and Mexico and get Mexico to pay for it because he’s that good as a negotiator. If I were the president of Mexico, I would prepare my team for that discussion with one key caveat: we will never agree to pay for the wall.  I don’t know what Mr. Trump’s style is once he gets in the room. Perhaps this is an act he puts on and is highly collaborative at the negotiation table, sort of a one-man “good cop/bad cop.”

The potential problem with Mr. Trump’s style is it does not engender trust in the discussions, leading to lost value in the deal. People often talk of not leaving money “on the table.” I prefer to say “don’t leave money under the table.” It’s easy to see the money on the table. It takes a special deal team to bring trust to a relationship so that both parties work together to find the hidden value in the deal. That requires appreciation for the other party’s interests; creativity in generating options and legitimacy in the asks of either side.

“Tough” negotiators don’t care about the other party’s interests. “Tough” negotiators have only one set of options; their own. And with a “tough” negotiator, legitimacy or fairness in demands is always a test of the other party’s BATNA.

So while it might seem impressive to hear of “tough" negotiators who “break” the other side in a negotiation, ask yourself: where does such behavior leave the relationship? Has is maximized the value the parties could have built together? And next time, will the other side look forward to an opportunity to do business again? Or will they use it as a chance to “get even” based on their previous experience?

This Kid Just Keeps Failing

The other day I met with a young man named Tom who is graduating from college next May. He is interested in a sales career in the technology industry and has some job interviews next month. Tom asked if I would provide some help in preparing for those interviews.

Tom spent last summer selling technology services to small business owners. Every sales call was a cold call: walk in, strike up a conversation and see if he could sell them on the value of his offering. Turns out he’s pretty good at it. He closed over 30 deals in the 8 weeks he worked there and was one of the top performing salespeople in his office.

I started peppering him with questions he should expect such as “Why are you interested in our company?" and “Where do you see yourself in 5 years?”. I switched to the “weakness/strength” and “challenge and recovery” questions.

I said, “Tell me about a time you failed and what you did about it.”

Without hesitation, he replied, “I failed 39 times a day.”

“Oh?” I said, waiting for an explanation.

“In the eight weeks I was selling over the summer, I usually got turned down about 39 times before I finally got someone to say ‘yes,’” he explained. “At first, it was pretty draining because the experience was so negative.”

“So what did you do?” I asked.

“I turned each ‘no’ into a positive experience. I decided to start each day with 39 ‘nos’ to count down because it’s rare for me to have more than that before I get a ‘yes.’  So each time a potential customer said ‘no’ it meant I was one step nearer to getting that ‘yes.’ That made me look forward to every new business I walked in to pitch. Each failure was getting me closer to my goal.”

Perseverance is not an idea or principle we talk much about these days. Perseverance requires focus, commitment and a positive attitude which, in our world of instant everything and immediate results, just takes too long. But those who truly aspire to greatness in their chosen fields know that there’s a lot of failing to get through before achieving success.

Don't Get Caught Naked

A colleague once asked me how much negotiation contingency I have in my deals.

I asked, “What is negotiation contingency?”

“It’s the money set aside for making concessions,” he said. “For example, if a client said they wanted a lower price, how much do you budget for price reductions?”

“Oh,” I replied. “Zero.”

Needless to say, he was quite surprised. “You mean to tell me that you never make a concession on price?”

“No,” I said. “I never make a concession on anything. What I make is an exchange; an exchange of value.”

Many sales people make the mistake of thinking offering discounts or cutting the price is the fastest path to signature. They will rationalize it, saying they are “investing in the relationship.”

But what’s the return on that “investment”? In other words, if a sales person gives a discount on price, they better have gotten something in return. Otherwise, that’s not an investment. That’s giving money away and it’s called being a sucker.

Giving free money to anyone is not good business.  Reducing price without getting something in return is called a “naked concession” and it’s rarely a good thing to be caught naked in any context! Naked concessions signal to the client a lack of respect for one’s own business. They also create a lack of trust, and we need trust to build lasting relationships. How is a client to trust us if we say, “This is our best price” and then reduce the price because “they needed this concession to seal the deal.” Obviously, we were misleading them about our “best price” because we gave them a better one when pressure was applied!

In deal-making, you have to get when you give. Trade value. Work with your team and develop a list of options for the client which will allow you to reduce cost and therefore lower the price. For example, can the client perform a task instead of us to reduce cost? Can we reduce scope? Can we reduce risk? Can we extend time? If we don’t show the client the value we put on our products and services, then the client has little reason to value or respect our products and services.

"Light Fuse. Move Away." Rules For Improving Client Relationships

I was looking at a pack of firecrackers a few weeks ago and noticed the very clear and simple instructions on the back: Light Fuse. Move Away.

Those instructions are so fundamental it seems ridiculous to put them on the wrapper. In light of the injuries suffered recently by some professional athletes, however, maybe the idea of moving away from a lit pack of explosives is not obvious to everyone.

And this is not just true for firecrackers. Other products have similar “you’ve got to be kidding me”-type instructions on them to help people who may be deficient in common sense. For example:

• Iron: “Do not iron clothes on body”
• Frozen dinner: “Defrost”
• Bottle of rum: “Open bottle before drinking”

The same problem exists among professionals who are trying to generate new clients or grow the relationships they already have: we often lose sight of the obvious.

