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.

Here Comes Santa Claus...

Yes, it’s that time of year again when boys and girls all over the world anxiously await the arrival of that special person in the suit who will bring them gifts and joy to finish out the year.

No, I am not talking about Saint Nick, the jolly old elf. I’m talking about the company executive who shows up in December to give away discounts to clients to close deals and make sales quotas.

You know, “Help.”

I originally published this column two years ago and, as I thought about what to publish for the end of 2019, this was still the most relevant advice I could think of!

If you haven't experienced it (or have and were not aware), “Help” is a noun, not a verb, as in “here come ‘Help.’” It’s a term used by deal makers when their management decides they need to get involved to “help” push the deal “over the line.”

In fairness, sometimes a deal team can use an objective perspective to close out some nagging issues that the parties can’t seem to resolve. In December, however, Help usually arrives as a result of a gaping hole in the sales forecast that needs to be filled with some fast closings.

When I worked for a software company, where December 31 was the end of the fiscal year, the rumblings about Help would begin soon after Thanksgiving. If I heard that Help was coming to see me, strains of the theme to “Jaws” would start playing in my head: a pounding rhythmic pulse of foreboding.

The client, on the other hand, hears, “Here comes Santa Claus, here comes Santa Claus…” That’s because for the client, Help was an executive with a big bag full of goodies that the executive couldn’t wait to give away. (And then the executive would crow about being the one who closed the deal.)

If all it takes to close deals is giving away money, management should send an ATM into the negotiations instead of an experienced deal maker.

The problem with Help is: not only does the client get a bunch of money in exchange for nothing in return (which trains the client that it can get a bunch of money in exchange for nothing in return), but sometimes Help results in a bad deal.

All deals need time to develop. The more the parties talk, the more they learn about each other’s real underlying interests, challenges and goals for the transaction. Sometimes, as the deal takes on its shape, the parties find out they are misaligned and decide to hold off for a while. When Help forces a deal by throwing money at the client to get a signature, all the ingredients for success may not be mixed in and the engagement may suffer.

When making a cake, for example, one usually mixes everything together and then bakes it for 45 minutes at 350 degrees. You can’t say, “We don’t have 45 minutes! We have to get this done! Let’s fire it up for 10 minutes at 1,000 degrees and we’ll worry about sugar later.” That’s a recipe for a bitter outcome. Given the right amount of attention and time, a good deal will rise and a bad deal should fall. Unless it gets Help.

Flat-Out Stupid

Imagine a multi-billion dollar industry that invests millions to get the best people, establish a respected brand and deliver a product to the highest standards, only to leave delivery and client management in the hands of a 12-year-old on a bike.

I started my career in journalism working for Newsday and The Daily News as a newspaper carrier in Malverne, New York. (Yes, I am one of those dads who tells his kids “I had two newspaper routes, morning and afternoon, and walked 2 miles uphill, both ways, to school! And instant messaging was handing a note to a classmate and hoping the nun didn’t see!” But I digress; and I digress from my digression.)

Later, when I was a newspaper reporter in Albany, I thought about the newspaper business model and I realized: this is just flat-out stupid.

The goal was to increase circulation numbers by getting more customers. Increasing circulation would allow the newspaper to increase advertising rates and generate more revenue. And yet, the newspapers put the least amount of investment possible into the sales organization, which was the primary source of helping to boost revenue: kids delivering the actual product.

The model has changed as newspapers lost readership (due to the Internet and cable news; not newspaper carriers with poor aim) and have switched to professional delivery services and responsive 1-800 numbers if the paper doesn’t show up.

But many companies are still suffering from the same blind spot: they don’t understand that without a well-trained and motivated sales team, their business will never grow to its greatest potential. A company can have terrific product that is easily differentiated from its competition. Without a professional who is skilled in how to sell that product to the target market, however, that product will be an also-ran.

