Posts Tagged ‘money’

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A Sales Negotiator’s Friend: “Just The Facts, M’am”

Tuesday, March 17th, 2009
Sales Negotiators Should Not Be Afraid Of Facts & Stats - They Are Just Here To Help!

Sales Negotiators Should Not Be Afraid Of Facts & Stats - They Are Just Here To Help!

So there you are, getting ready to fire up your side of a sales deal when all of a sudden you get hit with a volley of facts, averages, and statistics. You’re hit! Each one of those figures came with a sharp point that has embedded itself, perhaps fatally, into your arguments. Is there any way that you can survive?

Good news, the answer is yes. It turns out that these powerful negotiating weapons: facts, averages, and statistics are ALWAYS negotiable. We have trial lawyers to thank for showing us the way. The key here is not to argue with the numbers themselves, but rather dispute what lies behind the numbers.

Questions that a good salesperson will ask right off the bat after being attacked with numbers include:

  1. Who collected these numbers?
  2. What sources did they use to get the numbers?
  3. What techniques did they use to collect the numbers?
  4. Were there any assumptions used when collecting the numbers?
  5. Why were the numbers collected in the first place?
  6. What values were hidden behind the numbers?
  7. Were there any biases that might have influenced the collection?

A key point to always remember is that any facts, statistics, or averages are always based on things that have happened in the past. What you are in the process of trying to do is to negotiate a deal that will live in the future.

One final point is to not allow yourself to get too worried by statistics or averages. They are just ways of trying to be able to talk about large amounts of data. The most important thing to remember here is that by their very definition, statistics and averages really don’t apply to anyone including you.

Have you ever been trying to work a deal when the other side suddenly whipped out a bunch of numbers? What was your reaction? What did you do next? Did the numbers end up influencing how the deal came out? Leave me a comment and let me know what you are thinking.

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Posted in information gathering | 4 Comments »

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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Posted in authority | No Comments »

Sales Negotiators Should Always Have Limited Authority – Or Else!

Tuesday, February 24th, 2009

Sales Negotiators Who Have Authority Limits Can Use This To Their Advantage

Sales Negotiators Who Have Authority Limits Can Use This To Their Advantage

Do you run the world yet? I’m going to guess that the answer is no (if it isn’t, then we need to talk). When we talk about being successful in a sales negotiation, we often spend a lot of time trying to figure out how we can get more negotiating power on our side. However, sometimes NOT having negotiating power can work to our benefit…

If you are in charge, then the other side can always pressure you to make a decision because they know that you are the ultimate decision making authority. However, if you don’t have the ability to make the final decision, if you instead have limited authority, then there can be a number of benefits:

  1. Gives you the ability to say no gracefully if needed.
  2. Gives you room to back off and assess your position.
  3. Give you the ability to go check with experts.
  4. Give you the right to review the evidence.
  5. Give you the ability to take the time to look for mistakes.
  6. Gives you the time that you need to read the fine print.
  7. Gives you the ability to bring up undefined questions.
  8. Gives you the ability to write a better argument.
  9. Gives you the right to coordinate the decision.
  10. Gives you the ability to move the negotiation away from an unacceptable position.

As you can see from this list, what some would see as disadvantages during a negotiation can also be seen as advantages. Keep in mind that it’s really how you make use of something that determines if it is an advantage or a disadvantage.

The negotiation experts are often split when it comes to what types of limits on authority are more valuable than others. However, Dr. Karrass believes that  the best kind of limits on your authority are statutory or administrative limits. The other side will quickly understand that you are faced with these types of limits and in fact may enter the negations with the expectations that you have these limits.

Next in line comes dollar limits (managers can sign off on so much, Directors so much more, and VPs even more). The other side may be least receptive to hearing that you are dealing with people limits because these often seem to be things that you should be able to work through.

One thing that you are going to have to keep in mind is just how willing the other side is going to be to deal with you despite the limits on your authority. You may find that corporate policy limits are the ones that cause the most problems during a negotiation because they can be the most difficult limits to either change or circumvent.