So if you want to keep your existing clients, generate more clients/referrals or build better client relationships, here are three fundamental “Care Instructions” to follow:

1. Keep your word: If you make a commitment, whether to return a phone call, set up a meeting or successfully deliver a $50M ERP integration, deliver on your commitment. Nothing erodes trust faster than not doing what you said you would do.
2. Be transparent: Don’t be afraid of sharing with the client how your business operates and how client decisions impact your success. If the client doesn’t care about your success it speaks volumes about the quality of your relationship and you have a lot of work to do to improve it.
3. Show appreciation: It never ceases to amaze me how often a vendor will complain about a long-time client: “They’re so demanding! They’re so difficult!” Yeah, but they keep you in business! If we don’t treat every client like a new client, they’ll soon be an old client. The competition is always ready to take your client away.

And this last bit of advice on the tag of a mattress: “Do not attempt to swallow.”

A Million-Dollar Coffee Cup

Recently I was buying a car and I was reminded of the story of the million-dollar coffee cup.

I first heard about the cup over 20 years ago when I worked for a large technology products and services company (I won’t mention the name but its initials are “IBM”). At that time, IBM was competing in the mainframe space against a company called Amdahl, which has since been acquired by Fujitsu.

The story was that Amdahl sales reps would try to displace IBM mainframes by undercutting IBM’s price. Because switching mainframes was the technical equivalent of a heart transplant, unseating the incumbent on price was usually a wasted effort.

The Amdahl sales reps would thank the client for their time and, before departing, offer them an Amdahl coffee cup.

“It’s worth a million dollars,” the sales rep would say.

“Why is that?” asked the client.

“Because as soon as the IBM sales rep sees the Amdahl coffee cup on your desk, he’ll know I was here and he’ll drop his price by $1 million if you ask him to.”

The coffee cup is a great example of the power of having an alternative; somewhere else to go to fulfill your interests. Imagine you are buying a car and, like in many cities, the car dealerships are all lined up in a row on a main commercial street. While you are negotiating for a Ford, the Chevy dealership next door and the Chrysler dealership across the street represent alternatives to closing the deal on the Ford. If you can’t get what you want at the Ford table, you can go next door and sit at the Chevy table. If the Chevy sales team doesn’t put enough on the table to keep you there, you can leave that table and sit at the Chrysler table and see what they’ll offer.

The table that represents the best alternative to the table you’re sitting at is your BATNA (best alternative to a negotiated agreement). When you can’t get the deal you want, you go to that BATNA.

In reality, the less expensive Amdahl mainframe was not really a good BATNA to the IBM mainframe because of the switching costs and effort. But that coffee cup provided a perception of a BATNA by having the Amdahl logo in sight. And that perception was enough to provide some economic leverage on pricing.

Remembering the coffee cup story came in handy for me when I negotiated recently for a new car. I went into a dealership, sat down at the salesman’s desk and said, “I am buying X Model car this weekend.” I casually rested on his desk the brochure for the Y Model car from the dealership next door.

It wasn’t worth a million dollars, but having that brochure created a perception of BATNA that made negotiating on price a lot easier.

One Word to Becoming a Better Negotiator

You are about to sign a deal after weeks of intense negotiations. The client, before picking up the pen, says to you, “I just got a call from the CEO and he said he wants another 10 percent off the price before I sign.” What do you say?

More importantly, how do you feel? This moment, that was to represent the culmination of months of work, is suddenly spoiled by an 11^th hour demand for a concession. Doesn’t this somehow feel… unfair?

We have all encountered that moment in our professional and personal lives when someone asks for something and we feel like they are taking advantage of us. Most people go through a rapid cycle of emotions: anger and frustration, then analysis and rationalization, so that they talk themselves into saying “yes” to the demand “for the relationship,” “for the good of the deal” or “to keep the peace in the family.”

This is a negotiation ailment called “accommodation” and even senior business executives fall victim to it. But there is one word that can provide the cure: Legitimacy. Among the seven elements in a negotiation, Legitimacy is perhaps the most powerful because it serves as the baseline for whether a deal is good for both parties. Legitimacy is what triggers our “fairness antennae” and makes us pause in our response.

The way to use Legitimacy in our negotiations is simple and, once done a few times, becomes quite empowering. When the other party, whether it’s a CEO or your mother, says “this is what I want,” pause and cycle through your emotions. This time, instead of saying, “Well, OK if that will make you happy,” challenge the Legitimacy of the request. Say something like, “I hear what you’re asking for and please help me understand why that’s fair.”

Introducing the notion of “fairness” into the exchange has a powerful emotional impact on people. The notion of “fairness” is built into us from childhood; to play fair and to treat other people fairly. So when you challenge the Legitimacy of a request by asking someone to justify its fairness, it sends the other party into an emotional cycle of trying to balance the behavior in making the request against the moral compass of “fairness.”

What you now have is an opportunity to work out a solution that both of you will find acceptable. You will feel empowered that you healed yourself of your accommodating behavior and have begun a journey to being a truly disciplined negotiator.

Whadja Get?

“Mr. Gitou, how much do you usually budget for negotiation contingency?”

Tyler Gitou looked up from his computer screen, a quizzical look on his face. “I’m sorry, Verdi,” he said. “I don’t understand the question.”

“Well, when you negotiate a deal, how do you decide how much money to set aside to give to the client as a concession?”

“Oh, I see.” Tyler said. “Zero.”