Take a moment and think about your own organization: who is the face of the company to your buyers? How are they trained? How are they motivated? What kind of support do you provide to help them be successful? Sales is the heart: it pumps revenue throughout the body of the company. Without a strong heart, it is difficult to compete and to thrive. Take care of your heart and the life of your company will be that much stronger.

Your Price is Too Low

Sooner or later, you will be talking about price.

Despite all of the effort we put into crafting just the solution the client needs; understanding “what’s keeping them up at night” (which is, by the way, a terrible question to ask a client); and goals the client is trying to achieve, someone is going to ask for a price concession.

Why does that always seem to be a surprise?

Anyone who has received urgent emails or calls from colleagues about the client’s ask for a lower price knows what I am talking about. “How should we respond?” is usually the question. And we discuss some strategies to address the issue.

But in the back of my mind I always wonder: why didn’t you have a plan for this? We all know a request for a price decrease is going to come.

When was the last time the client told you, “Your price is too low”?

Planning a successful sales strategy is all about being ready for the unexpected; it’s a given that we should be ready for the expected.

We Both Want Apples

Sometimes a negotiation needs an agreement to get started.

Not a big agreement. Just something that the parties acknowledge works for both to demonstrate “we can close issues together.”

For example, if you have a bunch of big issues and little issues, agree on the little issues first. It creates a cadence of collaboration and a feeling of accomplishment: “Hey, we agreed on something!”

Generating positive energy is critical to a successful negotiation.

Breaking down big issues into smaller parts is also a great way to solve the bigger issues. In a recent discussion with a colleague who was trying to work through a termination scenario, she said the parties were stuck on how to solve for a key point. They had stalled because each was asking for different outcomes.

“Think of it this way, John,” she said. “They want apples and oranges, and we want lemons and apples.”

I replied, “Well, the good thing is we both want apples. So let’s agree on the apples, and just focus on the oranges and lemons.”

This works especially well when the “big” issue is about money. Years ago, when I was negotiating for a settlement of a dispute, the client said it owed my company $1 million, and my company was seeking $1.3 million. I understood why the client was taking issue with the last $300,000; they weren’t being positional, they just didn’t agree with how we valued our work.

I promised I would share their view with my leadership. “But,” I said, “if you say you owe us $1 million, and we say you owe us $1.3 million, then we both agree you owe us $1 million. So, if you pay the $1 million, my leadership will see that as a great sign of trust and progress toward working out the dispute.”

The client agreed to pay the $1 million, and we were left with a dispute of $300,000, which seemed much more manageable. I was able to present the client’s perspective to my leadership and, because the whole dynamic of the negotiation had changed due to their payment, my company saw the situation in a different light and agreed to reduce the demand so we could sign the settlement.

Many negotiations start with the question, “So which issues will we tackle first, the big rocks or the small rocks?” Starting with the “big rocks,” or toughest issues, will just reinforce the notion that “we don’t agree.” Focus instead on what the parties agree on and create momentum. You will also reduce your issue list, making the rest of the negotiation seem more manageable.

Use Your BATNA to Drive the Deal

I am a car-buying junkie. I am not hooked on cars themselves (though I was a bit of a gearhead in college). I am, however, hooked on the process of buying a car.

One of the primary reasons I am hooked is because car buying is a negotiation process that totally favors the customer, making it a great opportunity to practice my negotiation skills. Many would disagree. Polls show that most people do not like the car buying process. In fact, a recent survey found that 75% of the respondents would handle the entire process online if they could. So how could a sales process, where most of the negotiation power sits with the buyer, be so widely disliked by buyers?

I believe it’s because most people don’t realize how they can change the process and actually make it fun. You just have to use your BATNA to drive the deal.

“BATNA,” which is a concept coined by Roger Fisher and William Ury in the book “Getting to Yes,” is your “Best Alternative to a Negotiated Agreement.” Simply put, it’s what you will do if you can’t reach a deal with someone. For example, suppose you’re sitting in a Ford dealership, and you can’t get the price you want on a new Ford pickup truck. What do you do? You don’t want to give in and pay too much.

