Posts Tagged ‘negotiating’

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Winning Sales Negotiations: The Pizza Secret

Tuesday, August 25th, 2009
Secrets To Making The Biggest Deal Pizza! <p> (c) - 2008 </p>

Secrets To Making The Biggest Deal Pizza! (c) - 2008

Recently I was talking with some friends of mine who are planning on using the current depressed real estate market to “trade up” and get a bigger / better house. They were lamenting the fact that this process was going to require them to negotiate with the sellers. They had come to me because they knew that I teach others how to use negotiation to quickly close bigger deals.

What they wanted to do was use that “win-win” technique that they had heard others talking about and they wanted me to teach them how. Sigh. Nothing in life is ever as easy as it seems, but from this experience I thought there were a few key points that you might be interested in…

The Negotiating Pizza

When I started talking with my friends about the house that they wanted to buy, I kicked off the conversation by asking them what they wanted to get out of the negotiations that they knew would be required. They said that price meant everything to them – they could only afford to spend so much money.

Dear reader, clearly we were starting off on the wrong foot. The problem is that my friends were looking at the negotiations for the house that they wanted as a pizza. Assuming that that pizza had been cut into 10 slices, they wanted to make sure that they came out of the negotiations with at least 6 pieces and not 4 pieces. This is not win-win negotiating.

In their quest to get the house that they wanted at the lowest possible price, my friends were approaching the negotiations as a contest – a contest that would have a clear winner and a clear loser. No wonder they were nervous!

A Better Negotiating Pizza

Win-win negotiating has everything to do with how both sides of the table feel after the negotiators are done. If somebody feels as though they’ve come away with less pizza than the other side, then it wasn’t a win-win discussion.

What you need to do is to make the pizza BIGGER. That way it doesn’t become a matter of who gets how many pieces, because both sides actually walk away with more pizza.

In working with my house buying friends, I asked them where they had some flexibility – what else could we add to the negotiations besides just price. It turns out that they were flexible on when they could take possession – they didn’t need to move in immediately. Also, my friends are handy fixer-uppers and so they were willing to make changes to the house – the current owners didn’t have to actually have the work done.

Final Thoughts

In the end, these two additional negotiating points were what allowed my friends to successfully close the deal. The current owners had not yet picked where they wanted to move to so having more time to get out of the house was very important to them. Additionally, they had a lot of fancy furniture that they didn’t want to have to worry about covering while the house was being painted, etc. My friends got the house for a fair price and everyone went away with more than enough pizza.

Sales negotiators who learn how to make the pizza bigger for both sides of the table will be able to close better deals and close them quicker.

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What We’ll Be Talking About Next Time

The single  most important factor in determining how a negotiation is going to turn out centers on a single question: who has the most power? The big problem that most of us have is that we don’t think that we have enough of it. Turns out, we’re generally wrong about this…

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Real Deals Use Real Money And Sales Negotiators Never Forget It

Tuesday, July 21st, 2009
Although Funny Money May Look Like Real Money, It Isn't! (c) - gaymay

Although Funny Money May Look Like Real Money, It Isn't...! (c) - flickr / gaymay

My daughter is currently learning about how to add fractions in school. The trick to doing this right is that you have to make sure that the denominator (the number on the bottom of the fraction) is the same for both numbers before you add them. She’s struggling with this concept and it reminds me of a key sales negotiating point – never try to do a deal using funny money.

Just What Is Funny Money?

We all have heard the phrase “apples to apples” right? Well funny money is something that can either sneak into a sales negotiation or be slid into it by one side of the table. When this happens, all of a sudden you aren’t comparing two equal things such as how much a product costs and how much you are willing to pay for it. Instead, all of a sudden you’ve got apples, oranges, and bananas on the table in front of you.

A great example of funny money in real life is what happens when you gamble in a casino: you don’t use real money, you use chips instead. There are a number of reasons for this, but a key one is that chips don’t “seem” like real money. That allows us to gamble more and not feel as bad when they all go away (although it still hurts when we get the bill later on!)