“Zero?” Verdi said. “You mean to tell me that because you’re the Deal Whisperer you never make a concession on price?”

Tyler laughed. “No, Verdi. I never make a concession on anything. What I make is an exchange.”

“An exchange of what?”

“An exchange of value. Let me give you an example. Last month I was working on a managed services deal for a large pharmaceutical client. They said their primary goal in doing the deal was to reduce their procurement costs by 30 percent. Our proposal reduced those costs by 32 percent, more than any of our competitors. They wanted to sign the deal with us, but they said our price was 10 percent too high. What would you say in response to that?”

“It depends. What did they say will happen if I don’t cut the price?” Verdi asked.

“They said they will give the deal to one of our competitors.”

“OK,” Verdi  said. “I wouldn’t cut the price by the whole 10 percent. Maybe I’d offer them five percent.”

“OK,” Tyler said. “And I would ask you, ‘Whadja get?’”

“Whadja… what does that mean?”

“It means ‘what did you get in return?’”

“I got the deal signed,” Verdi said. “Wasn’t that what I was supposed to do?”

“Sure it was,” Tyler said. “But why did you give the client free money on your way to signing?”

“I… well I had to…” Verdi sighed. “OK, I give up. What did you do?”

“I offered them options,” Tyler said. “I told them I could reduce the price by five percent to get closer to the competitor’s price if they would extend the deal by an additional two years. With an extra two years of revenue, I was able to make some cost reductions and pass the savings on to the client. It also means an extra two years that I keep my competition out of that part of the client’s business.”

“Wow, that’s like a win-win with another win!” Verdi said.

Tyler laughed. “It was a good outcome but the most important part of it was demonstrating to the client that my price was real by asking for an exchange of value. If I had just offered a five percent reduction, the client would have lost trust in our company and thought I was just padding my price.”

“An exchange of value. I like that,” Verdi said.

“Good,” Tyler said. “Remember, Verdi, a Deal Whisperer must always negotiate with respect for his own business. If we don’t show the client the value we put on our services, then the client has little reason to value or respect our services.”

Don't Do It!

“Mr. Gitou, you’re never going to guess who just called,” said Verdi.

Tyler Gitou smiled at Verdi. “You know, Verdi, I can’t ever figure out whether that phrase means I am supposed to guess, or I shouldn’t bother to guess because of the forecasted futility.”

“What?” asked Verdi, looking perplexed.

“Nevermind,” said Tyler. “Who called?”

“That was Sam Gamigan, the head of procurement for National Distributors. I’ve been trying to break into that account for three years.”

“I remember. What did he want?”

“He said they are putting all of the logistics operations up for bid again,” said Verdi. “Sam says they are unhappy with the services from Calax Systems managing their hardware and software so they want a new business partner.”

“Wow,” Tyler said. “That’s a surprise. And a big deal too. Didn’t Calax win that RFP two years ago for about $50 million over five years?”

“Yes,” Verdi said. “We came in second for that bid and now’s our chance to come back and win the work!”

“Hang on, Verdi. Before you start calculating your commission for the deal, let me ask a few questions.”

“Sure,” said Verdi, taking a seat in Tyler’s office.

“First of all, why did Sam say they are putting it up for bid?” Tyler asked.

“I told you. He said they’re unhappy with Calax,” Verdi said.

“What specifically are they unhappy about? Did you ask?”

“I did,” Verdi replied. “And he said he couldn’t get specific.”

“OK. Who is running the bid process?” Tyler asked.

“Sam is. I made some calls to Margaret Fringe, the head of operations, and she knew nothing about it.”

“Gotcha. And lastly, if Calax is in year two of a five-year deal, don’t you think there is a hefty early termination fee for National Distributors if they want to get out of the deal early?”

Verdi thought a moment. “There must be. We had a big fee in our bid because we had to back-load the deal to provide savings up front.”

“That’s what I recalled.” Tyler said. “My advice to you, Verdi? Don’t do it.”

“What? Don’t do what?”

“Don’t bid on the work. Sam is not offering you a legitimate opportunity to win this work. He is offering you and the other service providers a chance to submit competitive pricing so he can re-negotiate the deal with Calax.”

“No,” Verdi said. “Why would he do that? Do you know how much time and money that is going to take? He wouldn’t run an RFP process just to get pricing.”

“Why wouldn’t he? As a good businessman, he knows that if he can get a ten percent reduction in the last three years of the deal he can save the company up to $3 million. You just said Margaret doesn’t know about this and she’s the head of operations. If someone was unhappy with the service, wouldn’t it be her? And he hasn’t hired an advisor to run the bid, has he?”

“No he hasn’t,” Verdi said. “And he doesn’t have a big department to handle responses from five service providers.”

“So it will cost him almost nothing to modify the old RFP, reissue it to five bidders and get back the pricing to use against Calax. We’ve not heard about any problems with Calax’s performance and he’s making vague statements that they are unhappy. There is no way they are going to pay Calax a termination fee to go through the contracting process and transition all that software to a new vendor. Sam is playing a game with you.”

“But Mr. Gitou, it’s a really big deal! Almost $50 million!” Verdi pleaded.

“No it’s not. It’s an opportunity to waste resources submitting a bid for something we will never win. This is a commitment issue, Verdi. Sam has no intention of unseating Calax and he's giving you all the signals of that. A rushed bid. No involvement by the stake-holders. And an incumbent who is so entrenched that changing to a new provider would completely disrupt the business. Calax is in there for the next three years.”

