Archives For Negotiating

graph-going-upMove to the 95% Close Rate

In my independent, unscientific, but somewhat accurate assessments – sales people in the high-tech industry are closing about 20% of their proposals…how frustrating.  The time from initial call to proposal could be measured in months, many trips across town – or even long distance travel. And then there’s the writing.  By the time you get to proposing, you really want to close.

One Secret Stands Above the Rest…

Well, actually there are many factors, and nothing is guaranteed.  But there are some steps and then there is one major secret that I’ve found – that will make the big leap from hoping to confident.  Here are a few tips:

  • The deal is sold long before the proposal is written in my opinion.  If you’re writing, thinking to yourself, this might not close…big mistake.  Insist on talking to the people making the decision before going through all of that work.
  • Meeting with what I call “Asset Owners” is a critical step in the process these days.  IT may have the technology info you need, but asset owners – a term I use and define extensively in my book, The House & the Cloud, is key.  These people live on the business side of the business…they oversee Money Making aspects of the company. Profit Centers. And according to Harvard Business Review, carry a lot of weight in the big decisions being made.  They bring a whole new meaning to the term – Influencer.
  • When you finally do write – write it to the person doing the approving.  I like to do this more like a letter or memo, and less like a proposal…

Now, what is the one giant secret that really does make all of this work…that’s the topic of my upcoming web training.  You can access it for FREE on Feb 10th at 3:00 PM ET.  Here’s the link to read how: (READ MORE).

Be sure to follow the instructions – seating is limited and I don’t want you to miss this one…

© 2014, David Stelzl

I’ve written numerous posts on negotiating, and as I continue to study this area, it gets better all the time.  Over and over I have encouraged people to practice!  Use every customer satisfaction issue as an opportunity to work through difficult situations! Become an expert at staying cool, controlling the situation, and methodically moving through the process.

Yesterday I experienced another victory – I received a call several weeks ago from a telemarketer asking me to switch from Windstream to Time Warner Cable for phone and Internet.  The cost was about half of what I was paying (I think I actually wrote about this sale a few weeks ago – the agent did a great job selling me), so I bought it!  Well this was the week to cut over.  I am now running my office on digital cable phone for half the price…however, vmail was not included.  The sales agent assured me it was, but alas it is not.

So yesterday I decided to see how high I would need to go to have free vmail.  I started with the call center who predictably could not give me free vmail.  Agreeing that this would be impossible, I asked to speak to the supervisor – Wyatt soon joined me, and we reviewed the situation.  He was sure is could not be done, so I simply restated, “You are not able to do this”.  He agreed, and I asked for his manager John.  John was very helpful, however he was not able to do it either.  However, John truly did want to help me, and began reviewing some options.  Finally he came back and asked me to visit the local store.  Well, who has time to drive to a store in the middle of a work week?  So I asked for the store phone number instead, which he gave me.  From there I called the store, asking for the supervisor.

The person who answered the phone insisted on helping me before getting a supervisor involved, however, he also could not help me once I explained my dilemma.  Finally, I was escalated to the store manager Brett.  Within a few minutes Brett was checking to see what he might offer me.  I recommended a half year of free vmail, to which he agreed, and then proceeded to add it.  Perhaps I could have pushed for more, but I was happy with the response.  Time Warner Gets an A+ for customer service on this one (although I would recommend empowering some power down the line to shorten this up a bit).  Once again, it pays to work through the process rather than getting upset or giving up.  Give it  a try.

© 2012, David Stelzl

I have written several posts on negotiating with customer service and sales people as a way of practicing.  You can do this almost every day at home as telemarketers prey on you and your family.  It makes getting unexpected calls more interesting.  In a recent webinar on fee setting (which is also discussed in my new book, From Vendor to Adviser – #VendortoAdviser), I talk about the need to understand the value, and get to the point where your client really understands, before quoting price.  This same principle is key to the negotiating process as demonstrated on a call I had yesterday with Time Warner.  Here is what happened…

I received an unexpected call from a telemarketer selling phone, cable, and Internet packages.  He started by asking me what I do for Internet connectivity, then went to cost – how much does it cost me.  Keep in mind, this is not a return on investment sale, but rather a classic TCO (Total Cost of Ownership) sale.  When I told him, he said, “Wow, that’s high”.  His comment was not scripted which made me feel like he was actually listening to me.  This one principle kept me on the line in the midst of a busy day!

