Welcome to the SNI DealCoach Daily!

Hello and welcome to The SNI DealCoach Daily - a community of experienced negotiators, sales consultants and everyday dealmakers who want to maximize your results in today's turbulent times.

As the economy tightens, effective negotiation skills become more important than ever.  It is imperative to commit yourself and your organization to achieving “win-win” deals. Though overused and often misused  “win-win” simply means: “the best way to get what you want, is to help them get what they want.”  The simplicity of this phrase, however, is belied by the difficulty many people have in executing on it, particularly in challenging economic times.

To survive in the short term, it may be tempting to take advantage of the other guy.  You may convince yourself that tough times call for tough tactics, and that the end justifies the means, but how will you feel when your 'partner' can't or won't fulfill their end of the bargain? One-sided agreements are often broken because players will either find a better deal or will be unable to keep their own doors open.

Using an upper hand to strike an unfair deal might seem like a good idea initially, but this approach fails to take into account the enormous cost associated with replacing a 'partner' or 'vendor' that is no longer able to perform. Not only do costs increase, but the problems can impact your own clients or customers…missed deadlines and reduced quality. Ultimately these “win-lose” deals impact on profits due to higher costs, or the increased concessions and higher discounts you must offer your customers in order to retain them.

One aspect that many people tend to overlook is that relationships built during challenging economic times are the ones that tend to last a lifetime (and beyond).  One famous example is McDonalds and Coca-Cola.  The story has oft been told of a struggling Ray Kroc trying to obtain a soft drink vendor.  Kroc did not have the money to pay for the equipment as he quickly expanded the hamburger chain.  Coca-Cola saw an opportunity and struck a deal that deferred equipment payments.  Other soft drink vendors had the opportunity to make this deal, but they were unwilling to take the risk.  Coca-Cola saw the opportunity and forged a partnership that has lasted decades

You must start by completely understanding what your customer is trying to accomplish and then deliver your service or product in a way that will help them accomplish that goal. Recently we consulted with a software company that was trying to negotiate a deal with a chain of bookstores.  We asked them: “What is your goal?”  It was a simple question, but we received 12 different responses, ranging from: “close the deal” to “get all of their budget” to “prevent our competitor from bidding”.  No one in the group provided the answer we were looking for, i.e. that their goal was to find a way that they could help this bookstore chain sell more books!  If they find a way to do this, all of those other goals will fall into place.

For more information on negotiations, sales optimization or influencing, please visit www.shapironegotiations.com

Comments

[Henry Jacobs]

But what happens when your client comes back to you and says: "You need to take a 20% cut or else you will lose the business." They say that they value you, but they have to cut their budget by 20%, so they are asking each of their vendors to cut their budget by 20%. How can you make this a "win-win" deal?

[Jeff Cochran]

Not to over simplify, but if you make a 20% cut you have to also cut the deliverables. If you don't, you seriously run the risk of a Lose-Lose situation. If you say no to the 20% cut, you may Lose the business. If you agree to the 20% cut without cutting deliverables, it appears as if you have been padding your costs and you Lose credibility. In our courses, we teach a strategy for individuals to make concessions that are logical to the customer while not eroding profitability.