The Negotiation Checklist

Understanding the Customer
☐ What is the business issue they want to solve? (What’s their ROI?)
☐ Who is involved, who are the buying influences and how do they view us?
(Executive Sponsor, User, Technical, Coach, Third Parties)
☐ Who are we actually negotiating with, what do we know about them?
☐ What are the key negotiation points for the buyer?
☐ Do we know the competition and their proposed solutions?
☐ Have we a record of discussions and objections raised to date? What does this say about the customer’s “hot buttons” and concerns?
☐ What tactics do you expect the customer to use during the negotiation?
☐ Do we know their BATNA?

Our Solution
☐ Do we have a clear statement of how we solve their business issue?
☐ Does the customer understand and agree with this? (Have we asked them?)
☐ Can we articulate our value and differentiators over the competition?
☐ Do we have the proof (to reduce risk) to show that we can do this?
☐ Have we defined our Optimum and Fallback positions?
☐ Besides price, what can we negotiate on?
(maintenance, training, payment terms, delivery, installation, support, volume discounts, account status, etc.)

The Negotiation
☐ Have we had an opportunity to fully present our value proposition?
☐ What do the BATNAs mean to out negotiation strategy?
☐ Do we understand where the power and leverage is for each side?
(Timing, information, power base, location, EQ, history, titles)
☐ Have we developed our questioning strategy?
☐ Have we got a clear opening statement? (How does our solution fully meet their business needs and ROI)
☐ What do we do if we cannot reach an agreement?

Your Attitude
☐ Do not assume you have to negotiate
☐ Don’t negotiate until the customer acknowledges that their needs can be met by our solution
☐ Prepare thoroughly, they will!
☐ Demonstrate a Win-Win attitude
☐ Be confident in the value your product or service will return
☐ Listen – Don’t rush to fill pauses – be comfortable with moments of silence
☐ Work on exchanging, not giving
☐ Work on all the possible variables
☐ Be prepared to walk away at this time

The 4 Stages of Negotiation

Good Negotiating – please comment if you have any feedback – note that you can download a printable pdf version of the guide together with more information regarding negotiation from the instant sales guides tab.

Take the IT industry, years ago it wasn’t uncommon for a company to have a product advantage over the competition for a number of years – the example that comes to mind is the DEC VAX, where they had 2/3 years of market dominance over all competitors. Today, I cannot think of any examples of such dominance unless the market is distorted by government regulation. I was interested to see that when Costa Coffee launched its new “flat white” premium coffee, Starbucks responded with their own product within 4 days!

The Smart phone market is also very competitive, not only between Blackberry and Apple iPhone, but with the phone industry giant Nokia with Symbian, Microsoft’s mobile Windows and now various versions of Google’s Android operating system. Any market where there is growth and money to be made is competitive. This means that your customers will probably always have good BATNAs (see previous article) and hence can squeeze your price due to a competitor offering a similar solution. Of course, if you have failed to link your unique value to the customer’s business drivers, then it will always become a price auction!

So what can sales people do – sell harder? Well, think about today’s buyer, they have more information than ever before literally at their fingertips, with the click of a mouse. Think about buying a laptop and search for comparison websites – how many do you want – every detail of every option is discussed, analysed and rated against all of the competition. So if you are a laptop sales person, what can you do?

The first thing is to embrace the new world order, it isn’t going to go away, and information that creates savvy buyers is here to stay. So treat buyers as intelligent, computer literate people who will have done their research.

Secondly, rather than selling laptops can you sell a service/relationship advantage – sales people repeating facts they have already pulled off the web won’t interest them – what can you offer that’s new and engaging? Having case studies of people similar to them – vertical market, business challenge, application – and showing how they successfully implemented the solution is a good place to start.
Additionally, if you can also advise of potential risks and issues they may face during the implementation then they will listen. One of the key complaints of buyers is that sales people only focus up to getting the order, whereas the customer is interested in a successful implementation and return on investment of the project. Demonstrate that you are a different type of sales person who is really interested in the success of the project (back to the business issues).

Remember, buyers will not let you into their buying cycle early if you cannot demonstrate that there is a value to them in doing this. And, as we all know, if you aren’t in early then someone else is setting the agenda and so you are likely to become a purely price discounted option.

Do you have any ideas about how you can change your selling approach to be more effective? Let me know, post a comment.

So the situation I want to use to discuss BATNAs is the election that has just taken place in the UK. For those not aware of the UK voting system, we have a first past the post system where 650 Members of Parliament (MPs) win seats by beating other parties in a straight fight with no account taken of the actual percentages polled by each party. So, as the chart shows the conservatives have won the most seats but not enough seats to command an outright majority in the House of Commons.

Where our system is slightly different to other countries is that we have two main parties, conservatives and labour, and then a third party, the Liberal Democrats, who command almost a quarter of the votes but only get about 50 of the 650 seats. Ah, democracy, don’t you just love it! This means that they have a large mandate from the public but this doesn’t normally translate into power. However, this election is different in that neither of the two main parties has an outright majority (326 seats). So the Liberal Democrats hold sway and can effectively decide who forms the next government.

As I write this the Liberal Democrats are currently negotiating with the Conservatives regarding working together to form a new government. So, let’s introduce BATNAs – the best alternative to a negotiated agreement. BATNAs are not your final offer, they are what you can do (your alternative) if you have to walk out of the negotiation today. If you think about it, the side with the better BATNA normally has the better negotiating position.

So, back to the politics, if the Conservatives can’t do a deal with the Lib Dems what is their BATNA? They would either have to work with a number of smaller parties, all wanting large amounts of money and power, or try and form a minority government. Whereas, the Lib Dems BATNA is to negotiate with Labour, who are actually more closely aligned to them, in terms of policies, than the Conservatives. Add into the mix that the Conservatives have been out of power for 13 years and you see that the Lib Dems have a very powerful negotiating hand to play. So the Lib Dem BATNA is much stronger then the Conservatives BATNA, and hence they should have a better negotiating position.

So we will see who this plays out in the coming days, as the Lib Dems main requirement will be that some form of proportional voting system is brought in, probably breaking the two party system for ever and creating coalition government in the UK as the norm. Hopefully, that gives a better example of BATNAs than normally discussed on negotiation courses.

Update
So the Lib Dems have managed to squeeze a very good deal out of the Conservatives after a quick dalliance with Labour (maybe they just wanted to up their negotiation position a few notches higher). A good BATNA always gives you a strong negotiation position, the question is “What BATNA can a sales person have in a negotiaton?” I would be interested to hear your comments.