Archives For negotiating

How to Win the Negotiation

Here’s a great exercise – a Lesson on Winning

Will I win the negotiation? I wrote an entire chapter on this in my most recent book, From Vendor to Adviser. I don’t know if I’ll win this one, but I’m still hopeful.

Most of us negotiate everyday, but most of the people I work with have little experience in winning. I hear people getting angry, upset, frustrated, etc. None of these are winning tactics.

This morning I am in my weekly Monday Morning Kickoff Meeting. I start the week, every week, just like this. I look at metrics, my business plan, top accounts, upcoming events, and my Quarterly goals.  I’m planning for my week.

Part of my Monday ritual is to check over my banking transactions, reconciling and looking for anything out of the ordinary. I took my Mastery Group to the Chinese Restaurant last weekend during a business planning and strategy weekend and they double charged me…but the manager also informed me of the mistake right after dinner asking me to make sure he didn’t double charge.  So I know that will get cleared up as soon as my office manager puts a call into them.

That’s When Things Fell Apart

But then there’s this service charge on my bank account that should not be there. By having a business account linked to a Merchant account at my bank, that charge should not be there.  So I called the bank, and that’s where my morning started going downhill.  I quickly reminded myself, this is a negotiation – don’t get upset, work the process.

My 19 year old son is right beside me working on his business. But I can tell he’s listening in by the smirk on his face. He’s wondering if his dad will win this one…

The bank people were very nice. I quickly got them to agree that they told me I would not have this service charge. But it turns out the person who sold me this package was wrong. What’s the solution? The bank will credit my account, make a note on the account, and then send me over to Bank of America Merchant Services to cancel that service.

It is amazing how friendly the Bank of America rep is compared to Bank of America Merchant Services Gal. She’s a terrorist of some kind I think. It’s not her fault and she can’t do a thing for me – but she has the attitude like “I’m in control here.”  There’s a $500 fee to cancel the merchant services agreement, or $100/yr fee to keep it and not use it.  Well $100 won’t break the bank, but the principle here is important. I really want to cancel at this point – and I want the fee waved. So what do I do.

Practice This – Negotiation and Moving Up.

I’ve done this many times – when I do it without making a mistake, I usually win. But in this case, it looks like it might be a hard one.  The jury is still out – but here’s where we are.

1. The first woman on the line, whose name I forget, just kept repeating the policy. My first mistake was not writing down her name. You always want to know who said what along the way.  About 10 minutes into this volley, I remembered to ask her if she had the authority to wave the fee. She did not. As soon as I asked that question it was easy.  I apologized for wasting her time and asked for her supervisor. There’s no reason to continue talking to her.

2. Bonnie was next on the line. She is the Account Specialist over there at Bank of America Merchant Services. I was told by the first woman that if anyone could wave the fee, it would be Bonnie. I tried to review the case with her, but she quickly said she could not wave the fee but could discount it by 50%. That might be okay for some, but I don’t consider it a win. After all, my contract ends in two years so why not just pay the $99 annual fee for two years and be done with it. This time, rather than debating the issue, I simply asked her for her supervisor.

3. After about 10 minutes, Jessie, the supervisor was on the line.  She also offered the $250, but didn’t seem to understand my problem. Since Merchant Services is not actually Bank of America, they don’t have to cooperate. It’s really BOA’s fault, but only Merchant Services can release me from the contract. At this point I clarified with her – “Do you have the authority to wave this fee.” She simply said no. At this point I simply apologized for wasting her time and asked for her supervisor…Dale.

4. I am now waiting for Dale to call back…it’s a 24 to 48 hour process….Talk about real time customer service.  I’m sure Dale is busy since no one in the lower ranks is able to do anything.

At this point I put another call into the bank to explain this whole mess – to see if they can apply some pressure from there side.  They promised to work on it and get back to me by close of business.

There are a couple of things to learn from this mess.

– First, I am still wondering if the “Policy” is written down somewhere. How is it that the bank made this mistake and seemed to not charge me for months, and then suddenly the change…still need to get to the bottom of that one.