One alternative is to go to another Ford dealership, and see if you can get a better price. Another alternative is to go to a Chevy dealership and negotiate for a different model truck. Whichever of those two alternatives works better for you, that is your “best alternative” or your BATNA.

Large companies leverage BATNA all the time. It’s called a request for proposal, or “RFP.” Companies issue the RFP to a dozen vendors and gradually whittle the list down to those alternatives they like best. Often, the company will pick one vendor to negotiate with, and keep a backup vendor as a BATNA. This gives the procurement team leverage to try and get the best deal out of the chosen vendor, because the vendor knows a backup alternative is waiting in the wings.

I actively use the concept of a BATNA when I am buying a car. For example, I needed to get an inexpensive “commuter” car, and decided to go with a lease. I picked three car dealerships, all on the same street, each with competing models of cars which fulfilled my interests.

I walked into each dealership, found a salesperson, and said, “I am leasing a car today. I would like your best price on your base model of X. I am going across the street now, and I will make the same request of that dealer. Whoever gives me the lowest price will get the deal.” Each salesperson looked at me, and then looked over at the competing dealership, and nodded their head, acknowledging my alternative.

A few hours later, I had three bids, and leased the car from the lowest bidder. No long negotiations. No hassle. I just let my BATNA drive the deal.

We Said "No"

Sometimes a client is not making a request, they are posing a test.

We were pursuing a $30 million systems integration deal with a long-standing energy client. The functions we were installing were of the “mission critical” type, and if something went wrong with the implementation, there was a high risk of substantial losses to the client. Trust and collaboration were the primary buyer values.

Having survived round after round of orals presentations, reviews and questions, the client was ready to make their decision. We had delivered what we viewed as a world-class proposal that demonstrated our understanding of the risks, provided mitigation and would achieve the client’s goals.

We were not the cheapest bidder, we were told. And we were not surprised. We were told, however, we had the best solution.

The client was making its final rounds to decide the winner between us and a key competitor. The sourcing lead contacted our sales lead and said, “We love what you’ve proposed. But we need the price reduced by 30 percent. If you do that, the deal is yours.”

There are always three potential answers to a request for a price reduction: yes, no, and an offer of less than what was asked.

We had several internal meetings to decide our answer. Throughout the process, we had committed to the client that we would provide the most competitive price that we could. We knew how important the success of this engagement was for the future of the client’s business, and we didn’t want price to be a distraction. We were focused on the quality of the work, reduction of risk, and achievement of the client’s goals.

When it came time to answer the client’s request for a price reduction, we said “no.”

The reason, we explained, was that all of our discussions had focused on what it would take to succeed. We said to reduce our price by any amount, thereby causing us to cut back on our solution or staffing, would put success at risk.

We won the deal.

Once the project was underway, we had a “win” review with the client to understand what about our proposal led them to choose us over the other service provider. The issue of the price reduction request came up.

The client said “no” was the right answer. Someone in the client’s executive leadership team proposed asking us for the discount to see whether we had been true to our commitment to provide the best price we could to do the project. The entire exercise was a test. If we had offered a discount, we would have destroyed all of the trust we had established both in our price and our ability to deliver.

And we would have lost the deal.

Of course, if we had not won the deal, we would be asking ourselves “what if” questions to this day. But doing the right thing is always the right thing to do, and you’ll never regret doing the right thing.

Throwing Gold Out the Window

Some people don’t recognize gold when they see it.

Not gold in the sense of the precious metal. I mean something rare that others greatly desire. Something they wish they had.

Such as a conversation with a client.

Whenever I hear someone on an account team say, “We have a meeting with the client,” I respond: “This is fantastic! You have a chance to hear about their challenges, provide updates on industry developments, and can get some insight into how we can make them successful. What are you doing to prepare for the meeting?”

Often, the response is, “Well, it’s their meeting. We figured we’d hear what they have to say.”

