The Single Most Important Item in Negotiation
And how to use the cloud to enable it
Bad Deals Can Happen on Both Sides of the Table
In his book, The Power Behind Positive Thinking, Eric Fellman says of life…"it’s simple, just not easy.” The same holds true for negotiation. Our research combined with our experience has taught us that business negotiation has been far overcomplicated for many years.
Sales teams are taught that they will be better if they learn things like: the six principles, 19 effective countermeasures, personality analysis, 53 Rules of Negotiation (yes, that is a book title) etc., but they are wrong. There is one thing that demands attention more than all others as it drives almost all negotiation behaviors on both sides of the table:
Negotiators will accept a deal when it’s better than their alternative.
Hugh MacDonald, Think! Consultant and equity partner shares the winning strategy, based on 12 years and $20b in won/loss analysis,
"Winners win when they show how they meet customer needs at higher confidence and lower risk than alternatives."
In the absence of this knowledge bad deals happen.
The Common Mistakes Sales Organizations Make
- Salespeople should never have a commercial terms discussion without being armed with this knowledge and prepared to articulate it better than our customers or their alternatives. In fact, the analysis of trying to decide how aggressive to be on commercial terms is informed by that strategy…without it we are guessing.
- 85% of organizations we surveyed at a deal level, do not know how they meet customer needs better than their alternatives. The good news is that this analysis does not have to be zero based or re-invented for every negotiation. All negotiations follow a highly predictable pattern, in fact we can prove (based on our two-year research study across 19 countries) with 97% accuracy that in all your upcoming negotiations the customer will refer to their alternative and then put concession pressure on commercial terms.
It only makes sense then that the #1 tool we need to use to be more effective negotiators is a tool to help us counter the “same thing” tactic. What does your sales team say when they hear: “I can get the same thing cheaper?”
Using Analysis for Negotiation Preparation
To effectively prepare for a negotiation, and achieve a favorable outcome based on the “why winners-win” strategy requires analysis. The steps for preparing this type of analysis are reasonably straightforward:
- Choose a business scope (product type, customer type and competitor type)
- Execute decision analysis as if you were the customer (e.g., if the customer were making a purely rational decision based on facts, when comparing you and their alternatives side by side, who from their organization should be involved, and what criteria should they be using to compare the two alternatives given their role and focus)
- Store this information and have salespeople “game” the decision long before the negotiation to determine areas of importance to this customer on this deal and where your solution fits better than their alternative (competitor, do it themselves, or do nothing/status quo)
While those areas where you meet customer needs better than alternatives will vary from deal to deal based on client needs, we know after 15 years of coaching over 20,000 business negotiations in 45 countries, the analysis or template remains fairly consistent. That being said, your value, competitor value and customer needs are now changing real time. That is why we’ve developed a Salesforce.com integrated cloud tool to house, distribute and update this analysis based on market realities real time.
If you have one tool to choose to prepare negotiators this is it. Proper analysis of customer alternatives and putting salespeople in the place to LEAD that discussion will result in more effective commercial terms discussions.