There are a great number of different types of authority limits that you may be faced with during any given negotiation. The specific details of the negotiation will define the limits that are placed on you. No matter what limits are present, they can generally be placed in one or more common “buckets”:

  • Money limits
  • Term limits
  • Policy limits
  • Legal limits
  • Design limits
  • Group approval limits

In the end, when you find yourself in a negotiation with a number of limits placed on you, take a moment to understand how you can use these limits to boost your negotiating power.

Have you entered a sales negotiation with limits on your authority? Did you see this as a disadvantage or as an advantage? How did that negotiation turn out? Leave me a comment and let me know what you are thinking.

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Posted in power | 3 Comments »

Classic Sales Negotiation Tactic: I’ve Got To Talk To My Boss…

Tuesday, February 17th, 2009
The Escalating Authority Sales Tactic Is Crude But Often Works

The Escalating Authority Sales Tactic Is Crude But Often Works

Picture this scene: it was about 20 years ago (ouch!) and I was still dating my wife when she suddenly had to replace her car. She knew exactly what she wanted: a Honda Civic with a manual transmission. There was a local Honda dealer near where she lived so one evening we went there to have a talk about buying a car.

The salesman that we talked with was the “older guy who reminds you of your uncle” variety. I had an opportunity to sit back and watch my soon-to-be-my-wife bargain with him over the price. She started low, he started high, and after a bit of back-and-forth, they were still fairly far apart. Now my bride-to-be had done her homework and had called a bank to find out how much this car was really worth (20 years ago = no real Internet). So she knew what the correct outcome of this sales negotiation needed to be.

The salesman that we were dealing with looked at the gap in offered / accepted prices and said, of course, “are you sure that you can’t do any better than this”. When my girlfriend said “No”. He then said “I’m going to have to go talk with my boss about this…” And off he went.

Returning about 10 minutes later, he had a slightly lower price, but still the gulf between what my girlfriend was willing to pay and his new lower price was great. TWO MORE TIMES HE WENT BACK TO TALK WITH HIS BOSS. I couldn’t believe this – I was watching a classic Greek play being staged before my very eyes. At any rate, my girlfriend got the price that she was asking for in the end after about 90 minutes of haggling. What was going on here?

I didn’t know the name of this sales negotiation tactic at the time, but I do now. It’s called the “Escalating Authority” tactic. This tactic uses the need to have a deal approved by a reluctant higher authority in order to gain more concessions from the other side of the table.

This tactic is used by salespeople all the time. The reason that they use it is because it often works. Here’s what a salesperson can expect to get out of using the “Escalating Authority” tactic:

  • Helps to lower the other side’s expectations.
  • Causes the other side’s arguments to come out early instead of later.
  • May cause conflict within the other side’s negotiating team.
  • Causes the other side to state their negotiating demands earlier.
  • Just physically wears the other side down.
  • May end up lowering the self-confidence of the other side.
  • Uses up the other side’s valuable time.

The party that this tactic is being used on is not without defenses. There are several counter measures that can be put in place in order to diminish or eliminate the effectiveness of this sales negotiation tactic:

  • Match the other side: bring your higher level people to the table when they say that they need to go to their higher level people.
  • Walk out.
  • Bypass the other side of the table and go directly to their senior management.
  • Manage the expectations of a quick resolution on your side of the table.
  • Communicate to your side of the table what tactic is being used against you and let them know that one of its goals is to lower their expectations for the outcome of this sales negotiation.
  • Don’t repeat yourself. Force the other side of the table to relay all that you have said to each higher level of their management.

In the end, the Escalating Authority tactic is a fairly crude negotiating tool that is used most often by amateur negotiators. It can be countered easily and effectively. Keep your eyes open and make sure that you spot it when someone starts to use it on you – the best Escalating Authority tacic defense is a good offense!

