Posts Tagged ‘communications’

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No Authority / Full Authority Sales Negotiations

Tuesday, March 3rd, 2009
Lacking Authority Can Leave Sales Professionals Feeling Naked In A Negotiation

Lacking Authority Can Leave Sales Professionals Feeling Naked In A Negotiation

Sales professionals really don’t like to enter into a negotiation naked. When you don’t have any authority to make concessions, you basically feel pretty naked.  Likewise, if you have full authority, then you’ve got a whole other set of problems.

Back to the poor sales negotiator who has no authority. Hold on a minute, they actually do have a lot of authority. Here’s what they have:

  • the authority to collect information and represent the other side of the table back within his organization.
  • the authority to attempt to create a “both win” type of negotiation.
  • the authority to establish both support and commitment with the other side of the table.
  • the authority to deal with different members of his organization in the role of a specialist.
  • the authority to try to reach a deal on a personal level.

The sales professional is really only prevented from giving in to any of the other side’s demands. Since he / she still has the ability to negotiate, it’s worth the effort because there is the possibility that the other side will make concessions and a deal can be struck, or at least valuable information about the other side will be collected.

If you’ve ever been in a no authority sales negotiation situation, then you’ve probably dreamed of having the ability of being in a sales negotiation where you had full authority. Careful what you wish for – this isn’t all that it’s cracked up to be.

The reason that full authority is not necessarily what you either want or need is because the name is actually misleading. Full authority simply means that whatever you agree to is what your  side of the table will end up having to do. This can lead to disaster. Here are some reasons why you might not want to have full authority when you enter a negotiation:

  1. Both sides of the table may not have equal authority.
  2. Both sides of the table may differ in stamina or physical qualities.
  3. Either side may not be properly prepared.
  4. Either side may be role playing.
  5. A side may be more secure than the other.
  6. A side may be busier than the other.
  7. A side might be more wealthy than the other.
  8. A side might be more emotionally involved than the other.
  9. Either side may have better support staff.

Should you find yourself in a sales negotiation with full authority, all is not lost. There are several ways that you can get out of this predicament. Here are a couple of suggestions:

  • Say that you are not familiar with how things operate.
  • Indicate that you will need to check with the board of directors.
  • State that there is a legal problem.
  • State that you need to check with a government agency.
  • Say that this may involve anti-trust issues.
  • Indicate that this deal actually depends on another deal that is currently being negotiated separately.
  • State that you have to tell your coworker / partner.

If none of these “escape” techniques work for you, you can always fall back on the old reliable – “I don’t know”. You may feel foolish for saying it, but at least you won’t end up negotiating a bad deal.

Have you ever entered into a negotiation with no ability to make concessions? How did you feel? How did that negotiation turn out? Have you ever had full authority in a negotiation? How did that turn out? Leave me a comment and let me know what you are thinking.

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Negotiating Self Defense: Countering The Reverse Auction Tactic

Thursday, January 22nd, 2009
Sellers Need To Defend Themselves Against Buyers Who Use The Reverse Auction Negotiating Tactic

Sellers Need To Defend Themselves Against Buyers Who Use The Reverse Auction Negotiating Tactic

I’ve always liked superheros. From my earliest days of reading comic books to my current-day trips to the movie theater to see Spiderman and Iron Man, I just don’t seem to be able to get my fill of superheros.

I believe that superheros, although fictional (probably – however I still have hope), can teach us a lot about how to become better negotiators. One lesson that all superheros seem to learn in superhero school is that in order to be successful in a fight, they always need to have good self defense skills.

In negotiations, sellers need to have a good defense against one negotiating tactic that a buyer can use which is called the “reverse auction”. It works like this: let’s pretend that you wanted to build buy a new car. You visit three different car dealers and get three different offers. As you can imagine, each of these offers will contain a confusing mix of different financing and option packages.

Your next step will be to call a “reverse auction”. You go back to each dealer an tell them that you’ve visited the other two dealers. Each dealer will then proceed to tell you why they are the best and why you should avoid buying from the other dealers. After you’ve had a chance to talk with all three dealers, you now understand the subtleties and the options associated with buying the car that you want.

With all of this new information, you are now able to more clearly refine your specifications because the alternatives have become clear. You can now specify the specific financing and option packages that the dealers can bid on.

You will end up selecting the dealer who can provide the best price while providing the most car for that price. By using a reverse auction, the buyer was able to learn a great deal about buying a specific new car and was able to trade off options that he/she originally did not know existed.

All of this is great if you are a buyer, but what if you are the seller (or the dealer in the case of our example)?

It turns out that although it may initially appear as though the buyer is holding all the cards when they are using the reverse auction tactic, that’s not really true – you still have a great deal of negotiating power.

Your greatest strength comes from the simple fact that the reverse auction takes a great deal of the buyer’s time in order to do correctly. They have to identify sellers, collect bids, evaluate, revisit to collect information, and then revisit again to negotiate a final deal. All this takes time that they may not have to give.