He then asked about phone and TV.  I don’t watch TV, so he went right to the phone/Internet bundle and started talking prices while mentioning faster speeds.  He did not try to argue DSL speed vs. Cable, which I have heard one too many times.  I wasn’t complaining about speed – just price.  So as long as the speed is comparable, the price is all I care about.  So where does the negotiation come in?  As soon as we started talking quote…

Once we came to the real numbers it came out that there is an installation charge of almost $100 between my two phones, fax, and Internet service.  Knowing that annuity revenue far outweighs the installation charges, I asked told, “I’m good to go if we can wave the fees”.  “Can’t do that,” he said, the people who come on site have to be paid.  But we all know that the money I pay for installation is not going directly to the installer, and there is no way the managers of that group are going to give up two phones and an Internet for $100.  I’ll be paying $100 every month from now until I die, unless a cheaper solution comes along next year, so I said, “I guarantee your manager will wave the fee to do this deal, go ask him.”  He was skeptical, but willing to go to bat for me.  Within 60 seconds we had a deal, free installation, and half my current bill, without a long term commitment!  It pays to learn what matters most when negotiating.

One more thing:  Don’t miss our Vendor to Adviser Webinar coming up December 21st – you can check to see if there are still seats open at: (CLICK HERE) – if not, get on the Waiting List!

© 2011, David Stelzl

Preorder Now!

I am very excited about tomorrow’s free webinar on fees!  While spreadsheets and finances are not my favorite pass time, the idea of increasing margins and cutting losses is exciting!

If you have not signed up, do it now! 

http://stelzlvendoradviser4.eventbrite.com/

I prepared 7 well kept secrets to help you change your pricing models for 2012 – and I know they will help you increase profits if you follow them closely.  Let me hint at one important pricing concept right here to get us started…

Did you know that when you discount 20% on services, you give away 40%?  It might be obvious, but tomorrow I plan to show you several simple math problems that will explain where most resellers lose money over the course of a year, and how that affects not only the bottom line, but every sales person’s personal income (and eventually your company’s ability to deliver quality service to the customer!).  I’ll show you how, and what to do about it tomorrow at 1 PM, ET.  Make sure you put this on your schedule – one hour could change your entire financial outlook for 2012…

© 2012, David Stelzl

First, don’t miss these two sessions online – this is my Christmas gift to you just for being a regular reader….

1. http://stelzlvendoradviser4.eventbrite.com/ – Setting Fees with Profit in Mind!

2. http://www.eventbrite.com/event/2571952780 – Secrets to Writing Winning Proposals (Including RFP responses)

Two areas I see even some of the most successful sales people missing on are fees and proposals.

Fees are tricky – sometimes your company sets this for you, but if you have any control over this, it’s one of the places you must master.  Too much, and the client looks at you like you’re a thief, too little and you leave money on the table or worse, discredit your own value.  I often hear the comment, “When we fix price, we lose money.”  Wow, that tells me you haven’t learned to estimate, but I will show you the secret of pricing on December 9th…there are two ways to calculate fixed price fees, then there are block time sales (which may be the thing that keeps you from really profiting the way you should be – and I’ll show you exactly why that is.)  And of course T&M, but there are two ways to do T&M, and one of them results in you taking all the risk.  I cover this in detail in my new book, From Vendor to Adviser, along with calculations and examples, so I won’t go into it here…but this is critical stuff!

Get the Book here:  www.stelzl.us/store.asp (Note: this is a preorder special – you’ll be one of the first to have it)

Then there is the proposal…I see many making one of several mistakes.  They execute the sales process perfectly, and then get to the proposal, and…well, all that effort turns into a big negotiation process, and maybe a visit to the chief purchasing officer (who, no doubt, has a degree in Negotiation Strategies!)  Who needs that at the end of a long sales cycle, and especially here at year end?  One thing  I can tell you, the meeting you have right before you write this proposal is the key to success – but there are at least eight secrets I give in my book to make this go much more smoothly.  I don’t know about you, but I don’t really like writing proposals – especially when they don’t close!

Here is that link again – I’ll see you on the 8th and hopefully on the 21st for the second one.  There is no cost to you, other than time, so don’t miss this.

Fees: http://stelzlvendoradviser4.eventbrite.com/

Proposals: http://www.eventbrite.com/event/2571952780

© 2011, David Stelzl

Photo By Sarah Stelzl

Pareto’s Principle – the 80/20 rule, applies in so many situations; negotiations included.  Listen 80 percent of the time, talk the other 20.  Great negotiation has a lot to do with a person’s ability to discern the hidden truths of what is being discussed, debated, or negotiated.

