Tag: Commercial Excellence

In our previous post, we explained that a complex business negotiation is much like a chess game. It’s about making a move and anticipating your customer’s next moves. One of our customers, a packaging company, recently learned this by following our Complex Negotiations Implementation Track, an intense training & development program for sales teams and management professionals. Throughout the process, our customer started to have a pretty good idea of what they were doing right and should do more of, what they needed to stop doing, and what they needed to start doing. We packed all the valuable lessons in a practical overview.  
 

What they need to CONTINUE doing 

Have strategic conversations

Before going into the negotiation and even quotation phase, start by exploring the customer’s challenges and priorities for improvement. During preparations, also talk to technical teams or people on the work floor. 

Sell the value, not the product  

Sales reps like to see their customer relationship as a partnership, where they jointly work on Total Cost of Ownership. This is a much better choice than just defending the value or margin on your product. To do this successfully, you need to be able to prove the value you are offering, whether it’s a cost reduction, cost avoidance, increased revenue, or decreased risk.  

You need to make clear that taking your company out of the equation would have a negative impact, one that outweighs the potential price gain from working with a cheaper vendor. The value you offer, including the specialty services on top of your product, is something unique.  

Prepare, prepare, and then prepare some more 

Hamlet knew: readiness is all. Preparation does make a difference. Prepare your meetings and calls by inputting data and insights from the customer in a structured way and always determine a next objective before starting any new customer interaction.   

What they need to STOP doing 

Give discounts  

Discounts don’t exist. Concessions are always a value transfer. Giving a discount without getting something in return will undermine your integrity and credibility. You are always offering the best price as part of your partnership. That is why you need something in return when your customer needs a lower price.  

Enter price negotiations before issues are solved  

Before going into the negotiation endgame (where you discuss what to give and take), you should reconfirm all actions that have been agreed upon and that have led to resolving all objections and concerns. It makes no sense to start your endgame discussion when some issues are still on the table.  

Oversell 

Don’t talk about features or benefits before you are sure that your customer will perceive these as valuable. You need clear confirmation from your customer about the relevance of your features and benefits.  

Ask self-serving questions  

Questions like ‘when are you taking a decision?’ do not help the customer. Instead, ask things like ‘by when would you like to see the first shipment or implementation?’ 

Assume things  

It’s dangerous to assume things. What happened yesterday or today, will not necessarily happen tomorrow. Don’t assume something to be true even if it is true 99% of the time. Instead discuss it with your customer and get confirmation. Remember: one mistake with one customer is 100% failure. 

 “Give” before preparing a give and take list 

You should always have a list of “gives and takes” before entering a negotiation. You need to know what concessions the customer is willing to do in exchange for your give list. Remember, it’s not wise to start giving before the Middlegame (all non-price related matters) has ended.  

What they need to START doing 

Ask the magic opening question 

‘What has changed since the last time we spoke’ is a great opening question. You don’t always know what has happened since you last spoke with your customer, so you should ask this question every time before going into the meeting agenda.  

Close every meeting  

ABC – Always Be Closing: try to get as close as possible to your next objective. Summarize what is agreed upon and ask for confirmation. 

Use the pre-close technique  

You have explored give/take scenarios and you have confirmed these with your internal team/management. The next thing you want to do is apply the pre-closing technique. This means that you assess the mood of the buyer before asking for the sale, so you can move your prospect forward more easily.  

Use the Game Plan template  

When reaching the Middlegame (resolving objections and concerns), use the Game Plan template. This is a tactical support tool which challenges you on all levels. 

Assess the Balance of Power  

Before going into the end game, assess the Balance of Power to prevent procurement from using pressure and emotion as a negotiation tactic. Many sales professionals underestimate the power they have over the customer. You might be surprised about the impact you have on a customer when you talk about what they would lose when moving to a competitor or what they would gain when they do (more) business with you. If you negotiate with more confidence, you will achieve more margin. 

Let’s play chess 

Negotiations are much like chess. And when you apply these lessons learned you’re much more likely to make the best moves and win the game.  

Even if you’re an experienced sales professional, there’s something to be learned here. Based upon my own sales leadership experience, I firmly believe it’s good to be challenged sometimes, especially when you are confronted with changing circumstances, or when you have been in the same company or business for quite some time.  