What you need to do is to present yourself as being the seller who best understands that the buyer’s needs are. If you can convince him of your credibility then you’ll be well positioned to close the deal.

Here are a few tips that will help you come out ahead when your buyer decides to us the reverse auction tactic on you:

  1. Be Last: You want to be the last person that the buyer talks with, not the first. This may allow you to short-circuit the reverse auction process.
  2. Use Your Best: When dealing with the buyer, you want to use either your best negotiators or at least make sure that you are well prepared for the discussion (no distractions!).
  3. Give In Slowly: This is always a good tip – do not hurry to make concessions to the buyer.
  4. Sell, Sell, Sell: Make sure that you sell the buyer on your strengths and benefits.
  5. Use Limits: Clearly communicate to the buyer that the scope of your authority is limited in this deal to the bottom-line figure.
  6. Use Experts: The buyer is desperately looking for somebody to believe in so that they can be convinced that you are the right one to buy from. Make sure that you provide the expert that they need to find.
  7. Use Innovation As A Back-Up: Life is unpredictable. Sometimes a reverse auction will start to go badly for you. In these cases, you need to make sure that you have a new and innovative approach that you can whip out if this happens – lifetime free oil changes anyone?
  8. Find The Decision Maker: You can talk with the buyer until you are blue in the face, but it will be all for naught if you haven’t done your homework and made sure that they really are the final decision maker. Check before you invest the time and energy.

Have you ever been in a situation where a buyer used the reverse auction tactic on you? Did you feel as though they had the power in the negotiation or that you had it? Was time a key factor that the buyer was dealing with? Were you able to convince them that you were the expert? Leave me a comment and let me know what you are thinking.

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What If There Was No “What If” Negotiation Tactic?

Tuesday, January 13th, 2009

The "what If" Negotiating Tactic Is A Powerful Way To Get More Information

The "What If" Negotiating Tactic Is A Powerful Way To Get More Information

During a negotiation, there often arise cases where we’d really like to get the seller to give us information that they really don’t want to give to us. If only there was some way to test the other side’s willingness to settle with us. Oh, and if there was a way to also “zero in” on the seller’s lowest selling price, this would be nice also.

It turns out that such a tactic does exist – it’s called (what else) the “what if” tactic. An example of how you’d use this tactic would be if you were buying blue widgets from someone.

You’d ask the seller to give you a quote for 100, 1000, 10000, and 20000 blue widgets (sorta like asking “what if I was to buy…”). Once you have a response to your request for bids, you’ll have lots of information about their pricing scheme, any setup charges, learning experiences, and production costs.

The “what if” tactic is very powerful when used correctly. In order to help you get the most out of this tactic, here are several suggestions that can help you get information during a negotiation:

  1. What if we change the specifications?
  2. What if we change when the work is actually done?
  3. What if we buy more items than just the ones being negotiated?
  4. What if we provide the required materials?
  5. What if we increase / decrease the warranty period?
  6. What if we increase the quantity?
  7. What if we agree to a longer contract?

Now all of these suggestions are great news if you are trying to buy something. But what if you are the one doing the selling? In negotiations, everything is an opportunity.

Once you hear the buyer starting to ask “what if” type questions, you should start to be on alert to what might be coming next. Here are several ways that the seller can react to the  “what if” tactic:

  • Don’t come up with new prices “off the cuff”. Take time to plan your prices carefully.
  • Realize that not every “what if” question actually needs to be answered. You can avoid answering these types of questions by using responses such as “they won’t”, “we can’t”, or “that will be very expensive”.
  • Use the buyer’s deadline to avoid answering a “what if” question. Tell the other side that in order to answer one of their “what if” questions will require more time than they have available to negotiate.
  • If you offer a concession, then make it contingent on you receiving their order immediately.

The selling party has a counter tactic called “would you consider” which can be used in response to “what if” questions. Both of these tactics can open new negotiating possibilities that may help both parties move towards a successful solution.

Have you ever used the “what if tactic” during a registration? Did it work for you? Have you ever had this tactic used on you during a negotiation? How did you respond to it? Leave me a comment and let me know what you are thinking.

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How Do You Deal With The Rest Of The Iceberg During A Negotiation?

Tuesday, January 6th, 2009
When Negotiating, It's Important To Deal With Unstated Issues In Order To Be Successful

When Negotiating, It's Important To Deal With Unstated Issues In Order To Be Successful

As the captain of the Titanic, Edward John Smith, did a fairly good job of looking out for the parts of icebergs that were above water. What got him in the end is when the Titanic hit a part of an iceberg that he couldn’t see because it was below water. In negotiating, all too often we can fool ourselves into thinking that we know all of the issues that are being negotiated. How wrong we are…

When we negotiate with the other side of the table, the issues that are really being negotiated are often a lot more subtle than those issues that were listed on the agenda at the start of the negotiations. In fact, the issues that originally appeared to be big issues, more often than not turn out to not be all that big of a deal after all.

The things that we often spend the most time talking about, services, goods being sold, and price are of course important. However, the clever negotiator realizes that these are only the tip of the proverbial iceberg.