Examples Of Funny Money In Sales Negotiations

Whether intentionally or not, funny money can slip into just about any sales negotiation. It’s the careful negotiator who keeps his / her eyes open and spots it when it shows up. Here are a few examples of what funny money can look like:

  • Price Per Unit: If I’m asking you to lower your blue widget price by two cents per unit, that seems like a small matter, right? It is until you realize that I’m trying to buy two million blue widgets and so what I’m really asking for is a $40,000 discount. Now that’s real money!
  • Price Per Lot: This is the flip side of the previous tactic. If I’m laying mulch in my yard and you tell me that you’ll sell me 10 bags of mulch for $20, that sounds like a fair deal. Until I realize that since I need 200 bags of mulch, we’re really talking about me paying you $400 for mulch. The total quantity needed and its price is what we need to negotiate.
  • Interest Rates: This is exactly what built those credit card companies into the powerhouses that they are today. If I borrow $60,000 at 10% on a 5-year loan to start my business, then I’ve just agreed to pay the bank $16,489.20 for the privilege of using their money. Sure seems like I should try to negotiate a lower interest rate.

Final Thoughts

It is the job of every sales negotiator to train yourself to always be asking the question: what is that worth. Just like my daughter is trying to learn to remember that she always needs to convert the denominator of two fractions to the same value, so too do sales negotiators need to learn to always “map” funny money to real values.

No matter what the other side of the table says, always take the time to translate funny money into real dollars and cents (or whatever currency you are using). If you don’t take the time to do this, you run the risk of making a bigger concession than you intended to. Learn to deal with funny money correctly and this will allow you to close better deals and close them quicker.

Questions For You

Have you ever been in a sales negotiation that included funny money? What form did the funny money take? How did it get into the negotiation? Did you take the time to map it to real money? Did you end up making a larger concession than you would have if you had been dealing with “real” money? Leave me a comment and let me know what you are thinking.

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What We’ll Be Talking About Next Time

The basics of sales negotiations are pretty straightforward; however, it can be easy to lose sight of them as we talk about tactics, preparation, and detailed sales negotiation skills. Maybe it’s time that we took a step back and got an expert to remind us about what we really need to be doing in our next sales negotiation?

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Deadly Sins Of Sales Negotiations: Hope And 3 Others

Tuesday, July 14th, 2009

When Playing The Sales Negotiation Game, You Can't Just Hope To Win<br><a href=We all hear so much about the smooth Donald Trumps of the world that we can fall in to the belief that everyone shows up for a sales negotiation better prepared than we are. Nothing could be further from the truth. In fact, there are four common sales negotiation mistakes that even really smart people make all the time. Are you making any of them?

The 4 Deadly Sins Of Sales Negotiations

It turns out that the reason that so many sales negotiations turn out poorly for negotiators is because they enter into the negotiations with the wrong state of mind. Instead of preparing for the negotiation, they go in with a “let’s hope for the best” type of mindset. How can they possibly hope to do well?

Sales negotiators who have this type of mind set more often than not don’t do well during a negotiation. They fall prey to the four deadly sins of sales negotiations:

  1. No plan
  2. Bad agreements
  3. Poor reading skills
  4. No follow up

Your Plan Is That You Have No Plan!

While I worked for Siemens, there was a large French-Canadian director who would occasionally explode in strategy meetings and shout at people that “Your Plan Is That You Have No Plan!” In a sales negotiation, this is often the case when people enter into the negotiation without a plan.

Instead of a plan, they have hope. Hope that things will go well. That they won’t make too many mistakes. That the other side will make mistakes. A sales negotiation is a journey, not a destination. You need to have a plan (concessions, demands, questions, schedules, etc.) for how you are going to get to where you want to go.

Agreement Without Clarity

During everyday conversations with friends and coworkers, we all have a tendency to agree to things that we may not have a full understanding of. This is a polite way of keeping the conversation going even when we may not fully grasp what they are saying – we figure that we can pick it up later on.