Just like our packaging customer, it’s a great, eye-opening exercise to draft your own start – stop – continue plan. In fact, I believe this can benefit any sales professional, whether you are experienced or not. It’s useful to always refresh your skills, polish your good habits, and have a fresh pair of eyes looking over your shoulder.

My colleagues and I have supported many experienced and senior professionals in this. If you are looking for a negotiation trajectory, similar to what we have offered to our packaging customer, we can be that partner for you.

If life is like a box of chocolates, then a business negotiation is definitely like a chess game. It’s about making a move and anticipating the next move of your customer. That’s the analogy we use in our complex negotiations implementation track, which we recently offered to a customer in the packaging industry. Let’s have a look at how we improved this customer’s negotiation outcomes. 

A few days into the implementation track, we already received encouraging customer feedback:

Thanks to the Perpetos workshop on Complex Negotiations, we were able to close a difficult negotiation that had been going on for several months, and we brought a good result home.

Of course, this didn’t come out of nothing. Just like a chess game, the negotiations had a well-prepared opening, middlegame and end game. Here is what happened. 

Opening: price pressure  

Our above-mentioned packaging company was suddenly confronted with one of their long-term, high-volume customers who after a leadership change decided to bid and test the market. The customer wanted to reduce their current raw material prices by 5% and even succeeded in obtaining a price offer that was 12% below our packaging company’s proposal.  

The customer was not opposed to a 3-year agreement per se. However, they did not want to be tied to automatic material (price) increases. Instead, they preferred to negotiate and test the market annually. In chess terms, the customer had made its opening move.  

Middlegame: a well-conceived game plan  

Was giving in to price pressure the only option for our packaging company? Far from it. This is how they handled it differently. For starters, the packaging company’s sales representative prepared his case using our Game Plan Template, which focuses on the customer’s needs and helps to map out all possible scenarios prior to the first customer meeting. 

Next, the sales rep assessed the balance of power. Based on that, he came to an understanding how he could influence that balance and determine his starting position. His plan A was a 3-year contract with a 16% price increase. Plan B included a 3-year contract with an 11% price increase and 10 M$ of new volume. 

The sales rep started the meeting with one simple question: “What has changed since the last time we spoke?” The question brought him a ton of new information about the buyer’s priorities and additional responsibilities. During the discussion, the focus was not so much on selling the packaging, but it shifted towards the added value and services provided by the packaging company. The sales rep also made sure that all open issues were closed at the table. This boxed the buyer into a position where he did not have any leverage relating to service or quality.  

End game: giving and taking   

Despite expecting a 5% price reduction, the customer did sign a 3-year contract with a 16% price increase. In exchange for this concession by the customer, the packaging sales rep agreed to reduce the increase to 11% for business or additional volumes coming from a new plant.  

Everybody wins  

Both buyer and seller came out better from the negotiation. This may sound easy, but in practice it’s not. It can be hard to sit in front of a customer who believes the market is softening and who demands price increases based on outdated material indices.  

You could also argue that all the above is obvious. So, why would you need a training or implementation track for that? Our answer to that question is: anyone who has been sitting in front of a customer lately, anyone who has sensed the heat of the moment, will know that these things aren’t obvious. We don’t always apply what we have learned, especially when we’re in the everyday rush. People do not change their behavior overnight, especially salespeople, who can be a bit stubborn. (I’m allowed to say that, because I am one.) 

Tools for negotiation success  

At Perpetos, we develop tools, we provide handles, and we give tips to put all the above advice into practice and to embed it in your daily sales approach. Implementation is the most difficult part of a change process. That’s where we go the extra mile. We do not just train people, we help them to implement change as well. 

Here is some feedback we received from participants of our recent implementation track: 

Negotiation is a chess game indeed. No matter how close your relationship with the buyer is, they can never be completely truthful. Preparation is so important. Confidence in the value you can provide, makes all the difference for your mindset.

When a customer makes a request, it’s OK to push back and ask something in return.

I need to dig deeper and find the underlying request. Never just assume!

Great session, it gave me the tools I need to take this to my customer.

More chess  

In our next blog, we’ll discuss some more lessons from the field. We’ll share the key takeaways from the implementation track followed by our packaging company. These lessons were learned during several workshops we had with the EU and US leadership team and global key account managers.