While the purchasing officer may be a well trained negotiator, most managers that pressure you to discount, are not.  Learn to ask great questions that will lead your opponent to talking.  Reflecting back what you’ve heard is often effective in getting them to continue talking.  The more they talk, the more likely they are to show their cards.

Start with those you are working with – the implementers.  Investigate, discover, and analyze.  Long before you get to the negotiation table, you should know their timelines, the urgency of their project or initiative, alternatives they’ve considered, and even some of the other firms who have been considered.

 

 

  • Know why they chose you – you should have a verbal before writing your proposal if you’re following earlier advice I have given.
  • Learn who else was considered for this project and why they might not have been selected.
  • Ask, who besides yourself will be involved in the decision making process.  By asking this way, you avoid pointing out that your listener may not be the actual buyer.
  • Know what business processes will be affected by this initiative, and what impact the final solution will have on the business.

By understanding these things, you stand a much better chance of closing this business without caving in on price.

© 2011, David Stelzl

Timmy Winning the Battle

Fait Accompli – a well documented tactic used in politics and business negotiation is something to keep in mind.  This French phrase, translated Accomplished Fact, refers to a deal where one party takes an action that is irreversible.  The buyer assumes everything is in place to close the business, but knows full well they are not done negotiating.  It’s kind of like, rather than asking permission if you can have a cookie, you just do it.  When caught, you act innocent and apologize.

Example:

The client may have you move ahead with purchasing something or installing something while the paper work is being processed.  The system in nearly installed when the negotiator comes back with a misunderstanding on price or scope.  “O, I thought these software licenses were included – if they’re not, please remove the entire server.” You know it will cost you more to remove it than it will to just move ahead with the customer’s request…what do you do?

Counter Strategy

This is why it is so important to put the agreement in writing, and get the signature before beginning work.  Even when dealing with urgent support issues, make the client sign before beginning work.  It’s their problem not yours – it’s their system that is down, not yours.  If it’s critical, they should be able to get someone in the company to sign off on it.  Don’t move ahead without agreement on scope, terms, and signature.

Comment with some more examples of this tactic…

© 2011, David Stelzl

Illustrated By David Stelzl

One of my first experiences with selling cars came early in my marriage when we decided to sell our Dodge van.  The vehicle was in great shape, no major problems, and well taken care of.  I listed it in the newspaper, and a few days later  received a call from a potential buyer.  He was a business owner, running a restaurant, and thought he might be able to use this van for his work.  After driving the van, he agreed it was in good shape, but then started complaining about modifications he would have to make before this van would really meet his need.

There’s an old Proverb that says, “It is good for nothing, cries the buyer.  But when he has gone his way, he boasts”.

The Strategy

In this case, the buyer gives hope that the sale is done, but then starts picking apart the product in an effort to bring the price down.  My car buyer had me believing I had made the sale.  Once he saw me mentally counting the money, he knew he had me.  Instead of paying me, he was looking for sympathy, adding up the costs of modifying the product to meet his needs. In the end, I gave in and sold him the vehicle for much less than it was worth. I felt taken once he left, and I am sure he was boasting on the way home.   I see this in business today.  Buyers will waver back and forth, moaning about changes or features that aren’t just right, looking for sympathy and price cuts.  The seller then feels bad and caves in.  Even the best sellers are taken by these tactics when the buyer plays his part well.

The Counter Strategy

1. First, it’s important that you know what your product is worth.  I knew the blue book values of my van…so I had this one covered.

2. Don’t try to shoe-horn your product or service into situations where it isn’t really a good fit.  In my case, I was not doing this – it was the buyer who called me, yet  I do see sales people trying to make their expensive products play in the SMB, while smaller companies accept projects that they are just unqualified to do.  In both cases, the pricing is often inconsistent with the real value of the project.

3. Don’t mark your close probability at 100% until the deal is done.  When I get a verbal commitment, it’s 90% – if an economic buyer gives the verbal. A verbal from an IT person, representing a new client, should be considered 20%.  In the case of my van, I was thinking 100% when he said he liked it.  I became emotionally involved in the transaction and gave into his tactics.   Looking back I realize this buyer was a shrewd businessman.  He knew what he was doing.

