Negotiation Fails
Former American President John F. Kennedy left us with a great quote: “Let’s never negotiate out of fear. But let us never fear to negotiate”. Actually, we do fear to negotiate though, don’t we. We worry about asking for too much or too little. We usually imagine a “negotiator” as someone totally unlike ourselves, a tough individual with ice coursing through their veins.
Ironically, we are all negotiating everyday within our families, circle of friends and companies. Decisions have to be taken, a direction has to be chosen and we need others to agree with our idea. This often requires compromise or even giving up our idea, in preference to competing suggestions. We are not taught how to negotiate though and so we are mainly unschooled amateurs flailing around.
Somewhere along the line, we find ourselves in a sale’s role and we have to negotiate with the buyers. Procurement officers are often highly expert in negotiations or at least they are deaf to our appeals about the value we provide. In Japan however, they are rarely specialists and often take a very basic approach.
They have their matrix with your name arranged vertically along the left side of the spreadsheet, together with all your competitors. Across the top they have the products nominated. In the corresponding spreadsheet cells, they plug in the prices. Bingo, find the lowest priced cell and buy from that company. This is bad. There is no allowance for any differentiation which you may have, because they are applying a very basic code of reference here. In these cases, we need our internal champion to intervene and fight for paying more for better quality.
Let’s now look at the usual negotiation cases, where we are not dealing with procurement officers.
This “negotiation” issue is a big topic, so let’s narrow the focus to common mistakes we may be making right now, which we should eliminate forthwith.
Negotiating price before details
There are many elements usually involved in making a decision and price is just one of them. We need to garner the full spectrum of issues involved and check our assumptions about what will happen once a deal has been struck. There are variations on pricing according to volume, frequency, regularity, quality, colour, sizing, delivery options, etc. Many aspects are in play in addition to just price, although most people get fixated on that one variable and that is a mistake.
Clients are also going to be suspecting things like hidden fees, tricky terms of payment or penalties, timings. Hopefully, you don’t have any of these issues to complicate building the relationship with the buyer.
We should anticipate the client’s concerns and create our own checklist of items, before we even have any discussion with the other party. The object of the negotiation is not to outsmart the other side. It is to create a relationship, which is mutually beneficial and so tricks and clever tactics where you win and they lose is a formula for a short and limited relationship.
Failing to keep the end in mind and leaving no room for negotiation
Key details can occupy our complete attention to the detriment of what we are ultimately trying to achieve. There are micro and macro perspectives involved and we need to be able to keep reminding ourselves of the big picture, while we are mired in the mud and blood of the details.
Lack of confidence
We undermine our mental attitude to the process of negotiating by talking ourselves down. Coming across as hesitant, unsure, nervous may embolden our negotiating partner and we achieve a diminished result as a consequence.
Salespeople who have targets, quotas, bonuses or commissions riding on a deal, are very prone to cave in on price, because they are so desperate for business, any business. This weakness will come across to the buyer and the price achieved is almost guaranteed to go down as a result.
Remember, in our lives the vast majority of people we will be negotiating with will be rank amateurs, just like us, so we shouldn’t be shy about what we are doing. As a salesperson, if you believe in the goodness of what you are doing for the client, then you can be confident when negotiating.
Failing to understand the needs of the customer
Some things may not be negotiable, often for reasons which we could never even imagine. Once we understand clearly what the other side wants, we will be in a better position to find middle ground and strike a mutually satisfactory agreement. We can get captured by a single item in the negotiation and miss the many options that are also in play. Often, what we imagine to be the key for the other side, may not be their main concern. We need to find out what is their main concern and find a way of supplying it to their satisfaction.
Letting the customer dictate the process and outcomes
The buyer may feel they are the dominant side in the negotiation and may try to force us to an agreement through the brute strength of their buying power. A bad agreement is a bad agreement, so we are reasonable in asking for input into the process and for deciding to walk away from the negotiating table if we need to.
Acting desperate
We may in fact be desperate, but handing that key insight over to the negotiating partner is not necessary. We become all give and no take in the toing and froing of the negotiating process.
Using argumentative communications
Emotional control is an asset we should develop and cherish. Verbal or written outbursts may make us feel important. Usually, however, they don’t help to find an agreement. It is rarely a good idea to set fire to the emotional wick inside the other person we are negotiating with.