And that is like seeing someone throwing gold out the window.

Every opportunity to meet with the client is as precious as gold in your hand. First of all, the client is busy! They are trying to run their business, meet the demands of internal customers, shareholders, and/or leadership. The fact that the client takes the time to meet with YOU is extraordinary!

Yes, you should go in and listen; but what are you listening for? Have you discussed, as a team, what the latest news is at the client? Have you checked their website? Checked news articles for any developments with their competitors? Have you thought about something you can share about the industry that they may not know? Will you leave the meeting with the client feeling that the time they spent with you was incredibly valuable to them, such that you can get another meeting next week?

Creating a strong, trusted relationship takes a long time. It needs a strong foundation, built one stone at a time. But you can’t build a stable structure on a pile of rocks. The foundation has to be designed with thought, intent and planning.

Preparation for any conversation is vital to you achieving what you want from that interaction, even if you claim you’re just going “to listen.” Because if you don’t know what you’re listening for, you won’t know when you’ve heard it.

Afraid of Negotiations

I am never surprised to find a business executive who is a terrible negotiator. I am, however, surprised when a business person admits they are a terrible negotiator.

It takes a great deal of humility and self-awareness to concede a lack of skill at something so critical to success as negotiating. Some people have told me they are afraid of negotiations. When I ask them why, the answer usually has to do with the perception of conflict. They claim they don’t like to have difficult conversations. 

While a good negotiation should be about problem solving, and not conflict, there is no doubt the discussions can get contentious. We are all different “types” of negotiators, and what type you are will determine how you deal with conflict and what you can achieve as an outcome. Identifying what type of negotiator you are can help you become a better negotiator if you work at it.

For example, if you are the type of person described above, you are an “avoider.” Rather than deal with issues you perceive as contentious and emotional, you will avoid having the conversation. How do you change? Think about your own goals and ask how you will achieve them if you don’t actually address the issues. At some point, you will have to come to the table, or you will never get what you want.

The avoider who solves his or her problem by saying “yes” to another party’s demands is an “accommodator.” How do you know if you’re an accommodator? Well, if your customer says, “I really like what you’ve proposed, but can you cut the price by 10 percent?” and your reaction is to figure out how much you can cut the price, you’re an accommodator. Rather than ask why a price cut is necessary and what you will get in return, you immediately believe that you have to give the customer something “or else the customer will be mad or might go to the competition.” News alert: the client can always go to the competition, so that “threat” is never new. Also, if the client would drop your services because you wouldn’t lower your price, you never sold the value and won the deal. Losing on price means the client views you and the other bidders as commodities, so lowest price was always the winning factor.

If your reflex is to say, “Let’s split the difference,” you are a “compromiser.” While you may listen to the customer’s request, and think about how to respond, in the end, you give up your own self-interests to “cut to the chase” and get the deal done. This is not to say that compromising is always a bad solution. Sometimes the only way to resolve a problem is by compromise, especially if continuing to work the issue has diminishing returns. But it should not be your initial reaction to resolving an issue.  

If you say “no” and refuse to have a conversation about other options (“My way or the highway”), you are a “competer.” For a competer, negotiations are about winning, and are very ego-driven. The problem with being such a positional negotiator is it doesn’t work well when establishing a business relationship. When buying a house or a car, where relationship is less important, it is OK to focus on getting the best deal. But if you want to sell a multi-year services deal, the quality of the relationship is a critical part of the success of the engagement. In addition, as a competer, you may get your way some of the time, but you are also likely losing a lot of value by not brainstorming on other ways to address the problem and create greater synergies.

The ideal negotiator to build strong business relationships is a “collaborator.” A collaborator wants a deal that benefits her company and meets her interests, but is also focused on the other party’s interests and seeing how best to meet them. A collaborator listens actively, trying to find the clues in what will best work for the other party. She also promotes brainstorming around the engagement to see if the parties can find more value to share, so rather than dividing a fixed “pie,” they are increasing the size of the pie. A collaborator brings all the parties together to maximize the benefits, outcomes and efficiencies in the deal for everyone.

