Negotiation Examples: How Avoiding Unprincipled Concessions Kept the Customer’s Respect (And Won More Revenue)

 

When competition starts putting the pressure on you, it’s natural to look at price-cutting as the primary way to keep the business. But in the long run, this is a mistaken impulse, unless accompanied by a sound business rationale such as a reduction in scope, change in terms or outcome from the deal. One of our engagements with a client that served a European industrial (the customer) with technology solutions definitely illustrated the value of avoiding such “unprincipled concessions!”

Unprincipled concessions are “giveaways” not tied to a credible business rationale. Our research shows that this simple business negotiation mistake costs companies between 9 and 18% of gross revenue and significant profit. (See our infographic on the topic for a more detailed discussion of this vital principle and how it can be applied.) Read more

Negotiation Examples: The Power of Agenda Management

The “time factor” — how you manage it against other considerations and use the high-level (or macro) agenda to help create agreement has a huge impact on your success!

This was certainly the case during an engagement with one of our technology clients, whose customer was in the European auto segment. All of our client’s revenue with this automaker was in jeopardy when the automaker announced that a purchasing freeze would be in effect at the beginning of the coming year, due to deteriorating economic conditions and new IT management. Since it was October, these developments required immediate action and a clear agenda that would culminate in closure before end of year. Read more

To Win the Deal, Add Personal Value to Your Negotiation Strategy

Effective, persuasive communication is fundamental to building winning deals. When you are understood and believed, you greatly increase your chances of gaining leverage and having your value argument accepted by the other side.

However, we make a mistake if our communication doesn’t recognize two kinds of value:

 

  • Company value to the other side
  • Personal value to the representative of the other side

You generate company value by making the deal beneficial to the customer’s organization. Read more

Unprincipled Concessions Cost You Money at the Negotiating Table

Spot Them, Avoid Them and Close Faster

Unprincipled concessions are concessions not tied to a credible business rationale. Years of research show us that this simple business negotiation mistake costs companies between 9 and 18% of their gross operating revenue.

Principled Concessions Infographic

Read more

Negotiation Success Range (NSR)™: Understanding Walkaway Positions so Neither Side Walks Away

Winning Negotiations Strategy

One of our tools for helping clients prepare a winning negotiations strategy is the Negotiation Success Range (NSR)™, which identifies the conditions under which both parties will be satisfied. And if those conditions satisfy both sides, but our side likes them more than theirs? That’s OK: A winning deal is never perfectly even. In business, especially when forging long-term relationships, the NSR is critical because the deal should work for both sides, and both sides need to feel like they have won.

This is easier said than done. As an example, during negotiation planning the seller’s price and the buyer’s cost are often crucial factors in the deal. In fact, price is often a deal maker or a deal breaker. (The impact of price considerations on your deal can be ameliorated with value articulation.)

While the NSR example we’ll discuss relates to price, the tool works with any negotiation term that has a range. Read more

The Value of Role Playing in Negotiation

We have had the privilege of assisting major companies all over the world with our Win Wisely™ approach to negotiation. The principles we teach are far from theoretical: they were forged from practical experience gained in all kinds of negotiations involving all types of participants. This includes everything from basic buy-sell transactions to complex, high-stakes negotiations in business and technology conducted by lawyers, salespeople and executives. Each of them needed a methodical approach to forging better deals.

We routinely hear from our clients. They describe how the teams we have trained are able to put their learning to immediate effect. Read more

Misusing Leverage: The High Cost of a Short-Term Negotiation “Win”

Do repeat business assumptions count in your business plan? If so, the way you conduct your negotiations takes on much greater importance.

Some view negotiation as a series of devious games and ego contests conducted to gain advantage by keeping the other side continuously off balance, intimidated or flustered. We find this approach to negotiation quite short-sighted if your “win” leaves the other side angry, resentful and questioning your credibility. Who wants to do more business with someone who makes them feel as if they have been bullied or tricked? The logical response will be to aggressively seek an alternative the next time around, whether you are a buyer, seller or “business partner.” That doesn’t sound like much of a win to us. Read more

Negotiation Blocking Techniques

In one sense, negotiations are a strategic exchange of ideas and information. But the value of what information we give (and when) can have a very real bearing on our success.

As you seek leverage in the deal, you are trying to find key information from the other side. If you’re negotiating with seasoned professionals, you can expect them to do the same with you. Sometimes difficult questions arise that, when answered, could erode your position. For example, if you have few or no real alternatives to doing an important deal, revealing that fact to the other side can cost you dearly. That’s why experienced negotiators have a handful of practiced blocking techniques they use when they feel a certain question must be deflected. As always, consider your purpose, audience and personal style as you decide how, and when, to use any of these strategies. Read more

International Negotiation: Using the MID™ to Cut Confusion

“We must have a 10-day shipment guarantee.”
“This functionality is a must.”
“A price reduction is mandatory.”

How often have you heard conditions like these during a negotiation? Sometimes negotiators make every request sound as if it were mandatory. But what are the real deal-breakers? K&R’s MID™ is designed to help you identify and prioritize the issues in any negotiation. Using the MID, you can separate and deal with the truly mandatory goals (or ends) while reducing conflict over issues that may not be mandatory. The MID approach makes deals easier to close. Read more

Negotiation in Sales: Presenting the Value Argument that Wins in Highly Competitive Conditions

With pressure to meet earnings and revenue targets, expand new markets and make the most of every resource, today’s global sales force is the difference between success and failure. Communication and online information are leveling the playing field, creating an extremely competitive environment and shrinking margins.

Even the best products are one development cycle away from being leapfrogged in the marketplace. Competing on price is the path to becoming commoditized and to being robbed of the ability to present a unique value proposition. Ultimately, it’s your sales people—and their skills and experience—that will help you differentiate yourself, your solutions or your company in a highly competitive selling environment. Read more