Failing to recognize the walk away points
We don’t have to agree if we don’t like the arrangements and we are better to flag those early, if they are deal breakers. Time is money, so let’s move on and find someone else more suitable to negotiate with. We need to have our BATNA (Best Alternative To A Negotiated Agreement) ready to go, should we need it. If the buyer is being a real pain, remember life is short, so go find a nicer buyer! We have to spend a lot of time with our clients and having a client list full of nice people who appreciate all that you do to advance their business is the better way to live.
Narrowing negotiations to one point, usually price
Price is only one element of cost – there are other levers around financing, quality, timing, volume, contract length, etc., which can come into play. There ar so many combinations which can create flexibility in the negotiation process. Always look for points of agreement where the value you can provide outweighs the cost of you product or service. When you really understand the client’s needs, proffer a very good solution, often price isn’t even raised.
Sometimes we get in our own way and make things unnecessarily hard for ourselves. If we stop making these basic negotiating mistakes we will do a lot better in getting a preferred outcome. The preferred outcome is a happy client, you are also happy and the relationship is becoming more and more solid, based on trust you are building and the partnership you are creating.
Engaged employees are self-motivated. The self-motivated are inspired. Inspired staff grow your business but are you inspiring them? We teach leaders and organisations how to inspire their people. Want to know how we do that? Contact me at greg.story@dalecarnegie.com
If you enjoy these articles, then head over to www.japan.dalecarnegie.com and check out our "Free Stuff" offerings - whitepapers, guidebooks, training videos, podcasts, blogs. Take a look at our Japanese and English seminars, workshops, course information and schedules.
About The Author
Dr. Greg Story: President, Dale Carnegie Training Japan
In the course of his career Dr. Greg Story has moved from the academic world, to consulting, investments, trade representation, international diplomacy, retail banking and people development. Growing up in Brisbane, Australia he never imagined he would have a Ph.D. in Japanese decision-making and become a 30 year veteran of Japan.
A committed lifelong learner, through his published articles in the American, British and European Chamber journals, his videos and podcasts “THE Leadership Japan Series”, THE Sales Japan Series and THE Presentations Japan Series, he is a thought leader in the four critical areas for business people: leadership, communication, sales and presentations. Dr. Story is a popular keynote speaker, executive coach and trainer.
Since 1971, he has been a disciple of traditional Shitoryu Karate and is currently a 6th Dan. Bunbu Ryodo (文武両道-both pen & sword) is his mantra and he applies martial art philosophies and strategies to business.
The Sales Success Environment
What are today’s revenue results, how much is in the pipeline, when will we get paid by the client, what is the run rate, will we meet our budget - this is the lexicon of sales. The sales results are the end product of a series of processes. There is usually ample attention placed on sales processes but sometimes we need to step back from the detail, the mechanics, the techniques and contemplate the overall environment we have created for sales to flourish.
Your Japanese sales manager yelling at the sales team and berating them for under performance is usually not very productive, because the motivation drops and a vicious downward spiral kicks in. The client’s best interests are out the window immediately and in short order, the brand “flesh wounds” start to accumulate. We need to redirect the team’s performance by moving things forward, rather than constantly combing through the bitter ashes of past defeats.
Here are five environment builders to boost the success of the sales team.
Best Our Rivals
Sales can become very internally focused. The constant review of sales numbers and focus on existing clients draws us into a web of self-absorption. Shifting the world into “us” and “them” can be great for focus and encouragement. Unfortunately, a lot of the “us” and “them” is often internally focused. This is usually centered on the failings of Marketing or IT or Production or just about anybody outside of sales who can be blamed. Better to focus this caustic energy on the competition. Intense rivalry is a motivator and beating the other sales team is a worthy goal that appeals to the competitive nature of sales people, so focus them outward.
High Income Factory
Having no limits on sales people’s earnings motivates. Pretty obvious! Sadly the ego of the President or the Sales Director can get swept up in this commission-based melee, especially when they realize that individual sales people are earning more than they are. Emasculating or ending a successful sales structure, because of ego or greed, is stupid but still happens anyway.
