Will it close this year?

Posted on December 15, 2008 | Filed Under Motivations, Objectives, RequirementsQuestions & Answers | Leave a Comment

As we approach the final days of 2008, you are probably working on a number of transactions with the hope of exceeding your sales quota or target.  If you are counting on a year-end close, we are offering two questions and a tip for your consideration.  These can shape your actions over the next couple of weeks, and affect your revenue and profit.

The questions:

1.    What happens to the buyer if they don’t sign before year-end? If your answer is that they won’t get this good a deal in January, you are dealing in pretty weak leverage.  The persuasion that is missing from this argument is business value. Buyers know that an offer made once can often be made (or closely approached) again. If they don’t have a business reason to act now – a reward that accrues or a risk that they take – they will often wait, and can afford to.  If you can’t link the sale you want to make to a real business risk or reward, you may close, but at a higher discount level than you would like.  Why?  Because the buyer knows that they can afford to wait while the seller gets nervous and discounts… again.

2. Why haven’t they signed yet? If you are near the end of the year, then the reason is unlikely to be price.  And, if the reason is not price, then changing the price probably won’t change your odds of closing.  Some studies have shown that in cases where Procurement is involved, the final buying decisions are made in late November.  They are just waiting to sign until seller nerves drive the prices to lower, late-December levels.

The tip: Stay calm. The more nervous you look, the more incentive you give the buyer to wait for a better offer.  It isn’t just a game for them.  They need to have confidence that they are making a good decision.  When sellers are nervous and discounting, the only way to get that confidence is if the seller is calm and reassuring, or if the buyer waits to the last instant to sign.

If you are a seller, think like a buyer at year-end.  Why should I do this?  Is pricing affecting my decision to sign? When you have the answers, stay calm, and give the buyer confidence that they are making a good decision for a good reason.  (td)

Thoughts about selling in the current economy

Posted on December 10, 2008 | Filed Under Motivations, Objectives, RequirementsSellingValue | Leave a Comment

Here are a few ideas and thoughts from some of the collective experience of our associates, in addition to some suggestions from articles we have read over the past few months about selling and negotiating in the current difficult economic environment.

In many of the articles, there are three common themes:

That being said – these are three very good themes – they do not necessarily drive you to any specific actions.  Here are a few ideas for you to try:

Budgets are being cut – or at least pared back, you must not lose momentum or your contact with your prospects.  When budgets open back up (and we believe they will), you want them to remember you and your organization.  You also want that memory to be positive!

We wish you a “Happy Holiday”, “Merry Christmas”, “Happy Kwanzaa”, “Happy Hanukkah”, “Joyous Solstice”, and all of the very best for a wonderful New Year. (jh)

SOAP

Posted on December 5, 2008 | Filed Under Negotiation Success Range™ (NSR™)Value | Leave a Comment

In our recent rounds of negotiation consulting for our Clients’ year-end transactions, we saw one practice from a US-based sales executive that we admire greatly (both the practice and the executive).  You can use it, and if you are as successful as she is, you’ll be happy. It’s called the “Summary On A Page” (SOAP).

Maybe she got it from her children’s 6th grade English class, but a good idea is a good idea regardless of the source. For some reason, when we described this in Spain, our client there called it a SOAP. Maybe everyone knows this practice (although no one we discussed it with seemed to), or maybe this is an interesting case of cross-language acronym usage.  So SOAP it is.

If you recall our recent article “Procurement Gets a Ferrari“, you know that many buyers come in with “spend less than last year” as their goal. This is influenced by a couple of common negotiation facts:

1.    While a new agreement is often closed with the Line of Business and then with IT, the follow-up agreement is often managed by Procurement as an extension or an amendment.

2.    Procurement is often measured by cost savings.

Enter SOAP.  Many sellers are not familiar with the term “loyalty gap”.  A loyalty gap exists when executives that were promised a benefit, never hear about the results that accrue from their investment.  Since they never hear, they tend to think that the benefit was under-realized.  It creates a loyalty gap to you, the seller.

In the context of the loyalty gap and the amendment-via-Procurement, SOAP provides a simple tool that addresses both. Create a single page that describes, at a high level, what the client bought from you and which business initiatives each of those purchases supports.  In the best case, add to it the actual business value that was achieved through use of the purchased solution.  That’s a SOAP.

The first goal of this is to avoid the creation of the loyalty gap.  By reporting on the actual achievement of value (better or worse than promised), you will gain trust and loyalty from the people who bought from you.  It will earn you credibility going forward, and that improves your odds of success.

The second goal is that the client should not take what they got for granted.  In a recent real-life example, one of our clients told us that the solution they provided was entirely responsible for the tracking, billing and collection of €9B of revenue for their client.  The solution never failed, was 100% accurate, and every invoice was timely.  Yet, when their client wanted more of the same, the seller was struggling with how to lower the price.  The revenue that the solution collected represented 100% of the revenue for that company.  The buyer took it for granted, and since they never thought about the value, 10% cheaper was a good target to them.  A simple SOAP can change the perspective from “cheaper is better” to “must have at any cost”.

Create a SOAP, and use it to open every presentation from every member of your team.  Don’t let your buyer forget your value.  (td – with admiration for LHT)

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