“But if I don’t bid, he won’t hire us.”

Tyler laughed. “He’s not hiring if you do bid! Verdi listen to yourself. Here’s my suggestion. How much would it cost us to respond to this RFP?”

“Probably about $30,000.”

“OK,” Tyler said. “Call Sam back. Tell him you’re sending over our standard rate card as our response. Also, tell him our company is making a donation for what a full response would have cost us to the Canine Rescue Shelter. I know National Distributor is a big sponsor. If he’s as smart as I think he is, he’ll respect you for seeing through his charade and turning it into an opportunity to help others.”

“You don’t think he’ll be mad we didn’t play his game?”

“I don’t care, Verdi,” Tyler said. “I’ll be mad if we do play his game. I’m a shareholder in this company and I don’t want to see our money wasted on what is obviously a pricing negotiation with an incumbent. Trust me, Verdi. Don’t do it.”

How Stupid Can You Be?

“Mr. Gitou? I got blindsided.”

Tyler Gitou waved Verdi into his office. “Tell me what happened, Verdi?”

“Well, remember we closed that deal to replace all the desktops at Macro Assurance, that big insurance firm?”

“Yes, I know Macro Assurance.” Tyler said. “It was about 250,000 PCs if I remember.”

“Correct,” Verdi said. “We’re probably going to lose about $1 million on it.”

Tyler was surprised. “Really? I remember you working on that deal. You were really excited about the solution we put together for Macro.”

“Not any more. We've had to add a lot more people to meet the client’s deadline and it’s costing us a fortune.”

“So what happened?” Tyler asked.

“The plan was to install all of the software on the computers remotely,” Verdi said. “You know, just download everything from the cloud versus having someone sit at the machines. It turns out their corporate firewall won’t let us do it in some locations. So we have to send people, which costs a lot more.”

“Really? Isn't that something we should have known?” Tyler asked.

“Yes and no. There was no reason to think their security would be so different in each country so we never asked the question. We just assumed it would be like every other engagement.”

“Verdi, how stupid can you be?”

“What? Mr. Gitou, that’s a really offensive thing to say!” Verdi said.

“I’m not asking to insult you, Verdi,” Tyler said laughing. “I am asking to see how you can avoid this problem in the future. When we get in front of a client, we often have the urge to be really smart. Know all the answers. Impress them and impress ourselves. But instead of thinking how smart we can be, we should ask how stupid we can be.”

“I don’t get it, Mr. Gitou. How will being stupid help me impress my client?”

“It forces you to ask questions,” Tyler said. “Let me share with you a similar experience I had when I was new in sales. We were proposing a systems integration deal to move a client’s trading platform from an old ‘home grown’ system to a new commercial system. I quoted a price to build the system, end to end, and won the deal with the lower price. Much lower. You know why my price was so low? I assumed their hardware would support the new platform. My competitor was ‘stupid’ and asked for data about their servers and they added in the cost of new hardware. As it turns out, their servers were all out of warranty and lacked the processing capacity we needed. It was a $2 million mistake on my part.”

“What did you do?”

“We installed the system as we committed to do and lost money on the deal,” Tyler said.

“Wow. And you didn't get fired?”

“No,” Tyler smiled. “My sales manager made me the account lead and said I had 24 months to grow the account and make it profitable again. I did it in 12. And I have been stupid in every client discussion since then.”

“That’s a great turnaround story. Who was the client?”

“It was Macro Assurance, the big insurance company where you just got blindsided,” Tyler said. “So my advice to you is get back in there and finish the project as we committed. Don't lose their trust in us. You've learned an expensive lesson. Sell on your experience, but solve from your ignorance. Don't assume one client is like another until you have asked the right questions. Remember, a Deal Whisperer always thinks about how stupid he can be.”

You Are Unbelievable

Tyler Gitou lowered his head and shook it slowly. “And you missed that deadline too,” he said.

“Yes,” Verdi said meekly. “We got the pricing exhibit to them the next day.”

“That’s three missed deadlines. What happened next?” Tyler asked.

“Well, we were down-selected so it was us and one of our major competitors,” Verdi said. “But in the end, we lost.”

“And why do you think you lost?”

“The client said our price was too high,” Verdi said.

“Do you believe that?” Tyler asked.

“Um… yeah,” Verdi said. “They had said we were a little more than the competition all along. But that’s because we had a lot of senior people staffed to make sure we were successful.”

 “Verdi, what was the client’s primary buyer value?” Tyler asked.

“Certainty of execution,” Verdi said. “The client is in a highly regulated business and if we can’t deliver the services and file their reports, the regulatory agencies are all over them.”

“And if you were choosing a business partner for a project that was critical to your business, what would you want to be sure of before you selected that partner?”

“I guess that I thought they would be able to perform.”

“Just ‘thought’? As in, ‘greater than fifty-fifty’?”

“No,” Verdi said. “That I was certain they could perform.”

“Exactly,” Tyler said. “And to have that certainty you would have to believe in their ability to perform. That they can deliver on their promises on time, correct?”

“Absolutely,” Verdi said.

“How did you do?”

“I thought we did well,” Verdi said. “We got a lot of positive feedback on our proposal.”

“You know what Verdi? You are unbelievable.”

“Thank you, Mr. Gitou.”

“It’s not a compliment, Verdi. I mean that you lost the deal not because of price. You lost because you lacked credibility and reliability. The client did not believe you were the right company to trust with such an important program.””

