Everyone believes in the merits of the Win-Win negotiation strategy, right? That's the politically correct position to take. Who would outwardly argue against that. OK ... reality check. When was the last time a Buyer asked you to raise your price so you could walk away with a bigger piece of the pie?
The reality is that Buyers will always try to get as much as they can for their money AND you can't continue to deliver quality products and services if you give up too many yards in the negotiating game. It's in both your best interest and your customer's that you MASTER the art of negotiation.
Negotiation is a game of emotion and leverage. The party that is the most emotionally committed to the deal, in terms of needing and wanting it to happen, has the least leverage. Let me rephrase that. The party who signals the most "neediness" has placed themselves in the most "disadvantaged" position.
Savvy buyer tactics as well as those instinctively applied by the average buyer, in order to be effective, are predicated on the "neediness" of vendors and the pressure on sales people to bring in the business.
The savvy, sales driven organization (while of course believing in the virtues of win-win negotiation) sees the negotiation moves of buyers for what they are and have developed the counter-measures to disarm the buyer up front, in advance of the negotiation.
Negotiation Moves of the Average Buyer
- Has at least three bidders. The buyer thinks that competition is good and that if he negotiates everything first he can select the vendor, keeping the leverage on his side. His objective is to create a buyer's market by having multiple bidders. Remember those older mortgage commercials on TV ..... 20 bankers in your living room bidding against each other. As buyers we like the idea. Some sellers have recently been drawn into on-line reverse auctions ... lowest bid wins!
- Never lets you know where you stand. Buyers want to keep you nervous, on your toes, pencil sharp. They understand that once the vendor selection is known, they've lost their buyer leverage. Often, close to the end, the leading bidder gets the cold shoulder (keep them on their toes - more concessions) while the followers getting the better treatment are lulled into thinking the deal is close at hand, just a concession or two and it's theirs.
- Takes the deal away at least once. The buyer keeps you (the leader) "honest by being "dishonest." The buyer wants you to feel as if you have a chance of losing. He knows if you get nervous, you discount.
- Is looking for free consulting. On the way to choosing a vendor, buyers get as much free work from you as possible.
- Issues a Request for Proposal. The buyer uses the "RFP" to level the playing field and neutralize any sales or relationship advantage afforded the preferred vendor.
- Time purchase decisions for the end of quarter. Buyers know desperate people do desperate things. It is common knowledge that sellers have pressure to hit goals and are judged by the calendar.
Let's look at the "Chainsaw" tactics and moves of the truly savvy buyer.
The savvy buyer, the professional buyer, will do all the same things as the average buyer but will ratchet it up several notches. The professional buyer is often compensated on percent of list price, so their income is tied to the outcome of what they can negotiate.
The most sophisticated of the group have actually been to negotiating school and have a playbook ..... pre-planned gambits they use to put themselves in the position of advantage over salespeople. Like that old in-flight magazine ad, "In life you don't get what you deserve, you get what you negotiate." In programs like these they're taught "The Flinch" and how to inflict it on salespeople in a mild, medium or hot version like the sauces at your favorite Tai restaurant.
Negotiation Moves of the Savvy Buyer
- Their "A" vendor negotiates last. In these bake-offs or beauty contests, I'm suggesting that the winner is often known in advance. The pre-designated winner is the "A" vendor. Why would they have a beauty contest if they already know who they're going to pick? They use the beauty contest or bake-off to drive a better deal from the "A" vendor.
- They may assign a "coach" to each vendor. This advice is often given to buyers in negotiation training as a way to "work" one vendor against the other. In typical sales training, the advice and practice of finding an internal coach plays directly into the hands of that savvy negotiator. Find your inside "coach." The reality in a more competitive, high stakes deal is that the inside coaches work for the company. Their mission is to work one vendor against the other and they facilitate that through the assigned coaches who "befriend' the designated vendor and then compare and strategize internally.
- Pre-negotiates and renegotiates. This means the buyer may not request everything from you in the first session. He may have more than one person negotiating with you, over time. He consistently adds new "wants" during the negotiation and chips away at your proposal. So you pre-negotiate with the end-user, then the buyer asks for your best and final offer, or BAFO. You think you're there. If he plays it to the hilt, he'll come back again and ask for your best and REALLY final offer, or BARFO!
- Leads with Lawyers. They assume lawyers are intimidating to most salespeople. The lawyers present no vested interest in the product or service and are in the role of unemotional, detached negotiators of the terms and conditions of the deal. Some will attempt to write the deal on their paper rather adhering to standardized terms that they perceive to be biased towards the interests of the seller.
- Separate sellers from users. They use the lawyers and purchasing pros to separate sellers from end-user allies thereby neutralizing any relationship leverage. We work with end-users for weeks and months. We co-develop a solution and invest in the relationship, then we have to deal with the chainsaw negotiator at the end of the sales cycle.
So, yes win-win negotiation is a noble philosophy. But when it comes down to slicing up the pie .... the side with the biggest chain saw wins.
Terry Ledden is 25+ year sales performance consultant, trainer and coach and award winning member of the world wide Sandler Training network. If you would like to know more about his training, "Negotiating with the Savvy Buyer," he can be reached at email@example.com