As a negotiator you need to realize that there will be a large collection of issues that need to be addressed but which will never get written into the final contract. What are these issues you ask? Simple – they are personal issues that the other side holds dear. Neither side can make these personal demands out loud during the negotiation; however, if you don’t address and resolve them, then you won’t be reaching an agreement.

If these personal negotiating issues are so important, then what are they so that we can start to look for them? They take many different forms during each negotiation and you are going to have to do some digging to find the ones that relate to your current talks, but here are some examples for you to keep your eyes open for:

  • Personal Schedules: “I need to get this negotiation completed by tomorrow because my wife wants to go visit her mother this week.” Both sides of the table have schedules that they need to meet and this can influence the negotiations.
  • Internal Organizational Issues: “My boss has been fired and I now work for someone who has a different agenda.” The world is a dynamic place and even as a negotiation goes on, things change. These changes can impact the direction that the negotiation is heading in.
  • Physical Health: “I’ve got a pounding headache.” We need to be constantly reminding ourselves that negotiating has a physical side to it. How either side is currently feeling can have a significant impact on how the negotiations progress.
  • Social Status: “I need this negotiation to be successful so that I can show my boss that I’m valuable to the company.” A negotiation does not occur in a bubble – it has visibility and has impacts. Both sides of the table want to be seen in a favorable light when the negotiations are over.
  • Workload: “I am already swamped and I need to be careful to not take on any more work.” This is the curse of the modern workplace – too much to do and never enough time to do it. You need to watch the other side to determine if they are dragging their feet because they fear an increase in their workload.

These types of personal issues are a critical part of every negotiation. If you can remain sensitive to these types of issues and are prepared to help the other side find a way to deal with them, then you will be that much closer to successfully concluding the negotiation.

Have you ever been involved in a negotiation in which a personal issue became a big deal? When did you first discover that there were non-agenda issues on the table? Did you have your own personal issues that needed to be addressed? How did this all turn out? Leave me a comment and let me know what you are thinking.

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Single vs Team Negotiation: Which Is Better?

Thursday, December 11th, 2008
Sometimes It Takes A Team To Complete A Negotiation Successfully

Sometimes It Takes A Team To Complete A Negotiation Successfully

Sorry – that’s a trick question. Most of the time when we talk about negotiating skills, we talk about how you can improve how YOU negotiate. However, in the real world, negotiations are often done by teams of negotiators.

The reasons for this are fairly simple: negotiations more often than not can take a long time and just the physical strain of active negotiating can wear a single person down quickly. Additionally, often special subject matter knowledge is required in order to hammer out specific issues and no one person posses all of that information. It takes a team to negotiate well.

There is, of course, one additional reason for preferring to negotiate using a team instead of a lone individual. During a negotiation so much is happening that a single individual is often hard pressed to stay on top of all of it.

Using a team for your negotiations allows you to use a group of people to capture all that is occuring. You can also use the team to jointly review what has transpired and make better decisions.

There are several reasons for not wanting to use a team as a part of a negotiation process. Here are three of them:

  • Requires Coordination: When you are the sole negotiator, once you know what you want to accomplish and how you are going to make it happen, then you are set. However, if you have a team of negotiators, then you need to make sure that everyone on your team REALLY understands what the goals are. This can be a challenge to do, especially if your goals change during the negotiation.
  • Sharing Information: In order for a team of negotiators to work together successfully, they need to all be aware of the same information. This will require that all information about the negotiation be collected, shared, and reviewed prior to the start of the negotiations. This can be a challenge under the best of circumstances and if the team is geographically distributed then it becomes even more difficult.
  • Showing Disunity: In the end, negotiating is all about power. Having team members become confused or showing disunity will reduce your power and increase the other side’s power.

With all that being said, you would think that nobody would ever use a team to perform a negotiation. However, you would be wrong. There are a number of compelling reasons why teams should be used more often for negotiatons than they currently are:

  • Better Coordination: Using a team allows you to distribute the tasks of negotiating among team members. This means that documents that need to be produced or facts that need to be checked can be done in parallel to the negotiations and this will speed the process up and reduce confusion.
  • More Experts: A single negotiator can only provide his / her expertise to the negotiations. A team can provide a much broader collection of experts and this should help the discussions move much faster.
  • Moral Support: Since a negotiation can continue for a long time, it’s easy to become disheartened if it appears as though an agreement will never be reached. If you are working with a team, it will be must easier to “keep a stiff upper lip” and not give up.
  • Listen Better: One set of ears can only hear so much. In fact, not only can multiple ears simply hear better, but they can also hear things differently which might help the negotiation move along faster.
  • Plan Better: A plan that is created by a single negotiator is as good as that negotiator. A plan that is created by multiple negotiators is often much better because it reflects the different inputs of multiple people.

What has your experience been: do you do better when you negotiate by yourself or when you negotiate as part of a team? When you are on a team, what role do you play? Which type of negotiation more often leads to a successful outcome? Leave me a comment and let me know what you are thinking.

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