“Just because we were late for a few deadlines? It was a complicated proposal! Plus the client was late on a bunch of stuff too!”

“The client is allowed to be late. They are the client! We build our reputation and trust with the client by being on time,” Tyler said.

“I think you’re overstating this,” Verdi said. “They told me it was price, not trust. In fact, the guy who told me is the head of procurement and I have a long relationship with him.”

“He was being kind, Verdi. How would you have felt if he said, ‘We didn’t choose you because we don’t trust you’?”

“I would have felt terrible,” Verdi said.

“Exactly. But you were not worthy of their trust because you didn't earn it. So you are not trustworthy.”

“That’s pretty harsh, Mr. Gitou.”

“Verdi, let me share with you a secret about how clients buy,” Tyler said. “Clients, just like many businesses, are risk averse because the client is actually made up of people who have a personal interest in being successful in their jobs. And those people worry more about not making the wrong decision than they do about making the right decision.”

“I don’t follow you.”

“When a business person makes a decision about which service provider to hire, they decide on the basis of which one is least likely to screw up. The business person does not want to answer for a failed project because they hired the wrong vendor . So to be viewed as least likely to screw up in delivering the service, you have earn their trust. Make them believe you are the low risk choice. And, frankly, being late three times on a single proposal does not generate credibility and trust. You are unbelievable.”

“I understand now,” Verdi said. “It’s a good lesson from a bad mistake.”

“That’s a positive way to think about it, Verdi,” Tyler said. “Now go look at where your process broke down on the proposal and next time get the client to believe you are unbelievably reliable in responding to the bid.” 

What Will You Do After You Get Punched in the Mouth?

The Deal Whisperer posted its 50th article in September, all based on my ongoing experiences leading sales teams in pursuit of outsourcing, BPO, SI and consulting engagements. My goal is to help business people drive greater value and stronger relationships in their deal-making. For the next 10 weeks I am offering a retrospective, posting the 10 "Most Widely Read" pieces from the last several years. Here is "What Will You Do After You Get Punched in the Mouth?". As always, your questions and comments are welcome and appreciated.

What Will You Do After You Get Punched in the Mouth?

"Everybody has a plan 'til they get punched in the mouth." Mike Tyson

Hard to believe a Mike Tyson quote would have relevance to a discussion of negotiation. Yet we often have moments in negotiations when we get "punched" or hit by a sudden act of the other party and we don't know what to do. All the planning and strategy goes out of our heads and we reel about, trying to figure out how to respond.

When we look back on the events that occurred, though, we discover that they should not have come as a shock; we just weren’t ready for it when it happened. Think of it in Mike Tyson’s context: shouldn’t a boxer have a plan that includes getting hit in the mouth? It is likely to happen! So when you prepare for your own meetings and negotiations, make a plan that includes what you will do after you get punched in the mouth.

A Deal Whisperer thinks of this as planning for surprises. Sounds counter-intuitive because a surprise, by its nature, is something we can’t plan for. With a few exceptions, however, there are not a lot of things that happen in negotiations that are real “surprises.” Walking into your house and having 50 people yell “Happy Birthday” is a surprise. You don’t usually expect to find 50 people in your house when you come home. You should expect in the course of trying to close a deal that the other party might say, “I’m withdrawing”; “Your price is too high”; “Your offer is too low”; or “I chose another supplier”.

So how do you plan for surprises? Walk through the “what if”s. After a milestone in your negotiation, take time to consider all the possible ways the other party might respond and what you will do next. If you just submitted a bid, the customer could 1. Reject the bid, 2. Offer a counter-proposal, 3. Not respond, 4. Accept the bid. There are variations on those possibilities but those are, in essence, the broad categories of outcomes to consider.

Make a plan for each. Write the plan down. And then discuss that plan with your team so everyone knows what the next steps will be. To become a Deal Whisperer, you always have to be so well prepared that a punch in the mouth is part of your plan.

The 'Five Hows' of Sales

The Deal Whisperer posted its 50^th article in September, all based on my ongoing experiences leading sales teams in pursuit of outsourcing, BPO, SI and consulting engagements. My goal is to help business people drive greater value and stronger relationships in their deal-making. For the next 10 weeks I am offering a retrospective, posting the 10 "Most Widely Read" pieces from the last several years. Here is "The 'Five Hows' of Sales". As always, your questions and comments are welcome and appreciated.

The 'Five Hows' of Sales

“Mr. Gitou, my team worked really hard on this proposal,” said Verdi. “It was a huge disappointment when the client chose our competitor. But our team did really well going from last place to second. Do you really think we could have known we were going to lose before we made our proposal?”

“Yes, Verdi, I do,” Tyler Gitou said. “As I mentioned last time, being told you finished in second is meaningless if in the end you don’t get any business. Second place is last.”

http://dealwhisperers.blogspot.com/2012/01/no-prize-for-second-in-sales.html

“I get it,” Verdi said. “So help me understand how I predict in advance the outcome of a selection process involving multiple bidders, multiple decision makers and millions of dollars at stake.”

“It requires detailed analysis, Verdi. But a great way to start that analysis is by asking the ‘Five Hows’. If you don’t know the answers to the ‘Five Hows’ it is not likely you will make a sale.”

Verdi pulled out a pad and a pen. “OK, Deal Whisperer, let’s hear the ‘Five Hows’.”

