March 26th, 2014

A Quick Guide for Structuring Win-Win Negotiations

A Quick Guide for Structuring Win-Win Negotiations

Consultative negotiations, seeking win-win outcomes, following a certain structure — not a precise ritual or Kabuki theater-style performance, but a series of phases that usually occur in a certain order. Below is a quick guide to help you structure this process by understanding what to do at each phase of the win-win negotiations.

Pre-negotiation Phase

This is the “selling phase,” in the sense that this is where both sides decide to pursue a business relationship.

This is the preparation phase, where each side learns what it can about the other. The buyer will have done “due diligence” and determined that the seller is worth a meeting and further investigation. The buyer will have decided whether just to meet with one company, to meet with many possible vendors and choose the best offer, or to meet with companies only until they can come to an agreement with someone.

The seller will either contact the buyer or be contacted by the buyer to determine interest. In both cases, the seller will determine whether the buyer is just that — a buyer. The seller will determine how to appeal to the buyer. While the buyer is finding out if the seller is likely to be able to meet the buyer’s needs, the seller is trying to determine the buyer’s real needs as opposed to desires.

Food is a good example to show the difference between need and desire. People need to eat. They desire, but do not need, to eat steak.

The Opening

The next phase of the sales negotiation is presenting a proposal. This can occur either at the meeting or beforehand in writing or by telephone. If a written proposal is sent before the meeting, the seller should spend much less time going over the details. The seller should consider having a draft written proposal at the meeting, even if that is the first contact. Edit as appropriate, and send to the client as conformation as soon as possible after the meeting ends.

In all cases, be as friendly as possible, aiming to build mutual trust and confidence. Start with the basics — arrive on time and turn your cell phone off.

Present the details if no proposal was sent earlier. Or, ask if the client was able to read your proposal, and then, summarize. A proposal will basically describe the product or service, the schedule for delivery, the cost, and the schedule for payment. Stress the advantages to the client. Our baseball bats cost $100 each in batches of 500. This is a better price than our competitors can offer. Our bats measure up to MLB quality controls. We can deliver batches of 500 in mid-February, early July, and mid-September (hopefully, the client is thinking post-season play). We can fill orders for more, if needed, with one week’s notice. Payments can be spread over the season.

Either side can open discussions, but the one who makes the first move in presenting ideas and details sets the agenda for discussion. This side has the advantage in discussions.

Counter-opening

The potential client responds to the proposal. The seller should just listen, maybe asking a few clarifying questions. If the potential client has made a more detailed than normal presentation or request for proposal, the substantive discussion starts here.

Converting Demands to Needs

Ask appropriate questions to separate demands and wants from actual needs. One way to do this, in a process which starts before the meeting, is to find out what the customer wants to accomplish, not just what products or services they want. Find out what they really want as early as possible in the negotiations. A customer seeking consultant services to improve a supply chain wants more than just that. He or she wants a way to increase production at minimal, if any, additional cost. How can this be done?

Try to determine the personal agenda of the client contact and of anyone else who has to approve. The best way to do this might be to just ask.

Value Justification and Trading

Use trade-offs when you differ in terms. If the client wants to stretch out payments, for example, trade this for a higher price. Summarize each point of agreement when reached.

Be creative and flexible, but avoid concessions as much as possible. Be prepared, as a last resort, to symbolically walk out of the meeting if a point cannot be settled. Don’t storm out. Adjourn the meeting to a future date.

Closing the Meeting

End the meeting. Be the one to summarize what was decided — first verbally and then in writing and in more detail. This lets you continue to set the agenda. It is easier to just make a change than to ask someone else to change something. Agree to the next steps and their timing.

Follow-up

Carry out the next steps. Consider sending a thank-you e-mail to the client as soon as you return to your office. Then, send a more detailed response in a few days. Even if you are the decision maker, as a courtesy, clear it with anyone whose cooperation you need at your office.

March Madness – Industry Focus: Technology 

Like fingerprints, no two organizations are the same. Each faces different cultural, managerial, operational, and industry challenges and opportunities. That’s why we customize our approach at Richardson, working with each client to develop specially tailored sales training and performance improvement solutions. This month, we are featuring our work in the technology sector. We invite you to please take a look by  clicking here to learn more or contact us directly at info@richardson.com

industry-focus-big-data-planning-and-leading

About The Author: Dario Priolo

As Chief Strategy Officer, Dario Priolo is responsible for driving Richardson’s market, product, and corporate strategy and planning — sharing critical insights with clients to help them win in today’s changing market place. Dario gathers intelligence and market and customer knowledge to: drive Richardson’s innovation; ensure that Richardson offers the best and most relevant solutions for clients that exceed client satisfaction; and raise awareness of Richardson’s extensive capabilities with sales and business leaders.

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