The Expanding Purchasing Power of the Non-IT Buyer in Technology Purchase Decisions

How to Adjust Your Sales Strategy for More Complex Terrain

In our recent executive brief, “Six Ways to Shorten the Sales Cycle,” one of the prime takeaways is the importance of tailoring your technology sales and negotiation process to the increasingly complex customer decision landscape. In great part, this is due to the expanding involvement of multiple people (and functions) in the decision process.

IDC underscored an important sub-trend to this reality in their Spring 2018 update to the Worldwide Semiannual IT Spending Guide: Line of Business: “Businesses are forecast to spend $1.67 trillion on technology (hardware, software, and services) in 2018. Roughly half of that spending (50.5%) will come from the IT budget while the other half (49.5%) will come from the budgets of technology buyers outside of IT. The former includes IT-funded purchases as well as joint projects funded by IT. The latter includes business-funded purchases as well as joint projects funded by line-of-business (LOB) buyers and “shadow IT” projects funded by the LOB without IT involvement. LOB technology spending has been growing at a faster rate than IT spending for a number of years. The compound annual growth rate (CAGR) for LOB spending over the 2016-2021 forecast period is predicted to be 6.9% compared to the 3.3% CAGR for IT spending.” 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

Fighting for Your Value: The Negotiation Wisdom of Bernard Hopkins

On the eve of his November meeting with feared Russian light heavyweight Sergey “Krusher” Kovalev, the New York Times took a fascinating, in-depth look at the 49-year-old who was about to step in the ring against Kovalev: Philadelphia’s Bernard Hopkins.

It was a chance to learn about the hard-won wisdom and discipline that had made him not just an expert boxer who could seemingly defy time, but an expert businessman. Boxing is often called the “cruelest sport” for the punishment that boxers absorb in the ring. It’s also financially unforgiving. The destinies of top fighters are managed by a handful of powerful and (sometimes) corrupt promoters. Even seemingly handsome six-figure paydays get gobbled up by managers, trainers and promoters. Only a few rise to wealth and fame, and many of these stars still see their massive fortunes vanish. Read more

Defining Value in Negotiations: K&R’s ViO™

“We’re giving you $100K of value for only $60K. This is a good deal!” How often have you heard that sales pitch?

Of course, this has nothing to do with business value. Value is derived from outcomes, and a statement like the one above derives from price. Yet defining value is one of the most critical negotiation steps. The strength of your value argument is what ultimately decides your ability to establish a uniquely defensible position and command your own price. Our negotiator training stresses that without a compelling value argument, you’re vulnerable to continued discount requests from a potential customer and price cutting wars with your competitors.

As a basic exercise in defining sales value, use this simple equation as a test:

BENEFIT – COST = VALUE

If you fail to calculate the benefit, then the buyer will look exclusively at the cost. Read more

Shaping Your Value Argument

Shaping Your Value Argument: Know Your Internal Audiences on the Client Side and Close the Deal

Relentless and thorough preparation is where negotiators on the vendor side shortchange themselves. It’s a major point of focus during our negotiation training, and one of the most critical aspects of this is considering the various groups of stakeholders across the table that need to understand and buy your value argument. Crafting your value argument – the ultimate answer to the question, “What’s in it for us?” – can fall flat and jeopardize the deal if your argument is presented with only one kind of stakeholder in mind.

The diagram below shows the relationship between roles, motivations (measurement concerns) and relative numbers of people that are typical at many lines of business. Read more

Negotiation Tactics: Discovering the Hidden Value in Client Requests

While at the negotiating table, sometimes the rush to provide a client with whatever he or she has requested without discussing the value of the request is a study in blown opportunities. This is illustrated by a recent discussion we had with a client regarding the case scenario below.

Our client was in negotiations with a customer about adding some content to an existing contract. The sales team wanted to close it by end of May. The customer’s procurement organization was involved. In the first week of May, the procurement director stated: "We might be interested in closing before the end of the month." The sales person responded: "That sounds good. What will it take to get that done?"

Read more

Negotiation Leverage to Win Deals

negotiation leverage
To Keep Leverage and Win Deals, Know the "Physics": The K&R Leverage Slope™

The concept of leverage originally comes from physics, referring to levers in a pulley system; the more you have, the more easily you can move objects of heavier mass. In negotiation, it’s the ability to move people closer to your way of thinking – your value arguments are your levers. The more credible value arguments you have, the more easily you can move people closer to your point of view.




Watch as Mladen Kresic discusses negotiation leverage and uniqueness in this short video.

What exactly is leverage? At K&R Negotiations, we’ve developed the concept of the Leverage Slope, defining the relationship between the buyer – who wants an optimal solution at the lowest possible price – and the seller, whose goal is the best price for their product. Read more

Value Articulation

At K&R, we urge our clients to utilize Six Principles of Negotiation™. One of the most important principles is: “Concessions Easily Given Appear of Little Value.”™ This is why we constantly advocate making principled concessions and this is also why we recommend that, prior to the start of the negotiation, you plan for future potential concessions. So how exactly is value expressed to the other party in a negotiation? Here are five important ways of expressing value:

Money. Very little explanation is necessary when the value is expressed as currency. For example, a statement such as “You will receive $2,500” is a simple money-based value statement. Money is a universally accepted denominator so its value is instantly understood by both parties to the negotiation. Read more

LogicaCMG and Dovetail

A recent agreement between these two companies yields a simple of example of the different values often seen by the two “sides” in a negotiation.

LogicaCMG is a European IT and business services company.  Dovetail is a provider of payments systems.  They recently announced that LogicaCMG has acquired a “master license” to Dovetail’s payment systems technology.  The details are not important to us, except that they provide a window on motivations, and how the motivations of two sides to a negotiation are almost always different.

At the core, most sellers get their business value from money.  Most buyers are using the purchased technology or service to solve a business problem, which in turn leads to value.  The accomplishment that the technology enables provides the value –  the technology itself does not.  In that way, the connection between business value is shorter and clearer for sellers than for buyers.  But most negotiations in IT end up with the seller describing the buyer’s future value.  It can be a difficult connection to make, but it is the most effective persuasive approach to convincing a buyer that what you offer drives value to them.  In fact, many sellers stop short of making this linkage of their offering to business value for the buyer.  For those sellers, they can expect a longer sell cycle, and a more difficult time sustaining price and terms in the agreement.

The press release from LogicaCMG makes a short value statement for each side.

First: Sarah Loveday, Director, Global Products of LogicaCMG, said, “We will develop our own variations to the core system that help us enhance our market-leading packaged solutions in response to the challenges facing our clients.”  This statement of value is indirect.  The implied value is that being responsive to clients will provide a return in market share, revenue, or customer satisfaction – something that is valuable in turn to LogicaCMG.  Valuable, but the purchase of the technology only enables the value – it does not provide the value.

Second: Martin Coen, Dovetail CEO, comments, “This validation of what we offer is the result of several years of intensive review by LogicaCMG, and confirms our belief that we have taken a significant step ahead of our competitors in delivering next generation payment systems.”  There are two values here.  (The following are not actual quotations, but things that might be said – in quotation marks for emphasis.)  One is not stated. “We got paid for this technology”.  (Although, in fact, depending on the value of the second type, even that may not be true.)  The second is a value of a different sort.  It translates to something like this, “My technology is validated by a key and credible client.  That makes my solutions more credible and attractive in the market, and raises the odds that others will also see my technology favorably.”  Which, of course leads to more chances to say, “we got paid for this technology.”

When you negotiate, as a buyer or a seller, remember this lesson.  Value drives decisions, and the value to you is not the same as the value to “them”.  You have to understand both.