Tyler laughed. “I appreciate your enthusiasm, Verdi. The ‘Five Hows’ are:
1. How does the client buy?
2. How does the client decide?
3. How else can the client achieve its goals?
4. How can we compete?
5. How can we win?

“Let’s start with the first,” Tyler said. “‘How does the client buy?’ This is a question about the buying and contracting process. Who runs that process? Is it procurement? Do individual executives have the authority to buy directly? Do those individuals have limitations on the sizes of deals they can commit to? These are all important questions because if you do not understand the process, you don’t know the rules of the game.”

Verdi nodded. “That seems pretty logical.”

Tyler continued. “The second is ‘How does the client decide?’ While this is another process question, it is focused on the client’s internal process as to how selection decisions are made. For example, does the client have a culture of consensus? If so, you need to understand who those decision makers are, their relationships and how that consensus decision gets made. If the client has a more entrepreneurial or hierarchical environment, key executives may be the final decision makers without the use of advisory committees. Also, it is important to know whether board approvals are required. You don’t want to hit the end of your sales quarter and discover the board meets in two weeks to approve your deal.”

“Oh, I have lived that nightmare before,” Verdi said.

“The third is ‘How else can the client achieve its goals?’ This is a BATNA question: what alternatives does the client have to signing a contract with you? Can they perform the work you are pitching on their own? Or can a competitor do it just as well as you? This can be a vital question if your solution is unique in its ability to achieve the client’s goals. If the client does not have a strong BATNA, that should influence your negotiation strategy, particularly around legitimacy.

“The fourth is ‘How can we compete?’ This question is tied to BATNA and probes how well we understand the client’s interests or ‘buyer values’. It also asks what levers we can pull to make ourselves more competitive. What are the limits for us on price, scope, risk and time? If we need to move one lever, how will it affect the other levers?”

“That’s a great question,” Verdi said. “Client’s always pull on the ‘price' lever and we often fail to consider the impacts on scope. We are so focused on ‘winning’ that we make price concessions without seeking some form of relief from the client on another lever.”

“Exactly,” Tyler said. “The last one is ‘How can we win?’ This is a complex question that really pulls in the answers to the other four questions and tests the level and quality of relationships with the client. Let’s talk about your last proposal. You said you started in last place and finished in second. Why do you say you were in last place?”

“We really had no track record with this client,” Verdi said. “We were trying to get a foothold against the incumbents.”

“What you’re really saying is you had no relationships with the decision makers,” Tyler said.

“At first,” Verdi said. “But I developed a great relationship with Larry, the head of procurement. In fact, Larry’s sister went to the same college as me and he’s a huge Jets fan like me, so we had a lot in common.”

Tyler nodded. “Building affiliation with a decision maker or influencer is a great way to start. Did Larry trust you? Did he trust your company?”

“I think he trusted me. I mean, I didn’t give him reason to not trust me. But my company? I don’t know.”

“That’s the point when you needed to ask yourself ‘How can we win?’ Not having relationships, not having trust, not knowing the buying process or decision-making process suggests you were destined to lose the bid. Larry may have liked you, but do you think that was enough for Larry to award you with a $5 million project?”

“I see your point,” Verdi said.

“Lesson learned,” Tyler said. “Unless you can use the ‘Five Hows’ to build an aggressive strategy that is going to result in a realistic chance of being chosen, you may be better served spending your sales pursuit budget on other potential clients.”

“Thanks for the advice,” Verdi said. “I never realized how much analysis I should be doing on my sales opportunities.”

“You’re welcome,” Tyler said. “Being a Deal Whisperer means being outcome driven. It’s important to have goals in closing deals with clients. It’s more important to know in advance how those deals will get done.”

Change Your Attitude!

The Deal Whisperer posted its 50^th article last month, all based on my ongoing experiences leading sales teams in pursuit of outsourcing, BPO, SI and consulting engagements. My goal is to help business people drive greater value and stronger relationships in their deal-making. For the next 10 weeks I will offer a retrospective, posting the 10 "Most Widely Read" pieces from the last several years, beginning with number 10: “Change Your Attitude and You’ll Change Your Relationship.” Your questions and comments are welcome and appreciated.

Change Your Attitude and You'll Change Your Relationship

Want to improve your relationship with a business partner? Try this exercise with your negotiation team:

List five adjectives to describe what it is like to work with the other party. Chances are you will produce a list that includes words such as stubborn, frustrating, confrontational, or one-sided. Then ask the team why, if those words are accurate, they would continue doing business with such a difficult party! Maybe they should focus on building a relationship with someone else.

The truth is that parties in a relationship, whether business or personal, will eventually develop negative perceptions of one another. The problem arises when those perceptions overshadow every interaction with the other party such that we wonder why we are together in the first place.

This is the challenge of “persistent perception”. We reach a point where we perceive another party in such a negative light that no matter what they say or do, we only recognize the negative behavior that is consistent with our perception.

Imagine, for example, you join a team and your colleagues tell you to go meet with Marty. “Good luck,” one says. “Marty is a jerk.” You now have a loaded perception seeking confirmation: when will Marty be a jerk to me? And, despite all of Marty’s efforts to be collaborative and positive, when he makes that one unreasonable request you rejoice internally: “JERK!” You return to your team and share with them Marty’s jerk-like behavior, largely dismissing all of his positive behavior.

Time for a change of attitude.

