There are libraries full of books on negotiation and closing techniques but the truth is that there is a direct correlation between the quality of the work you do in Selling the Opportunity and the ease of closing the deal. In simple terms if you have won the evaluation and the customer wants to do business with you, they will not allow the Procurement Manager to drive you away with outrageous demands.
While we are discussing Closing and Negotiations together they are very different and often mutually exclusive. What I mean by closing is “asking for the order” so almost by definition it does not happen in a formal negotiation. If you are in final presentation meeting you should always “ask for the order”. If you have done a good job in the business development and opportunity management phases you have earned the right to ask and asking always makes the status and next steps of the process clearer as the answer is always “Yes”, “No”, or “we need to do/clarify/meet with ….”. In a formal negotiation process usually the closing question is almost always some form of “So have we reached agreement?”
Only if you define Closing as every event between being “selected” by the customer and receiving the signed contracts are the two skills related as you will use both techniques in this period.
Let’s talk about Negotiation first. The strongest position in a negotiation is the position that nothing is negotiable. The overwhelming majority of consumer transactions are non-negotiable. You do not get the chance to stop at the check out of your supermarket and discuss price or legal terms and condition. More than a polite enquiry on the Returns Policy is clearly not tolerated in these transactions.
Some suppliers in the commercial world have had some success in holding to standard offerings, Microsoft is a good example, but with most corporate transactions (with Government deals being an excellent example) the negotiation phase can be as long as the evaluation phase. Once you are into negotiation one of your guiding principles is to limit the areas that you will negotiate about. Some basic ground rules will make this a little clearer.
First guideline – do not negotiate legal terms and conditions without professional help. Do you understand the difference between “best endeavours” and “commercial best endeavours”, no, the difference can be your company staying in business or going bankrupt. Try to tell the customer that legal terms and conditions are not negotiable. If they make it clear that this is a deal breaker, and only if it is a deal breaker, ask the customer to give you a “specific statement” (do not encourage them by calling it a “list” call it a “statement”) on the legal terms that they object to. You can judge how much trouble you are in by the nature of the reply. In order of magnitude of the trouble you are in, the responses could be:-
- We only do business on our standard procurement contract.
- A long List of clearly legal issues
- A (shorter?) list where there are some legal issues, and some issues that are really opportunities for clarification or explanation
Briefly, the appropriate response to 1) and 2) is to flag the situation up to Management and request legal support. The appropriate response to 3) is to clear up the opportunities for clarification and ask if the remaining issues (legal) are really something that they need to pursue.
The salesperson’s role in legal negotiations is to sell the terms and conditions earlier in the process, to reduce the time required to reach final agreement. Enclose copies of your standard terms and conditions with any proposal, so that the customer can pass them through for legal review. Reserve the time of the company advocate and attend the meetings or conference calls. Your only stake in the outcome is that if it is a major account the terms and conditions agreed should be acceptable for your company for the transaction being negotiated and all future transactions, as you will surely not be able to improve on them later.
The salesman has a much more important role in commercial terms negotiations. Usually the salesman is expected to be the chief negotiator, and I for one always wanted that role. You may be able to delegate this role upwards as again, as with legal terms, it will be the company’s decision whether to accept the negotiated terms or walk away, but I have always felt a sense of ownership in my deals. The salesperson also brings important resources to the negotiating table. The procurement manager may have more experience in the process of asking for discounts, but the salesperson has attended every meeting during the business development phase and knows why the customer needs the solution, what the value of the solution is, and why his solution was selected. I have often talked about these issues in negotiations, they are important ways of making the procurement guy understand that you understand the value of your negotiating position and will not be pushed further than a certain point.
In my view there is a lifetime of learning in negotiation but if you keep five principles in mind while you gain experience you won’t make too many mistakes.