Posts

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.

Sales Negotiation

Business Negotiation: Three Questions that Will Shorten Your Sales Cycle

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

Perhaps your strategy-level sales conversations have centered on how to shorten sales cycles. Many companies find themselves mired in protracted sales negotiations, driven in part by the expanding involvement of multiple people (and functions) in the decision process.

A recent article (The High Cost of Buying Complexity) cites CEB (now Gartner) research when saying that the customer’s own expectations of the buying process are exceeded by 97%, i.e., taking 97% longer than expected by those requiring the sought goods or services. This seems true whether the ultimate purchase decision is made or if the process results in no decision. In our experience, this is a result of changing priorities or organizations due to passage of time.

Decision to Purchase vs. Decision to Wait

Sellers and sales organizations are often their own worst enemy in this process.

 

Factor in the Decision Process – Make It Easier for Your Customer to buy

One of the most obvious errors we see is the lack of knowledge of the customer’s decision process. This falls on the seller; however, just as often, we see that buying organizations that need the goods or services don’t have a firm grasp on how to navigate their own processes. This is where a knowledgeable seller can help. They need to ask their counterpart at least three questions in the interest of realistic expectations.

 Three Questions Sellers Should Ask Buyers

“WProcess Iconhat is the process you will need to go through to get a decision?”

 

Length of Process“How long does it normally take?”

 

Decision criteria

“What criteria will be used to make the decision?”

 

We recently advised a client that projected a major deal to close in 90 days. The value proposition was compelling – the buyer would save millions of dollars per year in running their core banking system. When we asked about the process, this was the conversation:

Them: “The CIO will need to go to the board to get approval, but that is just a formality.”

Us: “How will the CIO decide whether or not to go to the Board?”

Them: “If we demonstrate we can actually do this and the savings are compelling. The business case on savings has already been discussed and we have a proof of concept running.”

Us: “Good! When is the PoC supposed to be completed?”

Them: “In one week.”

Us: “When is the meeting with the CIO to discuss the outcome of the PoC scheduled?”

Them: “The week after that.”

Us: “How often does the Board meet? When is the next meeting?”

Them: “Once monthly, however, due to a national holiday, the next monthly meeting will not take place. So, in about 6 weeks.”

Us: “And once the Board approves, will procurement issue a PO?”

Them: “No, they will issue an RFP.”

Us: “And how long will that process take?”

Them: “It has never taken more than 2 months from the RFP request.”

This team was taking an incredible risk and would likely be frustrated, along with the CIO. So, we discussed what could be done to compress this process in a collaborative way with the CIO’s organization. These included steps like:

Collaborating with the CIO’s Organization

CIO Collaboration Steps

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.

The thought process for you as a negotiator is similar to that for your internal negotiations: Identify goals by individual, using their measurement systems as appropriate. Remember that the higher you go in a customer organization, the greater the span of control. As a result, getting sponsors at those levels gives you greater leverage in closing agreements. Research shows that senior executives get very involved in the decision process for major purchases. But that involvement is typically early and late in the cycle.

Asking the right questions and managing the negotiation process with key roles in mind will lessen the likelihood that your deal languishes on the buyer’s side of the table.

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