How do you improve your skills and become a better negotiator?

A woman was walking in midtown Manhattan carrying a violin case. She stopped a stranger and asked: “Excuse me, sir, how do I get to Carnegie Hall?”

The stranger replied: “Practice, practice, practice.”

How to Succeed in Sales (and Space Travel)

Years ago, there was an interview with a NASA astronaut in which he was asked, “What would you do if you were in danger of destruction and had only one minute to save you and your crew?”

He responded, “I’d spend 50 seconds figuring out a solution, and 10 seconds executing it.”

A couple of elements of that exchange delight me. First, it highlights how cool astronauts are. These men and women are engineers, pilots and scientists, and they are not afraid to get launched into space on a giant rocket. That combination of intellectual capacity, discipline and courage makes them seem like the closest thing we have to real super heroes.

Second, it validates the old principle which I use in selling: plan the work and work the plan.

Note that the astronaut, who is trained to deal with crises, allocated over 83% of what could be his last minute on earth to planning his next steps, and the remainder to action. How often do you, when given a great sales opportunity, jump into action (“Let’s show them the solution!” “Let’s give them a price!” “Let’s sign an LOI!”) before you do any substantive planning?

Selling, like space travel, can be unpredictable. (That may be the only comparison I can make between the two!) And when something is unpredictable, it is because it has variables. (Constants are not unpredictable because they are, well, constant!) If we have to deal with variables, particularly ones with broad and material implications, we can’t develop a consistent plan that will address all cases. But we can develop a consistent process that produces a plan, taking into consideration the unique engagement we are going to undertake. For example:

• ·       Qualify the deal

o   How do they buy?

o   How do they decide?

o   How else can the client achieve its goals?

o   How can we compete?

o   How can we win?

(See “The ‘Five Hows’ of Sales” https://dealwhisperers.blogspot.com/2012/02/five-hows-of-sales.html.)

    

•       Build your pursuit team
•       Develop a power map
•       Etc.

The need to take fundamental planning steps does not change from deal to deal. And if you establish a process for how to analyze and strategize to customize a plan to deal with the variables, you will give yourself the best chance for success (and that trip to Mars you’re dreaming of).

Don't Judge a Book... Actually, Just Don't Judge

A young colleague and I were in a ride-share, heading into New York, and we began discussing the deal we were working on.

Tyler was asking questions about sales strategy (he’d only joined the firm three months before). I was explaining the importance of building trusted relationships with clients to be more effective in helping them solve their problems.

I couldn’t help but notice that the driver, an older African-American man, with dreadlocks piled high on his head, was frequently glancing in his rear-view mirror. He was obviously listening to the conversation. At one point, I noticed a wrinkling around his eyes. I couldn’t see his mouth, but I assumed he was smiling.

This was a multi-stop journey, so we dropped Tyler at his apartment, and then continued on to my hotel.

After Tyler got out, the driver said, “I hope that young man appreciates the fact that he has access to someone like you. You just gave him a wealth of information for nothing.” I mistook his accent as Jamaican. He corrected me. He was originally from Congo. His name was Maswamba.

I said, “Well, thank you, but that was just me babbling on as I often do with younger people. I like to coach them to be better in their roles.”

“But what you were saying to him was correct,” Maswamba said. “You don’t sell product, you sell yourself.”

I said, “That is absolutely true. You seem to have some background in sales.”

Maswamba laughed, “I was a salesman for 40 years at Unisys.”

“Really?” I said. “You sold for Unisys?” I tried to imagine if he had sported those dreadlocks when he was selling Unisys equipment in corporate America.

“Oh, yes, I sold a lot of big boxes. A lot. And the only reason I drive this car is because my son got sick of me being home all the time. This is only my third week.”

“And it gets you out to meet new people!” I joked.

