Sharpen that Pencil!
I was talking with one of my mentor program clients yesterday – his deal, like many, has gone to purchasing. The hardware has been approved, but the services are under scrutiny. “Sharpen your pencil,” they’re telling him. “We can get it cheaper – that’s what other firms we are considering are saying.” All of this comes from purchasing, but remember, purchasing doesn’t really have the power to choose who can do the job – only the power to negotiate within a budget they’ve been handed. On the other hand, don’t be so sure your coach from IT isn’t collaborating with them behind the scenes – they do have the power to determine who can and can’t do the job, within a budget they’ve been given. In the past, we’ve put a lot of trust in these influencer relationships…but with the economy the way it is, you can’t really trust what you see.
It may be the oldest trick in the book, but the “Good Cop / Bad Cop” strategy still works well, and chances are it will work on you if you’re not tuned in…
My client thinks his connection with IT is a good one…but suddenly he’s not sure about it. In this strategy one negotiator acts nonchalant, or even aggressive; they may even act down right nasty, “Sharpen your pencil Jack!” They communicate in no uncertain terms that you are a vendor and nothing more, and if you want this business, you’ll have to play their way. Expect the other negotiator to see your side, want you to win, and act as though they really care about your personal situation. This strategy begins to wear on you as the stress builds and you look for insight and empathy in the sales process. It becomes easy to disclose your personal deadlines, income needs, and frustration with the process. The more you reveal, the more ammunition the negotiator has to beat you down. As you share with your empathic listener, every word of it circles back to the hardball guy in purchasing.
In another scenario, there may not actually be another bad guy. In one seminar I attended, the speaker made the recommendation, “Don’t be the decision maker when negotiating.” In other words, continue to refer to a higher authority as you consider options. Admit that you can’t really make a decision without buy-in from above. This allows the negotiator to defer the decision as they continually must go back to someone you don’t see to gain approval. If you’ve bought a car at a dealership, you have probably experienced this. The salesperson makes frequent trips over to the elevated platform in the center of the showroom to check with his general manager. The truth is, he has room to negotiate, but by doing this, he remains your advocate, when in fact, it’s his own commission he’s protecting.
The Good Cop / Bad Cop strategy is difficult to win, simply because our emotions want to give in to the good cop. If you have watched war movies that include prisoners being brainwashed and questioned, you have seen some of the best examples. Luckily, we don’t experience this type of testing in the business world (although sometimes it may seem that way).
1. First, in the car dealer example, the negotiator’s power is in keeping the true decision maker out of the discussion. Don’t let this happen. I usually say up front, “I understand you are not able to make this decision, please introduce me to someone who can.” Don’t take no for an answer – continue to point out that you do understand, and so there is no reason to continue talking. Refuse to continue negotiating with someone who cannot make a final decision, but do it with a smile and calmness.
2. In the purchasing example, the power is in the unknown. We don’t know if my client’s inside coach is really our advocate or if they are playing us. We have to assume the latter. That doesn’t mean we cut off the relationship. Instead, it means we continue to add value to their position, helping them achieve their goals, but without disclosing our own personal frustration, deadlines, or personal financial needs. Work to learn more about their internal deadlines and focus on the risk and operational efficiency issues that originally justified writing the proposal in the first place.
3. In the case of services, there is a difference between you and the other providers. Use stories to communicate the difference, and express your concern over your client not achieving their desired results. That must be at the heart of the negotiation. If you followed the right course up to this point, you should have a verbal commitment on what exactly was needed, and how much they were prepared to pay. If you gave them a price before justifying the value, you will have to find a way to make this up.
4. In the end, they may push hard for lowering your price. Remember to always take away value from the deal as you lower the price. The final approver – the asset owner, requires a certain project outcome. If you have quoted this correctly, it will be apparent that they are giving up things they wanted.
5. Finally, remember, you can’t negotiate unless you are willing to walk.
© 2011, David Stelzl