Rather than reducing commissions, keep the no-ceiling attraction there to drive results and it becomes a win-win for everyone. Japan rarely operates on 100% commission, so there is usually a base/commission trade off. Keeping the unlimited income prospect in everyone’s sights is good business, because the corresponding base pay rates can be kept lower. If performance takes time to produce or is not being generated, then the actual fixed costs remain low. The more sales people succeed, the more attractive you are to the quality talent you want to attract and retain.
Focus On Personal Development
The basics of sales can’t be neglected or truncated. Every high performance athlete or sports team goes back to the basics at the start of every season. Sales people are no different – back to basics on a regular basis eliminates or confines bad habits.
Your own presentation can become boring. The client usually only ever hears it once, but the sales person could be giving the same basic presentation 20-30 times a week. Short cuts emerge, best practices are trimmed, inconsistencies pop up, complacency arises when sales people, even the good ones, find themselves immersed in routine. Stimulation to vary the presentation or to inject some fresh ideas into the sales conversation is needed. Training, attending sales rallies, industry related conferences and events, support for reading and on-line courses, are all magic stimuli for sales people.
Self Directed
In the famous movie Glengarry Glen Ross, the sales “leads” are so valuable they are placed in the company safe. Ace sales guy, Ricky Roma, played by Al Pacino, is the only one who is not dependent on the company provided leads. Moral of the story - don’t let sales people become dependent on leads generated by the marketing department or from the web.
The best sale culture is one of accountability for production , independence and a will to achieve. Organised tenacity, creativity, freedom, success orientation - should be the dominant attributes. Make it clear at the hiring point that “this is how we roll here”, because sales is a brutally honest results culture.
High Praise & Recognition Culture
It may be thought that self-directed sales people don’t need praise or approbation. They want it anyway. Don’t ever underestimate the competitive nature of sales people and their appetite for having their egos stroked!
Successful sales leadership builds people and manages processes. Paying attention to the macro-environment, as well as the gritty detail, will help build a sustainable, high performance culture in your sales organisation.Is what I have outlined here doing a good job in describing your work environment? If not, take some initiative and push hard to change it to a success model, rather than let it continue as a blame model. If you can’t change it, then get out. Good salespeople are welcome everywhere and life is too short to work for idiots.
Action steps
Engaged employees are self-motivated. The self-motivated are inspired. Inspired staff grow your business but are you inspiring them? We teach leaders and organisations how to inspire their people. Want to know how we do that? Contact me at greg.story@dalecarnegie.com
If you enjoy these articles, then head over to www.japan.dalecarnegie.com and check out our "Free Stuff" offerings - whitepapers, guidebooks, training videos, podcasts, blogs. Take a look at our Japanese and English seminars, workshops, course information and schedules.
About The Author
Dr. Greg Story: President, Dale Carnegie Training Japan
In the course of his career Dr. Greg Story has moved from the academic world, to consulting, investments, trade representation, international diplomacy, retail banking and people development. Growing up in Brisbane, Australia he never imagined he would have a Ph.D. in Japanese decision-making and become a 30 year veteran of Japan.
A committed lifelong learner, through his published articles in the American, British and European Chamber journals, his videos and podcasts “THE Leadership Japan Series”, THE Sales Japan Series and THE Presentations Japan Series, he is a thought leader in the four critical areas for business people:
Pricing
Salespeople don't set the price of what they sell. This is usually an obscure outcome decided by someone else inside the machine. It might actually be an elaborate process, where multiple variables are carefully calibrated, mathematical formulae are applied and a price is arrived at. Or, it might be a slightly moist index finger boldly thrust skyward to come up with a number. The latter is often the case when arriving at pricing for services. Regardless, the salespersons task is to sell at that price. This is where we get into trouble.
Salespeople are total wimps when it comes to price. We have learnt that getting a sale is what counts and price is an obstacle in that process. If we are on a fixed salary and bonus or base salary and commission, the two usual cases in Japan, we get paid when we make a sale. Do we know the profit margin attached to each sale? Usually no and actually we don't often care either, as long as we get paid. We are just happy to (A) not get rejected by the buyer and (B) get a win, however small. Our self-esteem is totally tied up with getting sales, modest in size or otherwise.
