Musical chairs in negotiation.

Why “Musical Chairs” in Your Sales Organization May Be Eroding Your Negotiation Capital

(This post is adapted from K&R Negotiations’ Six Ways to Shorten the Sales Cycle, a complimentary executive brief.)

Sales organizations often reorganize customer or territory responsibilities at the beginning of a fiscal year.

If your product and sales process is so simple that salespeople (and customer relationships) are as interchangeable as Lego blocks, then frequent reorganizations are unlikely to hamper you. But if you are trying to sell value in complex landscapes to companies with unique business problems, the reshuffling can be terribly disruptive.

In our previous post, we highlighted the fact that sales (buy) cycles are getting longer as customer’s buying habits change.  We also discussed one of the ways companies can shorten those sales cycles by factoring in the customer’s approval process. Unfortunately, with most reshuffles, you unilaterally extend the sales cycle. If you are in a “high value” industry, this could be an unforced error.

You’ll have to wait as the new account owners pick through their predecessor’s notes on your CRM platform, introduce themselves to key accounts, get familiar with the customer’s business — all of which is deadly in an era where the most successful salespeople are de facto consultants who are deeply immersed in and highly valued by their clients’ businesses.

It’s a Matter of Principle: Negotiations Are Continuous

In the most lucrative partnerships or buyer-seller relationships, a deal is not a discrete process. It’s part of a tapestry of interactions, which is why one of our Six Principles™ is “Negotiation is a Continuous Process.”

In other words, if you are skillful in building a good negotiation process, negotiations with your client should never end because you’ll be doing repeat business.

If negotiations are a building block for successful relationships, then they must be seen as a form of interval training, not a single sprint. Since negotiation work can result in a long-term future (or no future), success in that work will create business relationships that make doing business easier and more rewarding for all parties.

Negotiations do not end with the contract signing. In fact, some of the most difficult negotiations may begin after the initial contract is signed. This is particularly true in the technology industry, where many contracts are drawn up before implementation takes place, before any service has been performed, and even before all requirements are known.

These types of contracts guarantee that there will be yet more negotiation.

Some of the most difficult negotiations occur in this execution and revision period. Most contracts have an amendment process, evolving statements of work, change control procedures, engineering change mechanisms, or provisions for out-of-scope requests.

Another key point: The continuous nature of negotiations is that in each negotiation cycle, the parties will call upon what happened before as a model – sometimes of what they want, and sometimes of what they don’t want. But memory and impressions from earlier concluded negotiations will always be factors in the next round. Of course, if any sequence of negotiation is a complete failure, there may not be a next round. We often hear, in sessions around the world, a vendor say, “I’m in the penalty box with my client.” What they really mean is that because of a delivery problem, or a bad negotiation, they are paying the price in their current negotiations. It’s continuous.

We also speak and teach about “negotiation” capital: a “bank” of credibility earned by demonstrating value and managing the negotiation process wisely. This credibility is the foundation of your leverage with the client. Your “fresh new face” means that hard-won capital can reset to zero.

Discussions between customers and suppliers should never end, especially if the relationship is good. An end usually means the relationship is over and only the “survival” terms of the agreement are being implemented.

 While there is a value to reorganizing in order to gain fresh thinking and enthusiasm, we encourage our clients to approach reorganizations with circumspection. In the event that a reshuffling of chairs is critical, the company should encourage and compensate current sellers working on major deals to continue with those deals until an orderly handover is possible or until the deals are closed.

Download your free copy of Six Ways to Shorten the Sales Cycle.