Have you ever had the Escalating Authority tactic used on you during a negotiation? How did you respond to it? In the end was it successful? Have you ever had a chance to use it during a negotiation? Leave me a comment and let me know what you are thinking.

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Posted in how to negotiate | 4 Comments »

Negotiation Battle: Tom Hanks vs. Mel Gibson

Thursday, February 5th, 2009
The SAG And The Studios Are Deadlocked In Their Negations, Now What?

The SAG And The Studios Are Deadlocked In Their Negations, Now What?

In the world of Hollywood, they have the ability to make the unreal seem oh so real. However, right now they are having a great deal of difficulty negotiating to make a contract between the big movie studios and the Screen Actors Guild (SAG) become a reality. Are we going to be looking at another actors strike?

Perhaps a bit of a background is needed here. The SAG is a 120,000 member union that represents, what else, actors. The SAG is currently negotiating with the major studios to create a new contract for its members – their old contact ran out back in June.

This type of negotiation is fairly common. However, what’s making it interesting this time around is that there appears to be a difference in opinion on how best to negotiate within the SAG. This is causing a split to occur and may be significantly reducing the SAG’s negotiating power.

Within the SAG there are two groups that are taking differing views of how the negotiations need to proceed. The first group, called Members First,  is lead by the SAG’s president Alan Rosenberg and their Executive Director Doug Allen. Doug also happens to be the SAG’s chief negotiator. The second group calls itself Unite for Strength and has won several key seats on the board and now, by aligning with other board members,  has a slight majority.

So what’s the issue here?

Currently the SAG is in deadlock in their negotiations with the big studios. The Members First team wants to have the SAG members vote to authorize a strike if the negotiating team needs to call one. The Unite for Strength team wants the board to vote against having a strike vote as well as having them replace the current negotiating team. Talk about bad blood!

If the Unite for Strength team got their way, then they would probably try to jump-start the stalled negotiations with the studios. They would go along with the pay terms for new media that other unions have negotiated with the studios as  an exchange for getting improvements in the traditional media pay areas.

Why does the Unite for Strength team not want a strike vote to be taken? They believe that a strike now would be a poor decision based on the current economic state of the country.

Tom Hanks supports the Unite for Strength team. Mel Gibson supports the Members First team.

Just to make things a bit more complicated, the studios are insisting that their current offer on the table is their final offer. It contains some provisions that no SAG members likes such as a proposal to eliminate mandatory meal times (I mean come on, an actor has got to eat…)

So what should a negotiator make of all of this back-and-forth?

First, the public SAG split is bad news for the actors because it transfers power to the studios. When the other side of the table is in disagreement, your position is stronger. However, this also means that reaching an agreement with the SAG will be more difficult – the studios need to get all of the SAG to agree to a new contract.

It looks like SAG has done a poor job of PLANNING their side of the negotiation. There is a critical question of what is more important: money from traditional (films, TV) media or money from new (DVD, Web) media. Pick your poison, but this is an issue that all of the SAG needs to get behind.

Both sides of the table are at fault for allowing the deadlock to continue for six months. One subtle point here is that the studios may be willing to live with a deadlock because there is no current threat of a strike and the longer they wait, the greater the split within the SAG grows.

If the SAG replaces their negotiating team, then there will be a great deal of negotiating ground that will need to be revisited as the two negotiating teams meet for the first time and work out their negotiating positions.

What’s to be learned from this negotiating mess? A couple of key points: negotiations need to be planned out before discussions start so that inter-team squabbling can be taken care of BEFORE the talks start. Next, replacing a negotiating team during negotiations is a radical step that should be avoided at all costs – it’s just too expensive in terms of time. There’s a lot more to learn here, but I’m pretty sure that time will reveal what mistakes were made and which side ended up with more negotiating power…

If you were a member of the SAG, which team would you want to be a part of (the Tom Hanks team or the Mel Gibson team)? Who do you think has the stronger position in the negotiations right now? What would your next steps be if you were the studios? Leave me a comment and let me know what you are thinking.

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Posted in strike | 13 Comments »

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