Put together a list of the adjectives you and your team believe the other party would use to describe working with you. Don’t be surprised if it is not terribly different from the one you created describing the other party. Now make a list of the adjectives you would like the other party to use to describe your relationship. Ask your team what needs to change in how they talk to and work with the other party to achieve those adjectives. If your goal is to get the other party to change their behavior, you must change yours. Model the behavior you desire from others. If your team refuses to change their behavior, how can they expect the other party to change theirs?

Change your attitude and you will change the relationship.

Who is Driving?

“Verdi, haven’t you been working on closing that same deal for months?” asked Tyler Gitou.

“Yes I have, Mr. Gitou,” said Verdi.

“Why has it been so slow to close?”

Verdi sighed. “I have been struggling to get buy-in from the client around the deal. I am meeting with the people who run the client’s logistics department and trying to explain how the new system will function. But they all have different requirements for what they want the system to do.”

“Really? I would have thought those requirements would have been decided when they chose the system.”

“That’s the problem,” Verdi said. “The logistics department didn’t choose the system. The client’s new ‘business optimization’ group picked it.”

“Interesting. So one group in the company has chosen how another group will operate and did not ask their opinion?”

“That’s right,” Verdi said. “The business optimization group was tasked by the CFO with finding a software product that would drive greater efficiency and save as much money as possible. We showed that our product would reduce manual and redundant functions and potentially save the client thirty percent in the first year. So they chose us.”

“I’m glad they recognize the great value of your product,” Tyler said. “So after three months the logistics department is just getting introduced to the product?”

“Yes. The logistics department is now starting to understand what the software does and how this system will change the way they do business.”

“Sounds like you’re still selling, but now to the actual users.”

Verdi sighed. “It feels that way. I don’t understand why it’s taking so long. It’s a great product.”

“The problem is a process issue, Verdi,” Tyler said. “You never ‘sold’ the product. Instead, someone in the company chose a product for another department to use, and now they are just getting familiar with it. To reduce this type of inefficiency, a Deal Whisperer always identifies the key executive in the buying process. Ask yourself: Who is driving?”

“What does that mean?”

“Someone on the client side has to care that the deal is going to go through and the program be successful. That has to be a senior executive high enough to influence what is happening at the negotiation table. Think of it this way: if the client gets up from the negotiations and walks away, do you know who you will call to get them back to the table?”

Verdi thought for a moment. “No. I don’t know who would have that authority.”

“That’s your problem. You have no deal driver on the client side. That’s why you have struggled to drive the deal to closure.”

“So how do I fix that?” Verdi asked.

“For this deal you may not be able to. You need to have some high-level relationships on the client side who will reach out and help.”

“We don’t have any. This is a new client.”

“Fair enough. So let’s talk about some strategies to move more efficiently given your situation. But next time you are scoping out your deal, make sure you think about who is buying and develop a strategy to turn that buyer into your deal driver. To make an engagement successful, both parties need to have a shared interest in that success. With that shared interest there must be a shared passion for getting the deal done. Find out who on the client side is the source of that passion for success and you have your deal driver.”

An Expensive Relationship

“The client asked us to start the work because they had a ‘burning platform’. So we started even though we did not have a signed agreement.” Verdi sighed. “I know that was a mistake.”

Tyler Gitou shrugged it off. “It’s easy to spot our mistakes in hindsight. The key is to learn and not make the same mistake twice. So what’s the problem?”

“Well, the client had budget cuts and had to cancel the project, so they never signed the deal,” Verdi said. “Meanwhile, we already completed phase one and had billed the client $500,000 for it. The client is now challenging the invoice because the project was canceled.”

“So how much has the client offered to pay?”

“Zero,” Verdi said. “They said the work we did has no value to them without the project going forward.”

“Regardless of the value, do they recognize that they asked you to start the work, incur the costs of paying your people all on the basis of trust?”

Verdi nodded. “Yes. They said we should treat this as an investment in the relationship. They have a lot of other projects in the pipeline that they said we will be able to bid on to make up the loss.”

“What do you want to do, Verdi?” Tyler asked.

“My management is saying we should focus on the relationship. This is a client we are trying to grow so they see this as an opportunity to develop that relationship.”

“I see.” Tyler said. He locked his eyes on Verdi and said in a stern voice, “Verdi, give me $20.”

Verdi looked surprised. “Give you… why?”

“Because I asked you to. Verdi, you and I have been friends a long time and if you say ‘no’ to me, that is going to really impact our relationship. It’s just $20. Give it to me.”

Verdi sat back in his chair. “I have to admit, Mr., Gitou, I am confused.”

“What are you confused about?” Tyler asked. “I am asking you to ‘invest’ in our relationship. If you give me $20 it will be a better relationship.” Tyler let the silence overtake them both, and finally he smiled. “It’s awkward, isn’t it?”

Verdi sighed. “Yeah, really.”

“If you give me the $20 what type of relationship will we have? It will be a relationship where I ask you for money and you give it to me and get nothing in return. That’s not a ‘relationship’ that’s called being a sucker. And that’s an expensive way to try and develop a relationship.”

“So you’re saying we should never take anything less than the $500,000?”

“No, I am asking you to think about what you will get in return for the concession. For example, you said they have other projects. What if they awarded those projects to you?” Tyler asked.

“Well, they said we can bid on them.”

“Verdi, I can bid on them too. The janitor can bid on them. That is a valueless option. But if they awarded those projects to you, wouldn't that have value?”

