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Let’s face it, it’s an awkward situation
for a seller – the winning post is in sight
and you’ve expended an awful lot of time
and energy in getting to this stage, but this
is where it can all go horribly wrong. If your
contact is a much better negotiator than you
it’s even possible that you could lose
money on the assignment. It’s vital then
that you keep in mind the whole premise of the
sales process …
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We and our clients share identical, mutual
self-interests – we both want the same
thing – a solution that truly meets their
needs.
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If you find yourself ‘boxed into a corner’
you may end up with terms that mean that you
can’t meet their needs whilst making the
margin you require. As a result, dissatisfaction
(on both sides) is just around the corner.
So, how can you help your contacts see that
what you are proposing is truly in their best
interests? Approaching any negotiation situation
with this mindset immediately flags up your
intention to obtain a ‘win-win’ result,
so that you can indeed, give them what they
want and need. Let’s have a look at this
negotiation stuff and start with a working definition:
‘Negotiating’ is when you and
your contact discuss terms and come to an agreement
that is acceptable to both of you.
If you don’t do it well, be prepared for:
* Low margins
* Reduced profitability
* Working too hard for little return
* Unwanted precedents with your clients, making
future negotiations and pricing difficult
* Weak competitive profile
Clearly, it’s important to get it right!
Let’s explore some of the moves the experts
make:
Watch the ‘hidden’ messages
If you observe sellers and potential clients
together during a sales discussion, you’ll
see and hear, ‘messages’ being sent
by both, all the time. Your contacts infer things
and make assumptions about you and your commercial
position from what you say. For example saying,
‘Our rates are fixed at £1,300 per
day’ sends a completely different message
than “Our rates are usually between £1,000
and £1,300”. As does “Oh yes,
we can start straight away, we’ve got plenty
of space in the diary”, versus, “Well,
I’ll need to check, but it might be possible
to start almost immediately”. Your contact
doesn’t have to be an Einstein to work
out what to do if they heard the former.
Avoid coming off at the ‘first corner’
The ‘amateur’ mistake isn’t
failing to pick up important messages, or even
sending the wrong ones, it’s to start making
concessions while you are still selling! Remember,
negotiating is when you and your contact discuss
terms and reach an agreement acceptable to both
of you. It’s about movement; and in negotiations
movement is inevitably away from your ideal
outcome. Your first mistake, then, is to start
moving away (or sending messages that you’ll
be moving) before you’ve finished selling.
That is, before you have taken your contact
as far as possible towards your ideal outcome
by heightening their perception of what they
want – and the value of what you are offering.
To put it crudely, don’t try to win them
over by conceding or simply ‘buying the
business’.
Decide your strategy
An easy mistake you can make in negotiation
is to give no real thought to what you are trying
to achieve overall.
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It’s not enough to enter negotiations
just ‘trying to get a good price’.
You need to know the wider objective of your
negotiation.
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Examples could be:
* To generate profitable business
* To develop long-term relationships
* To penetrate a new client or a new market
* To develop your own or your organisation’s
expertise
* To gain an edge over your competition
Be absolutely clear about your underlying needs
otherwise you won’t be able to plan what
you say and how to behave.
Put yourself in your contact’s shoes
Having thought hard about your own objective,
start thinking about what your contact wants.
It lets you consider ‘where they are coming
from’ and will help you assess strengths
and weaknesses of their position, highlight
areas of common ground, and identify where you
can get movement.
Take stock
So, you’ve thought about the strength
of your position; you know why you are there
and what you want to achieve. Now you have to
plan what to do to get there:
You need to know …
What is negotiable
The value to both sides of anything negotiated
What will be difficult and what easy to
get agreement on
How you are going to use your preparation
How you are going to behave
What is negotiable?
You’ve probably heard the saying ‘Everything
is negotiable’. Whether it’s true
or not, don’t underestimate what can be
negotiated. Don’t restrict yourself to
the usual few items – price, payment terms,
time and delivery. Think about structure of
your work, the number of team members, contingent
or success related fees and so on.
Add up your ‘currencies’
A currency is anything, tangible or intangible,
you have that might be of value to your contact
(and visa versa). Generating as long a list
as possible helps because:
§ It will mean you have as much flexibility
(areas in which to trade) as possible, and will
give you most room to negotiate
§ You are unlikely to be taken by surprise
by your contact introducing a currency. If you’ve
not previously thought about a currency, how
will you know the cost of you making a concession,
or the value of an offer from your contact?
Value what you are holding
Having thought about what currencies you’ve
got, now you need to identify how valuable each
one is and, where you can, put a cash figure
against it. For example, putting a figure on
the cost of extra man-days, assessing the time-penalty
of producing an extra report etc.
What will it cost to me to move?
