Back to School
WMMM #074 - This week I share tips to help our negotiation skills.
Jeff Keplar Newsletter August 24, 2024 3 min read
As September approaches, our thoughts turn to the end of summer, Labor Day weekend, US Open Tennis, the beginning of the college football season, Major League Baseball pennant races, our Fantasy Football drafts, and the return to school.
Back to School
My former colleagues at Oracle will also be closing out their fiscal Q1.
If you are among them, you are likely waiting on contract revisions - another turn of paper, as we used to say - as you wrap up negotiations.
As a nod to those closing business this week, today’s edition shares tips and techniques to help sharpen our negotiation skills.
Negotiation Skills Matter
Bobby Bonilla was nearing the end of his 16-year playing career in 1999 when he was traded to the Mets by the Dodgers.
That year, his performance was dismal, playing just 60 games and batting .160 ( his lifetime ave. was .278 ).
The Mets wanted to get rid of him but did not want to eat the $5.9m they owed him.
Both parties ultimately agreed to defer all payment - with interest - to 2011 ( 11 years ).
Instead of $5.9m, Bonilla receives $1.2m each July 1st until 2035.
These 25 years of payments now are worth over $29m.
Bonilla will receive his last payment at 72 years of age.
The Mets freed up $5.9m for the 2000 season and got what they wanted.
Bonilla got financial security.
Negotiation requires many separate skills
Communication
Asking Questions
Active Listening
Emotional Intelligence
Expectation Management
Value Creation
Quantifying Value
Financial Analysis
Adaptability
Problem-solving
Patience
Timing
Are you employing these skills in your sales execution?
Do you work on improving them through coaching and role-play?
Negotiation Framework
In a recent interaction, one party suggested to the other party that they pick a day, lock themselves in a room, and “knock it out.”
I have rarely seen that work such that both parties get what they want and are satisfied with the process.
Here is a framework we can follow to help us navigate the negotiation process professionally.
Plan on this process requiring several phone calls or meetings over a period of weeks.
The length of time is proportional to the extent of the commitment for each party.
Preparation
Learn everything we can about the person(s) we are negotiating with.
Know their role and standing in their company.
Determine their personal objectives.
Understand the natural behavioral traits of their personality.
Do they have access (the Backdoor) to anyone else at our company?
Eliminate surprises from a “Backdoor” and information leaks.
Establish control of the communication channel.
Learn their desired outcome for the negotiation.
List all variables that can move the needle for both parties.
If multiple persons are involved, link each variable to the corresponding person who “cares” about it.
Develop a value proposition for each variable.
Are there any “3rd Rail” items?
Knowing what we know today about our company, if the roles were reversed, what vulnerabilities of ours would give us the greatest concerns in moving forward?
Discussion / Discovery
Listen as they explain their position.
Ask open-ended questions (not those with Yes/No answers) to learn and understand better.
Examples:
How did you arrive at that conclusion?
Why is that important to you?
What causes you the most concern?
What happens if you miss your estimates by 20%?
Thoroughly explain your position entering the negotiation.
Use facts and logic.
Eliminate emotion.
Try to find as much common ground as possible during this step.
Develop a concession strategy that includes a target outcome, an opening position, and a walkaway outcome.
Many companies will have sent their negotiators to training, where they learned they must reach a walkaway point in the process.
Be prepared to walk away from the negotiation.
We are not quitting - this may likely be part of the process.
Negotiate
Discuss options for each area of difference.
Listen twice as much as we speak.
Problem-solve.
Execute our concession strategy.
Continue to refine our value propositions.
Agreement
Pick those areas where we could agree.
Keep a written, detailed list of each concession, compromise, and alternative proposed by both parties.
The concession strategy has already been executed, and we are at the point of agreement.
This step is anti-climatic, and we want it that way.
Lessons Learned
1) Ask questions. The desired outcomes and the pain of not achieving them are the goals.
2) Know who cares about each variable.
3) Have a negotiation process and follow it.
4) Value creation is the key.
Thank you for reading.
Jeff
When you think “sales leader,” I hope you think of me.
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