Saving your way to prosperity

Posted on March 25, 2009 | Filed Under K&R Success StoriesK&R WorkshopsSelling | Leave a Comment

Times are tough.  The stock market is at 1997 levels.  Unemployment is high.  Sales are down.  You need to manage your business results for 2009.  What do you do, and why?

If we were playing the television game show “Family Feud” (or Family Fortune, if you’re in London), the number one answer is…  Stop spending!

How about it?  Can you save your way to prosperity?  While careful spending is always a good practice independent of the economic conditions, will it make you or your company successful?  Probably not.

Let’s look at the economics of earnings.  The big number isn’t the cost line.  Well, the big number shouldn’t be the cost line – too many people are losing money at the moment.  The real leverage to improve your business results is in the revenue / profit line. One method to improve revenue and profit is to do more with what you have – make the most of the opportunities that still exist.  Through the use of effective negotiation skills, you can take those same opportunities, and get better results from them.  So, in the balance sheet of a difficult year, do you spend to improve the “big” lines (revenue and profit), or do you slow spending to affect the “little” one (cost)?  We think you should do both – but don’t decide based on an arbitrary fixed rule like “no outside spending!”  Use the same good business judgment that has made you successful in the past.

One of the popular K&R services is a series of consulting engagements to alter the outcomes of negotiations that are in progress right now.  We delivered a set of these for a client near the end of 2008.  In that K&R Opportunity Workshop we worked on 22 identified sales opportunities.  Prior to the session, only 2 of the opportunities were expected to close.  All, of course, were in the “forecast” to close, but experience shows that a forecast is more often a wish than an accurate prediction.  As a result of the workshop, eleven of the opportunities were closed by year-end, and our client beat their revenue and profit targets.  We helped them make the best of what they had already.

In a typical two-day K&R Negotiation Workshop session, where we focus on immediately applicable skills, 10-15% of the attendees use something they learned in the session in a real negotiation – before day 2 is over!  We consistently receive feedback that the attendees will use the tools and techniques within 30 days, and we have documented cases of increased revenue and profit that average 10%.

Contact us – we can help you improve your results.  (td)

Value, Benefit, and Cost in Negotiations

Posted on March 9, 2009 | Filed Under SellingValue | Leave a Comment

In a K&R Negotiation Skills Training Workshop toward the end of last year, one of our clients brought in this formula…

Value = Benefit – Cost

Not perfect, but persuasive in many ways.  Let’s discuss a couple of critical pieces of it.

The first negotiating mistake we see related to this is that “value” is one of the most misused words in technology sales.  A maddeningly high percentage of the time, it is used by Sellers as a substitute for “price”.  An example: “This deal provides you with $250,000 worth of software value for only $167,000.”  This sort of presentation reminds me of the magazine subscription solicitations I get in the mail. “Photographing Travelling Automobiles, a $360 value, for only $14.95 for one year.”  I do not believe there is anyone left in the world who believes the $360 value statement.  It’s really a statement of newsstand price.  It is not in any way credible.  If you are a Seller, don’t ever make this mistake again.  Find out  the real business value that your offering provides to your Buyer, and describe it properly.  Remember that the more specific the description is to the Buyer, the more persuasive it will be.

The second negotiating mistake related to this formula is forgetting to quantify the benefit.  If we plug in $0 for the benefit, what do we get?

Value =  0 – Cost

It’s always a number below $0.  As a Seller, the only way to improve your position is to cut price, and hope that the Buyer has some value figure in their head that can offset the cost remaining.  This is a bad negotiation strategy, and leads to agreements that get closed when the Buyer gets around to it (because their intuition says the time is right).

If you’re happy with that as a seller, you have our permission to ignore the benefit part of the equation.  If you are not happy with this, contact us – we can improve your results.  (td)

About This Page

You are currently browsing the Negotiation and the News blog archives for March, 2009.

Recently


Categories


Archives