– Arguing with customer service reps who are not empowered is a waste of time…but think how much it is costing this organization to escalate these issues up the ladder. Companies really should empower people to make a decision.  Maybe not the first level – she should have offered the 50% deal.  But I am 4 levels up now…Even US Airways was easier to deal with when I had a seat issue a few years back.

– Use these opportunities to build your endurance, make a good case, not get angry, and be willing to keep going higher. It’s great practice.

I’ll let you know what happens…in the mean time, I am not processing credit cards through Bank of America Merchant Services.  I have two other providers who are both easier to deal with.  If you have an opportunity to choose Bank of American Merchant Services, think again. There’s someone out there who is more customer friendly than they are.

 

© 2014, David Stelzl

P.S. I wonder if these people monitor social media.

Reserve a seat for my new upcoming online training – it’s free for all Reseller Technology Sales people! <<Register

 

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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

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

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

Most negotiators are playing mind games – especially when you move to enterprise sales.  They train and use professionals whose sole purpose is to save the company money.   I don’t like deceptive sales tactics, and I certainly don’t like deceptive negotiators.  My intent in writing these  posts over the past week is to make you aware of the games being played, and to help you avoid being taken advantage of.  Work to establish tangible value, and do your best to meet business needs of those you sell to – but be aware of those who will work to whittle down your price…

Strategy #5 is definitely a ruse…it goes like this:

Negotiation Strategy

Purchasing picks something in the deal they know they can’t have (or at least probably can’t have).  Let’s say you’re selling an application and they want one-hour onsite support – not going to happen.  They press for this over and over, but there is just no way you can deliver it.  The pressure builds – again, it’s their timeline unless you control the milestones.  The more they know about your pressures, the more they can time this.  Coming down to the wire, the deal must close – perhaps it’s quarter end.  The negotiator finally gives in on the one hour support, but suddenly replaces it with the real point of negotiation – something completely unexpected, that must happen to close the deal.  Perhaps it’s a greater discount, added feature at no charge, or some other value-add you have not considered.  You don’t really have time to think about it, so you give in.  In fact, you feel you owe them after not giving in on the support issue.  It’s a mind game – bate and switch.

Counter Strategy

Honesty and consistency are your best friends in the sales process.  Present your best value and the real price up front.  Never give discounts greater than the street price demands, and let your client know right up front, this is the best price and here is why we charge this.  Your value must justify the price right up front.

When the negotiator starts demanding things that you just can’t do, shoot straight and let them know you can’t do it.  When the switch comes, expect it – always expect them to pull out some new requirement at the end.  I find it’s best to have a process or policy to go through whenever a demand comes out.  If the price question comes out last minute, I call and work through the value one more time, set price aside and solidify that I am the selected provider, and then go to work on price by pulling out options we’ve probably already covered.  Consistency eventually sinks in…at some point they get it.  This is the price, these are the options, and I am willing to walk if we can’t figure it out – I can only do this with confidence if I have been forthright through the sales process.  The value is there, the price is good, there should be no question.

© 2011, David Stelzl

Buddy! - Our new German Shepard puppy

Here is the ultimate negotiation…returning from my bike ride on Saturday, my wife and half of the kids greeted me as I pulled into the driveway with the other half of the kids and a van full of mountain bikes – with an offer to take me to see a German Shepard puppy.  I said no, but a few hours later I was the proud owner of a brand new puppy (pictured to the left).

Continuing on with Negotiations….Last week I briefly mentioned today’s strategy in the context of the Good Cop / Bad Cop ploy, but sometimes “I’m not the final authority,” can be used without a bad cop involved – just by the negotiator referring to someone up above…this works well, so be aware of it…

The Strategy

I find this to be more often used by managers than purchasing people.  “The boss will never go for this.”  This strategy makes it look like I would choose you if I could, but together, we must figure out how to reduce the cost.  You negotiator talks as if his authority does not want to know the details, but will not go for the proposed price.  This generally takes place even before a price has been submitted up the ladder.

You may hear comments like, “I’ll send it up the line and see what they come back with,” or  you might even get “Looks great, we’ll get back to you once everyone has a chance to review.”  In either case, the person you are presenting to is saying, “I can’t approve it.”  One of two things can happen at this point; either they’ll come back with a counter offer, or time will pass without any answer, putting more pressure on you, the seller.  When the time is right, they’ll come back, knowing you are now out of time.

As long as you think your negotiator is on your side, you are more likely to hand this all kinds of insider information that will help them get their best price. When the come back, they’ll have all the info they need, and you will be desperate and ready to cave in.

Counter Strategy

Like the Good Cop/Bad Cop, giving away information helps them take advantage of you.  As a trusted adviser, you want a trust relationship, however when the deal is built on value; your time lines, compensation, and margins have nothing to do with the sale as far as the client goes, so don’t go there.  Make the value in this deal all about them, deliver great value, and hold your price.

As I stated last week, refuse to negotiate with those who do not have authority to negotiate.  Instead, agree that they don’t have authority and insist on moving up.  This really should be done as part of the discovery process where you can leverage your need to cover all the bases and liability by interviewing those responsible for the ultimate success of the project.

© 2011, David Stelzl

 

 

Photo taken by Hannah Stelzl

“Hurry up and wait,” a common negotiating strategy for those on a deadline…Here’s how it works:

The Purchasing Strategy

First, purchasing needs your proposal, your pricing, details, etc. and they need it now.  Then suddenly everything comes to a screeching halt.  Dragging their feet often seems like laziness or lack of interest, but it might just be a well calculated strategy learned through their local negotiation expert.  The whole reason purchasing is done by a separate department is, they don’t have an urgency to get something, and they are not emotionally involved; perfect for talking price.

IT may need you, but purchasing doesn’t.  They don’t really understand your value nor your differentiation; however, they probably do have orders from IT (or whoever is actually making the purchase) to buy from you – with the caveat, “Get the best price.”   Keep this in mind during the process.  Unless it’s a pure product deal, purchasing in not actually making a decision here.

As long as they don’t really care about you, all the pressure is on you to close the deal.  You need them to make the sale, yet they can go elsewhere to get the same thing (or so they say).  You see where I’m going here…building on yesterday, if you don’t understand your client’s deadlines, there may be a date out there, but without that information in hand, you have lost all control because you’re the only one with a timeline – one that impacts your personal income.

Once purchasing figures this out, expect them to drag the purchase through days, weeks, or even months of indecision.  Every day, pressure is building for you to close as your managers wonder what happened.  Purchasing may stall by withholding information, asking for additional time to review your proposals, they may send you off to gather new information, or you may see them looking at numerous comparisons with other possible bidders.

Counter Strategy

When the proposal is handed in early, the deal is out of your control.  You don’t have commitment, and you have not been selected – at least you don’t know if you have. Try this…

1. Make sure you know who the asset owners are – those liable for the outcome of this project, and those who will depend on the systems you are selling – ones they will be relying on to perform their work.

2. Once the vision is clear, and everyone knows what is needed, you are sent off to write the proposal.  Wait.  Don’t run back to the office and start writing.  Instead come up with your options, identify the client’s urgent issues based on impact and likelihood, and then call the decision maker to review the need and discuss the options along with price.  Gain verbal approval on exactly what they are going to buy, and write down the language the buyer uses in describing what he is buying.

3. Write the proposal using the buyers own words.  You now have verbal approval, and you know you are the chosen provider, as long as the pricing can be worked out.  You know the urgent issues, and you know what kind of time frame you are working with.  Submit your pricing as an agreement, not a proposal, and patiently work through the purchasing process on their timeline, keeping their urgent issues in front of them.  Don’t make your quota or your company’s financial deadlines a part of the negotiation process or you are destined to lose.

© 2011, David Stelzl