“We’d save a lot of money in sales expense if we don't have to compete for the project,” Verdi said.

“Exactly. Maybe they don’t have $500,000 now to pay you because the budget was cut. But they have other things of value to offset your loss. Ask them to award that work to you and you can reduce the $500,000 to perhaps $200,000. A Deal Whisperer always gives to get. If we make concessions in negotiations for which we do not get value in return, we are training the client that we do not respect our own business and we will give money away because they say the magic word, ‘relationship’. A Deal Whisperer builds relationships on mutual respect and trust. Client’s don’t respect us if we give away money and they are wise to keep asking us to do it until we say ‘no’.”

“Thanks for the advice, Mr. Gitou,” Verdi said. “I am going to sit down with my team and put together some options to address their financial limitations and also make us whole on the sunk costs of the project.”

(See “How to Build a Trust Action Plan”   http://dealwhisperers.blogspot.com/2011/02/how-to-build-trust-action-plan.html.)

What's the Problem?

Verdi was surprised to see Tyler Gitou in his office.

“Mr. Gitou! How nice to see you. You’ve been gone for a while.”

“Hello Verdi,” Tyler said. “I have been. Come in and visit with me for a bit. How have you been?”

Verdi sat down. “I’ve been great. Very busy with a bunch of new deals and I could really use your help. Where have you been?”

“I was away getting some sales and negotiation training,” Tyler said. “The best program I have ever had in my career.”

“Really?” Verdi said. “You go to sales training? But you’re the Deal Whisperer! What would anyone have to teach you? You’re the best in the business!”

Tyler laughed. “Thank you, Verdi. That’s very kind. But do you know why I am so good at sales and negotiation? Because I take training. Refresh myself. Learn new ideas and recall some I had forgotten. Practice.”

“You have to practice?”

“Absolutely,” Tyler said. “What do the best athletes do when they are not competing? What do football teams do in between Sundays or golfers do when they are not on tour? Train. Practice. Get better and be ready for bigger challenges.”

“That’s terrific. Did you learn anything you can share?”

“I learned a great deal, Verdi, and over the next few weeks I will share as much as I can with you. Why don’t you tell me about your deals?”

“OK,” Verdi said. “The biggest one I have is with a client that wants us to build a new software platform to run its retail operations.”

“Why do they want the new platform?” Tyler asked.

“The one they are using is old technology and getting expensive to maintain. The client has asked us to build something that is easier to upgrade in the future, so they want us to use all off-the-shelf software.”

Tyler nodded. “That sounds like an exciting program.”

“Well, it gets better. We figured out that if we build this we can actually turn it into an offering that we would sell to other clients. There are lots of retail operations out there that could benefit from this. This could develop into a billion dollar business for us. Our senior management is really excited.”

“It sounds like you have identified a problem that the client needs our help with and a solution for that problem. What’s the issue?” Tyler asked.

“It’s the revenue sharing.”

Tyler cocked his head to one side. “Revenue sharing? Where?”

“In the new business,” Verdi said. “We are trying to figure out how to share the revenue from the new offering. The client is asking for a large sum up front because, they say, they will have helped us build the business. We are proposing a revenue model that tracks to the growth of the business.”

“This is a very interesting discussion,” Tyler said.

“Interesting but a little contentious. The client’s leadership is starting to get involved and feels we are not moving enough to make the deal happen.”

“Which deal?” Tyler asked.

“The deal for the new business.”

“What business?” Tyler asked.

“The one that leverages the new software offering.”

“What software offering?” Tyler asked.

Verdi sighed. “Come on, Mr. Gitou! I just told you. The software offering we are going to build for the client.”

“Going to build?” Tyler asked. “So let me ask you this: how is it you are negotiating for what revenue the parties will share for a business that doesn’t exist that is to be built on a solution that has not been designed, developed or delivered?”

Verdi was silent for a moment. “You are suggesting we are putting the cart before the horse?”

“No,” Tyler said. “I am saying we don’t even have a cart OR a horse. We have an idea of what a cart and a horse might look like someday and we have described it to the client and gotten them all excited about something that could happen in the future. What about solving the client's problem?”

Verdi shrugged. “What problem?”

“The problem that the client asked us to help solve. Replace their legacy environment with a lower-cost and easy to upgrade system.”

“Yes,” Verdi said. “We’re still going to do that.”

“I know, but my point is you haven’t done it yet. And now the notion of creating a billion dollar business has everyone so excited that our team has lost sight of the underlying problem.”

“But Mr. Gitou, this is a really big deal.”

“No it’s not, Verdi. Right now it’s a thought. You have a deal on the table to help the client. Focus on the deal that the client needs, not the deal we want. Otherwise, your conversations about how to split non-existent revenue from a business that hasn’t been created will destroy the potential to really help our client.”

Verdi nodded. “I see what you mean. So what do I do next?”

“We need to change the conversation. Let’s strategize about who we need to speak with at the client and what we need to say. You are in a very precarious situation now having built expectations. We need to reset those expectations and re-frame the outcomes that we can achieve. As Deal Whisperers, our goal is always to focus on what we can legitimately achieve for our clients right now and bring them into a spirit of collaboration. As we develop the relationship, and we discover we can find more value in our work together, then we can decide how to optimize that value and the appropriate way to share it. But before we do that we have to demonstrate that we can both solve the critical problem that we all identified in the first place.”