4. Stand firm.  If the buyer starts whining, go back to success stories, or offer to provide additional consulting with additional fees.  Nothing really works out of the box in the IT world, so assume there is work to be done.  If he can’t afford it, offer some less expensive options.  Chances are he is just working you on price.

© 2011, David Stelzl

My first exposure to buying timeshare investment properties started with a free trip to the Carolina shore, and an overnight stay at one of their properties, with a tour of possible investment properties to follow.  It started with a call most of you have received – a special offer for a free overnight stay at one of your choice locations.  They had to know right then and there on the phone, no time for thinking about it or checking with past buyers.  When we arrived, the tour involved one of their vacation properties, but the overnight stay was in a run down hotel down the street – surprise!  In the morning, they loaded us up for the tour and headed down to the properties; timeshares for sale.  I have to admit, the properties were nice, but at the time I was not in a position to buy.  As we drove around, the person driving would make announcements about properties that had been sold.  It was like they were disappearing before our eyes.  Then, when the tour ended, we were ushered in to a room with a high pressure sales person with an assumptive close.  Again, the pressure was strong and most of the selling directed to my wife.  They wanted me to feel guilt for not buying, and needed a commitment right then and there to get the deal.  Timelines have been used for centuries to press people into buying – often leading to poor buying decisions.   What happens when this same tactic is used by purchasing?

The Strategy

You, the seller, receive a last minute call.  Budget is available, but only so much and it must be spent today.  The buyer has in mind a specific need, and offers you the money.  The only question is, can you do the deal?  This sort of timeline pressure places tremendous pressure on the seller.  In fact, on a coaching call today, my client related a story about a sale he recently made where he left out software licenses on the product portion of the deal, all because of a short timeline.  In another case, one of my clients quoted a deal at his cost by accident.  These are common errors, made simply because the client was in a rush.  The most common mistake I see is where the sales person takes the offered amount, and assumes they can make the project work.  It’s an easy close, so they are willing to take the risk.  In the end, the deal turns out to be non-profit.

Counter Strategy

First, hasty decisions rarely turn out in your favor, so avoid them.  If a client has money to spend, don’t go with their initial proposed scope, but rather build your own.  If the client is in a rush, let it be their hasty decision to approve your scope rather then your hasty decision to go with it.  If the budget dries up tomorrow, chances are they can’t find another provider in time to make this happen anyway, so propose something you know will work.    I understand there is not always time to go through the proper steps, but you can’t afford to over commit.

© 2011, David Stelzl

Still working through those gut-wrenching negotiations.  You may have read about the Bait and Hook…what happens when purchasing reverses this strategy, using it on you?

First, if you have not heard of this tactic, it goes something like this…
When used by a sales person, they may find one key requirement in an RFP or other request, and put a heavy focus on it to eliminate the competition.  Then, once others are out of the way, begin working through the details.  The buyer doesn’t want to start over, and feels pressured to stay with their selection, while the seller begins to change the story around that one key provision.  Here’s what this might look like in reverse…

Purchasing Strategy

You’ve made your proposal and the client offers you the business…once accepted, they begin changing the scope on you.  The details have been left out of the agreement in this case because you are responding to their request, written by them.  In order to get more for their money, they begin pressuring you for more while threatening you with a withdrawal.  You’ve already committed this business on your forecast, and they know it.  It would be hard to go back and tell your managers that the deal is no longer on, so instead you compromise, allowing them to take advantage of you.

Counter Strategy

1. Most of these problems result from not writing up the agreement.  The deal happens quickly, so you assume everything is okay and go with the handshake.  Always email back the details when you talk by phone, and when signing up to do something, be sure to write up an agreement.  Use a change control process on all projects – and get them signed off on by someone with authority.  Using a project manager makes this much easier, as it allows the sales person to stay out of change management, instead, focusing on the relationship.

2 When there is a question on scope – get on the phone.  I recently had someone email me their side of a misunderstanding…in this case they were not pushing for scope creep but I wasn’t sure at first. An email is not the place to negotiate or clarify.  On the other hand, it is a great audit trail once you’ve ironed out things verbally.  I responded by phone, reviewed what was agreed to, came to a understanding so that everyone was happy, and then responded back with an email thanking my client for the question and restating what we had just agreed to. He in turn forwarded our discussion to his team and everyone was clear…there’s an archived email to reference if the question were to resurface.

© 2011, David Stelzl