This same type of behavior during a sales negotiation can be disastrous. If you don’t take the time to fully understand what you are agreeing to, you may find yourself quickly in a bad situation. Call for a break, take a time out, or ask the other side of the table to better explain something before you agree to it.

Doing A Poor Job Of Reading

Looking the other side in the eye and signing a contract with a big flourish sure can make a strong impression – that you don’t have any idea what you are really signing. I learned a long time ago that he who takes the notes, ultimately controls how a meeting turns out. The same goes for sales negotiations – it really doesn’t matter what you THINK you’ve agreed to, it’s the words that make it onto the paper that really matter. Take the time to read them!

Follow Up, Follow Up, Follow Up!

It’s too easy to think that a sales negotiation is over and done with once the last paper has been signed and the handshakes have been exchanged. However, both sides of the table have a responsibility to follow up and make sure that the agreement is being executed by both sides. Not only is this a critical part of doing business, it can have a big impact on any future negotiations between the two sides.

Final Thoughts

A long time ago I took a scuba diving class. One of the key lessons that they taught in that class was the simple phrase “Plan your dive, dive your plan.” The same thing can be said about sales negotiations: you need to have a plan and you need to follow it if you want to have any chance of being successful.

We now know what can happen if you don’t have a plan: you’ll end up skipping ove important steps like agreeing to things that aren’t clear, not reading things that you are signing, and not following up after the deal is done. Remembering to plan your negotiations ahead of time and avoiding the 4 deadly sins of sales negotiations will allow you to close better deals and close them quicker.

Questions For You

Have you ever gone into a sales negotiation without having a good plan? Did you end up agreeing to things that perhaps you didn’t fully understand because you didn’t know what you were looking for? Did you fully read the contract before you signed it? Did you remember to follow up to make sure that the contract was being followed after it was signed? Leave me a comment and let me know what you are thinking.

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

My daughter is currently learning about how to add fractions in school. The trick to doing this right is that you have to make sure that the denominator (the number on the bottom of the fraction) is the same for both numbers before you add them. She’s struggling with this concept and it reminds me of a key sales negotiating point – never try to do a deal using funny money.

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Shut-Up Is What Sales Negotiators Need To Learn To Do!

Tuesday, June 30th, 2009

Sales Negotiators Need To Learn To Just Keep Their Mouth Shut!Negotiation is all about power. The trick to walking away from a sales negotiation feeling satisfied about what you were able to achieve is to make sure that you walk IN to the negotiation with more negotiating power than the other side has. Sounds easy doesn’t it? I’ve been amazed  over and over again to see sales negotiators just give away their negotiating power to the other side time after time. They just don’t realize that they are doing it. Let’s see if we can put a stop to this…

How Do Sales Negotiators Lose Power?

Negotiating power can be a be a funny thing. You can have a lot of it and not even know it. Likewise, you can give it away and not be aware that you are doing so. There are a lot of ways to lose power but the #1 way is for you to run your mouth too much. Ultimately negotiating power is all about having more information. Whichever side of the table has more information about the other side has the power. Information can be used against you, so you want to hold on to it as tightly as possible.

How To Hold On To Power During A Sales Negotiation

If only it was as easy as keeping your mouth shut! Nope, there are actually a number of things that you can do in order to ensure that you keep the upper hand when it comes to negotiating power during you next sales negotiation:

  • Don’t Talk Business: In the small talk that occurs before the start of any sales negotiation, don’t talk about business. You might be able to not give away any secrets, but maybe you’ll make a mistake. Stick to weather, sports, family – anything but business.
  • Let The Other Side Do The Talking: Even better than you talking is getting the other side to talk, and talk, and talk. Just as you can leak power to the other side, the more they talk the better the odds that they will say something that will give you more negotiating power.
  • Keep Your Timeline A Secret: At the end of a fiscal quarter, negotiating with a salesperson who has already met his / her quota is completely different from negotiating with one who hasn’t. If you are this salesperson, don’t let the other side know where you stand – also don’t mention if business has been slow, or if you’ve got product piling up all over the place.
  • Don’t Start With Discounts: All too often salespeople will start a sales negotiation that they are anxious to close by offering a discount or some other enticement to the other side right off the bat. Don’t do this – although it might have worked in some other negotiation, if you start this way then the other side won’t see the value in your offer and you will have lost power even before the negotiations have begun.
  • Tell Everyone On Your Team To Shut-Up!: Even if this discussion sinks in to your brain, you can still lose power by comments that the engineers, procurement staff, and even the lawyers on your team make. Take the time BEFORE the sales negotiation begins to huddle with your team and explain to them that the more they talk, the more negotiating power they will be giving away to the other side.