Maswamba laughed again. We talked about sales, raising children and social issues until we got to my hotel. (We were so caught up in conversation, in fact, that he missed the turn instructions coming from his phone twice.)

I left the car, energized by the wonderful discussion we had. His initial appearance had set my perception of him in one direction. Once engaged, his easy manner and style confirmed what he said: he must have been a great salesman in his day.

I made a mental note, for the umpteenth time: don’t judge a book…

Actually, I thought, just don’t judge anyone. First impressions can be misleading, and it takes time to really understand what people are truly about. But take the time. It’s worth it.

"Golf" is a Four-Letter Word

There is an old joke that asks: Why did they name the game “golf”?

Because all of the other four letter words were taken.

If you listen to a frustrated golfer, there are other words they use to express their emotions that could have been used as the game’s name. Rarely does a golfer miss a putt and yell, “Golf!”

Similarly, while called “sales people,” the reality is that the best of us don’t actually think of what we do as “selling.” The concept of “selling” has with it a connotation of convincing someone to buy something they don’t really need. Yes, someone may be successful at that, once, but the purchaser will soon realize they don’t need it and won’t work with that salesperson again.

For me, the goal is not to “sell” to a client, but to turn the client into a “buyer” of my firm’s services once they recognize the value of the solution we are proposing. That requires more than “selling.” I have to ask questions, listen, understand the nuances of the client’s challenges (maybe even more than they do themselves), make suggestions and listen some more. When I suggest a potential path forward, I want the client to trust me that I will do all I can to make them successful in this engagement so they ask for my help. They become a buyer.

Though “sales” may not be the ideal word for what so many of us do, I guess, like golf, we’re stuck with the word. It would be difficult and confusing, instead of telling people I am in “sales,” to say I am in “buys.”

Open the Black Boxes

I once negotiated for two weeks on the word “capital.” Not because people were being difficult. It’s because we were not explaining ourselves well.

When trying to close a sale, it is important to remain open, flexible, and maybe a little stupid (see, “How Stupid Can You Be?” http://dealwhisperers.blogspot.com/2014/03/how-stupid-can-you-be.html).

The stupid part can be especially useful because it allows you to ask clarifying questions: Why is that important to you? What do you mean when you say that? How does that affect your business? Asking open questions such as those may lead you to what should not be a surprising conclusion: your client doesn’t see the world the way you do.

People are complex animals: highly cognitive, reasoned, self-interested and emotionally contoured. When trying to come to agreement with another, it’s the contours of emotions that usually create the conflicts. We all have been shaped differently, by nature, nurturing or experience, so we all react or perceive what we see in the world differently. Words are black boxes. Sometimes you don’t know what’s inside until you open up a dialogue.

In my case, I was negotiating with a large pharmaceutical client over a termination clause. The client wanted the right to terminate our multi-year services agreement for convenience. I said we would do that, subject to a fee of several million dollars. When the head of procurement asked what the fee covered, I said “our invested capital.” He said no.

We went back and forth, neither one giving in on the issue, until he finally asked me the clarifying question: what buildings do you have that you are investing in?

Buildings? I said, this is not about buildings. It’s about money. The cash we invest in launching this deal and transitioning the services. If you terminate before we recover that investment through our fees, we need to be made whole for that capital.

He smiled and explained he had a different view of what “capital” was. He had been pushing back on this provision for two weeks because he thought our need to recover “capital” was related to infrastructure. Being a pharmaceutical company, he said, we run factories that manufacture drugs and the word “capital” is tied to hard, tangible assets.

Once we understood the source of the miscommunication, we closed the issue. As a result, I now know when there is a challenging issue to resolve, it’s time to open the black boxes.

Make An Offer They Can’t Refuse

I began my professional career as newspaper reporter, so I have always seen words as powerful tools of influence. The adage, “The pen is mightier than the sword,” may have more relevance in today’s political environment than when it was first uttered in 1839, but it has always been true in developing sales strategies. After all, how many successful business deals are closed by threat of “the sword” or brute force (other than contracts negotiated by Vito Corleone and Luca Brasi)? The successful signing of a long-term deal requires trust and respect as a foundation, not violence.