Sounds like a question to an Estate Agent …
and you need the same level of discipline when
you assess the cost of any movement you may
make (and the value of any offer your contact
may make). But don’t only think in pounds
and pence. It’s often helpful to think
in terms of percentages too – a 1% fee
reduction requested by your contact might not
sound much but could actually be a very significant
sum. Or, to think in terms of precedent, any
movement on one particular currency like hourly
rates, or price per unit may tie you to that
position forever. Hmm …
Getting your act together
So far you’ve considered what you want
to achieve, what’s negotiable and your
overall approach to the negotiation. You’ve
also thought about your currencies and their
value, and you’ve put yourself in your
contact’s shoes. All this is a lot of analysis
and thought, and if you’ve got this far
then you’re much better prepared than most
people entering a negotiation.
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The more you find out about your contact’s
position and needs, the more likely you are
to discover tradable currencies which are high
value to them and low cost to you.
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No, I insist, after you …
Now it’s crunch time: One of you has to
make the first move. Should it be you?
There will be times when you should try to
be first with your proposition. For example,
if you think your contact has unrealistic expectations,
or where you have little flexibility to move.
In situations like this you’ll want to
avoid the problem of having to move them from
a position a long way from your ‘negotiable
zone’.
There will be other times when you have just
no feel for what is acceptable to your contact.
In this case you’ll want to avoid making
a proposal which leaves you so far apart that
it’s difficult to have a sensible and constructive
discussion. In such a situation it’s better
for you to get your contact to make the first
proposal.
Try this for starters …
It’s enough to keep you awake at night
worrying about questions such as… if you
have to open the discussion how high will you
start? How hard will you be with your opening
offer. You want to show some flexibility …
but how much? What will be perceived as weakness,
or arrogance?
The pro negotiators adopt these advanced
manoeuvres:
§ Do open above your ‘hoped
for’ but not at a point which will blow
your credibility
§ Do send a message about the degree
of flexibility you have. If you have some flexibility
(the usual situation) you should state your
opening position ‘conditionally’ on
other issues. If you have very little flexibility,
you may be more inclined to state an opening
position more baldly, or to add a commentary
to the effect that you have little room for
movement
§ Do keep in mind that the agreement
is about the whole package. Make any provisional
agreements conditional on a suitable settlement
being reached on all the currencies. Suggesting
this, in itself, sends an important message
about your approach to the negotiation
§ Don’t ‘settle’
all the ‘easy’ points first before
raising the contentious ones. If you do that,
you’ll reduce your room for manoeuvre as
the negotiation progresses and you might end
up in deadlock or have to concede more than
you planned on the major points
Are you a lovely mover?
Negotiation is all about movement, so there
are two things you will want to avoid –
stalling and ‘reversing’ too far,
too quickly from your ideal outcome. Here’s
how to move elegantly around the discussions:
Pro negotiator’s tips to avoid ‘stalling:
Make your proposals conditional. A stark, ‘our
terms are £1,500 per day’ is more
likely to stop the negotiation, than a conditional
statement like, ‘Assuming that we would
be performing both the drawing up of the specification
and selecting the supplier, we would charge
£1,500 per day’.
Don’t over-react to ‘ridiculous’
offers. Your contact may propose something that’s
simply not in the same ballpark as you. This
may reflect poor planning or knowledge on their
part or it could be a ‘there’s nothing
to be lost’ try-on. Dealing with this in
a calm and professional manner (asking for reasons,
for example) leaves the door open to take the
discussion further.
Don’t respond immediately with an offer
of your own. If you do you’ll come across
as not properly considering their proposal.
If you’ve avoided ‘stalling’
you’re on your way to a successful negotiation.
Your destination is just around the corner,
but watch out. If your contact is a good negotiator,
they will know that now is the time when you
are most likely to concede to their demands
for a better price, more product, more service,
more time, or more people etc. You need to avoid
going backwards from your goal.
Pro negotiators’ tips to avoid reversing
too far
Highlight the value of what you are offering.
Make sure that your contact knows the full value
of what you have to offer before you make a
proposal. For some points – man days, frequency
of meetings – ensure that your contact
sees the costs and implications of not doing
what you are proposing.
Don’t concede without getting something
in return. Whilst it’s not always easy
or possible to do this, or to get something
equally valuable in return, it’s surprising
how often you can achieve it - and how ‘generous’
your contact can be when you have made a concession.
Beware as deadlines approach. There is a well-researched
tendency for concessions to increase as deadlines
approach. Establish the real significance of
a deadline – sometimes it can be artificially
imposed to increase pressure on you to give
ground.
Negotiating is all about getting a ‘win-win’
situation for yourself and your buyer. You both
need to feel ‘ok’ about the outcome
otherwise you will have trouble ahead. Remember
throughout that at the very start of the sales
journey you did a risk analysis on whether you
should work with this client or not. You made
a ‘green light’ decision that this
was a client that would be good for you –
but you also made an assumption that you would
benefit from being associated with them.
The negotiation stage is a really good point
to check your reasons for wanting this work.
If it was to make a profit on the work then
make sure that your negotiation reflects this.
If it is for some other reason e.g. to enter
a new market or gain market share then check
that what you are agreeing will help you to
achieve the result you are looking for. Act
accordingly.
About the author
John Timperley is a senior business development
professional with PricewaterhouseCoopers. John’s
book, Connective Selling, published by Wiley,
is available from Amazon.co.uk. He can be contacted
on 07710 035890.
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