The instinct of the salesperson then is to make the price as malleable as possible. Offering a discount seems to get the buyer in a good mood and more likely to give us a yes. This reduced price immediately impacts our commission and if we keep doing this, will also impact our bonus and job security, as we don't bring in enough revenue relative to the target.
The key problem is that the salespeople often don't believe in their own product or service. Because of this they can discount with gay abandon. This is a short-term gain for long-term pain. The ability to meet the price requirement is a critical piece of the salesperson’s skill set. Dropping the price may be easy, but we never build the skills to really succeed in this profession. It usually is a path to our removal by the sales manager, who understands we are unable to sell.
Amateur salespeople, when they don't believe in the price, start right off the bat with a discounted price. They say stupid things like, “normally the price is x but I am going to offer it to you for y”. Or, “if you buy two, I will drop the price by x”. The client hasn't even requested a discount, begun haggling, attempted to massage the ask and yet lo and behold, a miracle has just popped up without warning. This tactic may be misinterpreted by salespeople, who don’t know what they are doing, as building trust and a good relationship with the client. That is a false dawn of hope on the part of our intrepid hero or heroine.
Thanks to volunteering an unprompted price cut, the client now understands that your firm are a bunch of liars who say one thing, but do another. They also know you are a tricky bunch who are trying to snow buyers with your fiction pricing magic. They don't see the gratuitous lower price as a bargain. They see that as the starting point in a negotiation to drive the price even lower. By having a listed price and immediately offering a lesser price, the buyer feels you cannot be trusted because you cannot even defend what you say is the value of your offering.
By dropping the price so quickly, the whole question of perceived value is brought into fundamental disrepute. There is no fixed price for this sale and therefore no equivalent particular value attached to it either. We are now in the Wild West of selling, where there the only rule is the right of force and the buyer has the Gatling Gun and we have a water pistol.
The salesperson’s job is to pour on the value explanation and show why this pricing is fair and reasonable, fully justified and easily defensible. If they do need to meet the client’s restricted budget or need to allow the buyer to save face with their bosses, then any discounting should in the first instant be attached to volume purchases. If they buy more then the price can be adjusted. The amount reduced should be as smallish amount, as part of the first offer. Remember, we are now off the paved highway and are hacking our way through the dense brush of a negotiated agreement, where there are no maps, no signposts and no 5th Cavalry about to come to the rescue over the sand dunes.
If the price point is to be assaulted, then the reductions should be small and fought heroically all the way. Do not go for round number drops or large number drops, go down in dribs and drabs. The client will feel much better knowing that they got a legitimate discount against the usual price, because they extracted that right out of the salesperson’s hide, rather than the salesperson rolled over right from the get go. When that happens, they doubt everything about you and your company because your pricing seems bogus.
Never drop your price. Defend your price with value. Resist reductions all the way down and extract some form of quid pro quo against volume purchases. If you buckle, you will be destroying the brand, the brand positioning and the credibility of the firm. You may lose some sales. These are usually people who cannot afford you anyway. If you believe in the value of what you are selling don’t give in, defend, show value, fight, fight, fight.
Engaged employees are self-motivated. The self-motivated are inspired. Inspired staff grow your business but are you inspiring them? We teach leaders and organisations how to inspire their people. Want to know how we do that? Contact me at greg.story@dalecarnegie.com
If you enjoy these articles, then head over to www.japan.dalecarnegie.com and check out our "Free Stuff" offerings - whitepapers, guidebooks, training videos, podcasts, blogs. Take a look at our Japanese and English seminars, workshops, course information and schedules.
About The Author
Dr. Greg Story: President, Dale Carnegie Training Japan
In the course of his career Dr. Greg Story has moved from the academic world, to consulting, investments, trade representation, international diplomacy, retail banking and people development. Growing up in Brisbane, Australia he never imagined he would have a Ph.D. in Japanese decision-making and become a 30 year veteran of Japan.
A committed lifelong learner, through his published articles in the American, British and European Chamber journals, his videos and podcasts “THE Leadership Japan Series”, THE Sales Japan Series and THE Presentations Japan Series, he is a thought leader in the four critical areas for business people:
Why Lawyers Can’t Sell, But Need To
Lawyers have spent a lot of time studying to pass their bar exams. When they graduate, they are the white collar galley slaves, shackled to legal partner’s teams, doing the grunt work for years, until they can be allowed on deck. As they move up the ranks they begin to interact with clients. After a few more years they actually have to go out and get clients. The big dog in the law firm is the rainmaker, who brought in the clients who paid the most money for the professional services of the firm.