That’s why I always bristle when a deal team sets up a central working location and refers to it as the “war room.”

What war? Who are we fighting with? The client? The client is not our enemy!

Our goal should be to engage with the client, build a relationship that recognizes the value we will bring, and move through issues collaboratively to get to a result that maximizes the outcome for both parties.

I always rename that central location, “The Deal Room.”

To some this may seem like a fussy point, but getting this right sets the foundation in how your people think about selling. Using references to fighting and winning creates a frame of reference for the deal team that this will be a “battle” and we have to “beat the client.” We don’t want to beat the client, we want to help the client.

Framing the opportunity to solve the client’s problems and help grow its business as an adversarial relationship will cause people to focus on the challenging aspects of the dialogue with the client. The team will not be tuned to listen for the clues from the client about what will resolve the issue, i.e., what’s really driving the client’s ask?

For example, if the client says, “I need you to cut the price by 20 percent,” the adversarial frame of reference says, “Here we go! They’re trying to screw us on price!” The collaborative frame of reference analyzes the request and thinks: “For the last six months, they have talked about quality and using our best people and have never talked about price. Why this and why now?” It may turn out, as has often happened to me, that the client’s budget was cut and they can no longer afford the solution as modeled. They are asking for a price reduction, but what they are really saying is “I have an issue! I can’t afford what we have agreed on so we need to change the solution on the table.”

Once you understand the client’s challenges, you can work on options that solve for their issues and still meet your interests and needs. Put together a proposal so creative and insightful that you can make an offer they can’t refuse. But not in the Vito Corleone sense! It should be that they can’t refuse the offer because it is so good they’d be foolish to miss the opportunity to work with you.

Cheap and Fast, But Not Very Good

There are several ways to join two pieces of wood together.

A hammer and a nail is one way. A screw and a screwdriver is another. You can also use adhesive. And sometimes a clamp works best.

If you’re building a house and framing the walls, you’d use a nail gun. You want to work quickly and you don’t care what the wood looks like when you’re done.

If you’re making a china cabinet out of mahogany, adhesives and small screws in pre-drilled holes to join the pieces would likely produce a better aesthetic.

Likewise, there are multiple ways to negotiate a deal, and which one you choose depends on the situation. In the end, it all depends on the answer to a simple question: what do you want?

If you are at a stop sign or getting on an elevator, you want to move along. Who goes first is not going to be a lengthy discussion and there will be no “so tell me about yourself” conversations. If we follow the rules, the negotiation will be quick and we will all get on our way. Goal: expediency.

When you and a significant other are discussing where to go for a vacation (and, yes, that is a negotiation) the idea, usually, is to go on vacation… together! If you get what you want and your other gets what they want, you may end up in different places! Goal: relationship.

When buying a new car, you try to get the best deal you can. So does the dealership. This is a “positional” negotiation. You use data to work down the price. The dealership tries to see how long it can resist. You probably don’t care about the “relationship” (and the dealer may or may not care). Goal: lowest price.

But when we negotiate for large business agreements that involve collaboration and multiple years of services, we have to combine the substance and the relationship in order to achieve the optimal outcome for both parties. If one side is focused on trying to squeeze every concession out of the other side for the sake of “winning,” the outcome is both sides lose. Usually, in a multi-year services deal, the goal is “success”: get the system installed; improve the quality of services; drive cost out of operations.

If the engagement is a failure, no one ever asks, “But did you get a good price?”

You can make a china cabinet from pine boards with a nail gun. Just don’t expect anyone to slap you on the back and say, “That's a beautiful piece of work! I'm proud to showcase it in my dining room!" Like a complex business engagement, no one is satisfied when it's cheap and fast, but not very good.        

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