Chapter 5.6.2 Closing – Negotiation – The Priciples – Part 2

Twenty percent discount may be more than your company will accept (or they may bite your hand off to get the deal) but what you are really doing by summarizing is you are using principle number two:

Limit the Scope of Negotiation as Much as Possible

It becomes more and more difficult to judge whether you are truly trading value, the more aspects of commercial terms you allow to become subject to negotiation. To return to principle one, the usual reply is “No we have other points we need to negotiate” which brings us to principle three,

Do Not Negotiate one Point Then Another; Always Get The Entire Wish List Out on the Table

This principle reinforces point 2) as you can see the full extend of their demands and you can start working out your response. Remember saying, no, this is not negotiable is a valid response. In a complex negotiation it is appropriate at this point to ask for time to consult with your management and prepare a response. Occasionally some more pompous procurement guys will start asking whether you have authority to make a deal, and whether someone else who is empowered should meet with him. Usually a polite reminder that he has had several days to prepare his list and you cannot be expected to reply immediately without time to consult will shut him up. I have often been tempted to ask them whether they are empowered to negotiate a 20% rise in the offer price without reference to his management, but on balance procurement people are difficult enough without annoying them. (Though if you are really sure about your position with the customer’s end users and the procurement guy has over-reached himself, having an argument that leads to a breakdown of negotiation is an option to be considered. I have only had the guts to take this line a couple of times and sometimes it has won, sometimes the deal was lost.)

Always Know Your Walk Away Point

While we are talking about guts, principle four is “Always Know Your Walk Away Point”. One of the ways this is sometimes expressed is “Win-Win or No Deal”. Which raises a couple of interesting points: I nearly always state in the first negotiating meeting that I am happy to work towards a “Win-Win” outcome and am not prepared to accept win-loss. Usually met with a cynical smile and taken as a challenge, it has the purpose of announcing your intend to take an ethical approach (hence the cynicism); it implies that you have a bottom line after which you will walk away (DO NOT tell him what your bottom line is if he asks, you may do better than your bottom line but ONLY if you do not disclose it); and it reinforces something that is important in all aspects of selling, but of particular importance in negotiation, say what you mean, and do what you say. I cannot over-emphasise the importance of this behaviour (in all meetings with clients and) in negotiation. Once the procurement guy catches you in a position where you are on the back foot with a previous statement or offer you cannot deliver, he will push you and push you and push you.

Your Role is to be the Broker of the Agreement

In all this it is easy to end up in an adversarial mindset with the procurement but the final principle is “Your Role is to be the Broker of the Agreement”. You have interests at stake (commission, future terms of trade) but nothing compared to your company and the customer. If you can keep this mindset and work on the issues, review the list, identify the non-negotiable issues; identify the value trades; summarise a win-win agreement and sell it to both parties. You need to sincerely believe and sell it to your company as a good deal, and you need to have the agreement of the customers negotiating team that it is acceptable.

If these are the principles of negotiation the principles of Closing are easier. It boils down to asking for the order. The only preparation I make for Closing is to prepare 4 or 5 different ways of asking the question, as often asking for the order flushes out an objection or a final negotiation point, so to avoid repeating yourself you need more than one form of words. For example the conversation may go:

“I have prepared the appropriate paperwork, can we execute it now?”

“I need to get final approval from the Steering Committee.”

“So we should meet to sign the paperwork on Wednesday afternoon after the Steering Committee”. Just use different words, to avoid exhibiting obsessional behaviour or anxiety; “execute” in sentence one, “sign” in sentence two.

If you prepare for the little things that you can prepare for you can focus on the big issues.

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About Michael

After studying Marketing at both Wollongong University and the University of Technology, Sydney, Michael Worked in B2B Marketing for the Cronulla Sharks Football Club for 3 years. Currently at CRMNow, he looks at Customer Relationship Management as a vital aspect of successful business and with a passion for Social Media and Digital Marketing he believes that all businesses have the potential to grow and remain profitable no matter the size.

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