Lawyers are proud of their achievements, their study, their knowledge of the law, their brains. They want the clients to appreciate all of this and as a consequence, give them work. This is the “I deserve it” school of sales in the law. Knowledge is valuable. I have knowledge therefore you need me to help you sort out these various issues you are facing. I don’t have to be persuasive, charming, attractive, engaging or likeable because I have what you need.
Once upon a time that was the way of the legal profession. A bunch of lawyer nerds serving up legal rocket science to companies. Times change and now there are lots and lots of lawyers, all vying for their share of the pie. The clients have also become better educated too and are more discerning, particularly around questioning the massive bills they receive.
Faced with such a proliferation of buying choices what do clients do? They do what they do for all the other purchases they make. They apply the “Know, Like and Trust” rule. To know the legal firm, means to have a trusted confidant provide some testimonial style advice on how they performed in the past, how reliable they were and their degree of expertise in this particular area. If there is no track record which the client can judge, then this “know” process is the equivalent of the “cold call” in sales. Don’t recall there were any “cold calling” modules in the legal curriculum at university.
The “like” part is the legal equivalent of a doctor’s “bedside manner”. Doctors here in Japan haven’t quite gotten around to learning this yet, but in most advanced countries the doctor has to become skilled in handling people. To greet them properly, make them feel relaxed, assure them of the wisdom of their diagnosis and reinforce the trust the patient can place on their prognosis.
This is a great metaphor for the legal profession, because all of those same steps make for the “like” and “trust” results on the lawyer’s scorecard. The diagnosis component requires two great skills: listening and questioning. Asking well designed questions to uncover the client’s needs. This is Selling 101.
The delivery of the solution requires great skill to engage the trust of the client. The client may not be an expert on the finer points of the law on a specific issue, so the ability to explain complex things in a way the buyer can understand and relate to them is a fundamental sales skill. Technical experts, like lawyers, get excited about the details and start explaining these with great enthusiasm.
This is what we call explaining the features of the solution in the sales world. Many lawyers tend to stop there, believing their job is now done, but they are in grave error. This is the case also with unsuccessful salespeople. Instead, the features of the solution require to have the respective benefits attached to them, the application of those benefits need explaining and so does how they will impact the business. Evidence of where this has worked elsewhere needs to be marshalled to sustain the argument and then we ask for the business, using a trial close.
Was there a varsity module on “trial closes?”. No and neither was there one on handling client hesitations and objections. These are part and parcel of the sales world, yet lawyers are oblivious to what is necessary for convincing buyers to select their recommendations.
Lawyers are all in sales, they just don’t know it. They are in bad company though. They are in the same bracket as the failed salesperson. They are saying the wrong things, using the wrong approaches and remaining under skilled and under educated about dealing with buyers. These days the buyer of legal services has a surfeit of choices. They will gravitate to those they know; like and trust. Lawyers who get it, realise they need sophisticated sales training. The rest will scramble for the crumbs.
Engaged employees are self-motivated. The self-motivated are inspired. Inspired staff grow your business but are you inspiring them? We teach leaders and organisations how to inspire their people. Want to know how we do that? Contact me at greg.story@dalecarnegie.com
If you enjoy these articles, then head over to www.japan.dalecarnegie.com and check out our "Free Stuff" offerings - whitepapers, guidebooks, training videos, podcasts, blogs. Take a look at our Japanese and English seminars, workshops, course information and schedules.
About The Author
Dr. Greg Story: President, Dale Carnegie Training Japan
In the course of his career Dr. Greg Story has moved from the academic world, to consulting, investments, trade representation, international diplomacy, retail banking and people development. Growing up in Brisbane, Australia he never imagined he would have a Ph.D. in Japanese decision-making and become a 30 year veteran of Japan.
A committed lifelong learner, through his published articles in the American, British and European Chamber journals, his videos and podcasts “THE Leadership Japan Series”, THE Sales Japan Series and THE Presentations Japan Series, he is a thought leader in the four critical areas for business people: