When the negotiating balls are in the air
I remember one of my largest ever sales with mixed emotions. The deal, for a mixture of hardware, software and design services, was a whopper and had been in the pipeline for months. Likewise it had been in my forecast for months and all eyes were on me. I went in on my own for the final session to actually get the order and knew there would be some negotiating to be done. However, we were in a very strong position technically and I suspected that, as far as the engineers were concerned, it was a one-horse race.
For a one-horse race I sure got beat up. I was in my mid-twenties and meeting up with Reg, their procurement VP, who must have been around sixty and knew every low-down trick in the book. What I had expected would be a final, quick haggle on price turned into a mammoth session going over the price, technology, deliverables and Ts & Cs with a fine-tooth comb. By the time I left I’d given away half of the farm, my head was spinning and I still wasn’t sure if I’d got the order. It wasn’t so much a negotiation as a very long, painful series of concessions.
I remember two of his tactics particularly vividly…
- The salami technique. He took me through our Ts and Cs line by line with him questioning each one, telling me why they couldn’t accept it and asking me what we could do about it. So during the course of the meeting I made more than one call back to base to find out if we could move… and mostly we could.
- The power of legitimacy. I’m sure you’ve probably heard about this concept… it’s the un-thinking respect for standard terms and conditions, operating procedures and in general anything documented. Reg used this to full effect with his terms; they were written in stone… absolutely couldn’t be changed… never in the history of the company had they been modified… he’d be fired for even thinking about it. Of course, when it came to our Ts & Cs he had zero (0) respect for them and expected each one to be individually re-drafted for him!
So what did I learn from this exercise?
- Don’t let them get you “on a roll” with the salami technique. If you do have to go over a lot of items just ask what they want on each one to begin with, don’t comment on any of them and move to the next. Make absolutely sure you have the complete, full list of requests before you comment. Then at least you are in a position to trade e.g. “I can do something on warranty if you can…” I actually wised-up to this half way through the negotiation with Reg, but by that point I was “on a roll”.
- When someone wants concessions from you make sure that you have the power of legitimacy on your side.
- When you want concessions from someone else… don’t be awed by the power of legitimacy. Feel free to question their standards terms, their company policies… especially if they are directly at odds with yours. Something has to give.
- Prepare! If it’s a big deal don’t expect the customer to cough-up the order without some hefty negotiating, especially if procurement are involved.
“The (written) quotation is fixed and firm”.
“Our system doesn’t allow that”.
“We put a lot of work into it to make sure it’s the absolute best deal”.
“Maintenance is not negotiable”. (When I sold software I can’t recall any customer questioning this!)
As it happened I did get the order, had my moment of glory and big bonus cheque. What I’d negotiated didn’t really effect the value of the deal, just the terms… and my bonus wasn’t paid on the terms. There’s probably a lesson for companies there as well… don’t send out young sales guys to negotiate on their own when they have their b**** on the table and a big sales bonus at stake!