Final Thoughts

Things that we can’t see are hard for most of us to get our hands around. Power in a sales negotiation is one of these things – it can be hard to tell how much of it you have and if you’ve lost some of it. Remembering to keep your mouth closed and working with your team to make sure that they do the same thing will allow you to close better deals and close them quicker.

Questions For You

Have you ever been in a sales negotiation when the other side revealed something that gave you power? Have you ever made a slip and given power to the other side because of something that you said? Has your team ever said something that weakened your position? Leave me a comment and let me know what you are thinking. Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

People are either honest or they aren’t right? Umm, well not exactly. Look, in a sales negotiation everything is not as it seems. I hate to use strong words like “lying” or anything like that, but let’s just say that a healthy dose of skepticism is often a sales negotiator’s best friend…

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Deadlines Make Sales Negotiators Give It All Away

Tuesday, June 23rd, 2009
Sales Negotiators Can Give It All Away In The End If They Are Not Careful

Sales Negotiators Can Give It All Away In The End If They Are Not Careful

Every sales negotiation has some sort of time limit associated with it. You might have an hour, a day, or even longer to conduct the negotiations, but there is some point in time at which you’ll run out of time to talk. This is when most sales negotiations fall apart.

The Problem With The End

Studies of negotiators has revealed a disturbing fact about all of us. During a normal negotiation we engage in a process in which we give a little bit and take a little bit. Pretty much what you would expect in any transaction. However, then the news arrives.

When we are informed or we become aware that the window to negotiate is coming to a close (perhaps someone important needs to leave for the airport), then for some weird reason one side or the other makes a mistake.

The Big Mistake

When we become aware of an approaching deadline, all too often we start to make big concessions to the other side of the table that we wouldn’t normally make. What happens next is that they don’t make big concessions to us, instead they make smaller concessions which causes us to make more big concessions.

It turns out that this type of behavior is practiced by both experienced and inexperienced negotiators. The only real difference is that the inexperienced negotiators made bigger concessions than the experienced ones did.

Why Do We Behave This Way?

In all honesty, this type of behavior really shouldn’t come as a surprise to any of us. It all boils down to one simple fact of life: humans have a tenancy to make very bad decisions when we are under pressure. Clearly, the last few minutes of a negotiation is the worst time for us to be making concessions.

What To Do About It

If we can accept that we are poor decision makers when we are under pressure and if we don’t want to give away the farm at the end of a sales negotiation, then what’s a sales negotiator to do? In the end this is all about self-discipline.

You need to limit yourself to only making small concessions during the negotiation and you need to space them out during the negotiations instead of bunching them up at the end. As the end of the negotiations draws near, before you make ANY concession keep asking yourself:

  1. Why should I make this concession, and
  2. Can this deadline be negotiated?

If you can keep these questions in mind as the negotiations wind down, then you’ll be all set to close better deals and close them quicker.

Questions For You

Have you ever given anything away at the end of a negotiation that you wished that you had not? Has the other side ever made big concessions to you during the last few minutes of a negotiation? Have you ever caught yourself before you make a big concession that you would have regretted? Do you use this tendency for the other side to give in at the end as a negotiating tactic? Leave me a comment and let me know what you are thinking.
Click here to get automatic updates when
The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

I’ve been amazed  over and over again to see sales negotiators just give away their negotiating power to the other side time after time. They just don’t realize that they are doing it. Let’s see if we can put a stop to this…

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Posted in deadlines | No Comments »

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