T-Mobile Credibility and Leverage… Again

Posted on November 17, 2009 | Filed Under Credibility Leverage | Leave a Comment

You may recall our October article about T-Mobile’s Sidekick user data loss problem, or may have read some of the 25 or 26 million references available via a search for “T-Mobile data loss”. It is a simple, real-world example of how loss of credibility can hurt your business.

T-Mobile’s public statements allow us to make some estimate of the business value of this temporary service loss, and the long-term credibility loss that goes with it. Add these up:

The estimated cost of lost business in sales of Sidekicks and the far larger long-term loss from sales of service plans when T-Mobile temporarily suspended sales of the Sidekick after the outage.
The cost of the $100 “service vouchers” that were offered to users inconvenienced or impacted by the outage.
The 14% price reduction that T-Mobile has made to the price of the Sidekick LX model ($175 to $150), now that sales have been restarted.

It’s a big deal. Next time your credibility is on the line, remember what’s at stake, and protect it. How quickly you respond, and how effective you are, can add up to a lot. (td)

Principled Concessions™ – The short version

Posted on November 16, 2009 | Filed Under Persuasion Principled Concessions™Selling Value | Leave a Comment

In our workshops, we teach the concept of a “Principled Concession™”. Many people hear this and confuse it with the related but different concept of trading concessions in a negotiation. They think of common examples like these:

“If you buy 2, I can discount the second one by 50%.”
“If we reduce the scope by providing service 12×7 instead of 24×7, we can lower the price by 20%.”
“We can finance your total $100M payment for this project, at a cost to you of $1M.”

These “offers” follow the least-acceptable form of changing your position. It is a more acceptable form than this one:

“I’ve sharpened my pencil, and I can offer you an additional 12% off the price.”

It is easy to see that the first three are preferable to the last one. The 12% price reduction in the last example implicitly contains a message that your profit margin is high enough to offer a discount. The buyer is now challenged to take that information, and try to find out how much margin, through extended negotiating. Instead of the goal which the offer is usually intended to achieve (faster closing), it actually creates buyer uncertainty, loss of confidence, and delay.

Let’s reframe the first three in the form of Principled Concessions™:

“If you buy 2, I can discount the second one by 50% – and you’ll be able to use both at the same time when needed to perform (whatever desired outcome you bought them for).”
“If we reduce the scope by providing service 12×7 instead of 24×7, we can lower the price by 20%. However, your mission-critical revenue-collection application will take longer to restore during the unsupported hours, and your revenue could be impacted by $25,000 for each hour of delay.”
“We can finance your total $100M payment for this project, at a cost to you of $1M. This will allow the project benefit stream (in $) to pay for the continuing costs, and you will avoid significant out-of-pocket costs, thereby freeing up that money for other investments.”

In each of these cases, we are describing the exchange in terms of outcomes to each side. For the seller, this is money. The buyer gets simultaneous use (for whatever purpose), risks losing revenue, or will free up funding for other projects. In each case, the outcome description provides a business basis for the concession, and allows the buyer to make the decision on the basis of business value. In the real world, the outcome descriptions would be even more robust, but these examples convey the intent.

So here is the formal definition of a Principled Concession™: A concession given with a specific connection to business value. The alternative form is this: A concession expressed as an exchange of outcomes. (td)

Forensic Forecasting – More business in 2009

Posted on November 4, 2009 | Filed Under Selling Value | Leave a Comment

We have added an article on Forensic Forecasting to the K&R Web Site. The article begins:

“Forensic” is an adjective meaning “appropriate for use in legal or public discussions”. In today’s popular culture it often refers to the use of technical analysis for criminal cases. We’re not taking your sales forecast to court, but we can tell you how to improve its accuracy – and your results. When year-end measurements are coming, improving your results can have an even bigger impact.

You can read and download the complete article here: Forensic Forecasting

Best Wishes for every success in closing more business in 2009.

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

T-Mobile Credibility and Leverage… Again

Principled Concessions™ – The short version

Forensic Forecasting – More business in 2009

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