strategic consultant to:  

Here is a 4-part series of weekly posts on the Tactics of Successful Negotiation:1) Standing up for your value;2) Learning the pace of negotiation;3) Overcoming your demon voices; and4) Coming from Abundance–the real power.

“Never go to the negotiation table unless you are willing to walk away.”This was my first lesson in negotiating, when I was just starting out.

Later, when I better understood value pricing, I learned the second lesson: you will never get paid what you deserve if you don’t request it, and stand up for your value.

Both of these lessons apply to product lines, service offerings and consulting practices. For ease of language, I will use “your offering” to stand for all of these.

Many sales or gigs are unnecessarily lost in the pitching or in the back-and-forth negotiating on price and terms, because you do not stand up for the value of your offering, and because you will not walk away from a deal that destroys your margins or compromises your ability to deliver a quality result. This is especially true when there is a Big Brand on the other side of the table.

I work with my clients to consistently raise their value pricing for services, or their product pricing, in a steady way until we reach the maximum that the market and our margins will allow.Some of this is in the presentation, the offer, the bundle, the terms, and some of it is in the negotiation itself.

To stand up for your value, you must believe in your value.Sounds simple, but I watch many of my successful clients doubt themselves when the negotiation takes too long (or they think it is taking too long), and begin to talk about lowering the price of their offering, or bundling more for the same price, and otherwise cutting their power and their profit margins.

I repeatedly stop my clients from negotiating against themselves (see Part 2: Learning the pace of negotiations, next week).I make them wait for a response, for an objection, for a counter-offer.I convince them to start with a higher number that is acceptable in their market, and see what happens. This strategy is appropriate because their Big Brand customer already knows them (and their value) and has invited them back for more work, or more products.

My clients are not in an RFP (request for proposal) situation where they are bidding against unknown competitors– they are experts sought out for their services and products.It astonishes me that they doubt their value and their pricing in these circumstances.

But the “knot in the pit of my stomach” as one client put it, is very common.Very few of us have been trained to negotiate (even our Big Brand partners).Negotiation takes an inner confidence (which you can learn –see Parts 3 and 4, upcoming), careful pacing, discipline, and willingness to both maintain your value pricing and margins, as well as willingness to accommodate your client or customer with your service or product.All this can be learned over time.

More on all this again next Friday.

Let’s talk about the negotiation itself.

What I end up teaching my clients is that they must 1) stay the course, 2) watch their margins, 3) assume the true value of their offering, and 4) be prepared to walk away from a deal that doesn’t work for them.Sometimes this is about confidence, and often it is about not “negotiating against yourself” by offering compromises before those compromises need to be put on the table.

Negotiating is a back-and-forth ritual.You propose the scope of work and set a price.The Big Brand answers back with an objection, or a reduction in scope, or an increase in scope for the same price (called “scope creep” – when the scope of work is allowed to creep up without more compensation), or some vague notion of budget constraints.

Negotiation is a finely paced dance.Here’s what to do:

• Notice the level of the person doing the negotiating.If he or she is not the true decision-maker, make certain to give this person what he needs to make his case one level higher in Management, but save your significant concessions for the real decision maker or the last step.
• If you are communicating by email (not face to face), offer only one concession for each communication (if you can do this without damaging your margins).If you are negotiating face to face, but not with the ultimate decision maker, behave the same way.
• Answer only the questions that are asked, and no more.If you are asked what is involved in a certain stage of work that makes it cost so much, answer that.
• Do not offer to reduce your price, nor to add to the scope of work — it is not time yet for final concessions.
• Do not protest that this amount of work is worthy of the price you have set for it.Just answer the questions, and stand by the value of your offering and its price.Silence speaks of authority.

After the stages of management have done their work, and you are negotiating with the actual decision maker (by email or in person), be prepared to make certain concessions (at this final stage) to close the sale.

But don’t offer any concessions at first.Let the decision maker suggest what he or she needs (it’s the other side’s turn to offer). You don’t know where the pressure points lie.Instead, if the decision maker is not making a counter-offer, but just pressuring you to negotiate against yourself (a tactic to make you cave in), ask a simple but powerful question:“What is it that is holding up the close of this agreement?Perhaps I can help if I know.”

You may very well get an answer that had not occurred to you.For example, the decision maker may say, “We value your work, and need Phases 1 and 2 done during this fiscal quarter.But our budget doesn’t fill up again until next quarter.It is only an allocation problem, but we only have budget for Phase 1 now.”

In this situation, you can offer to accept a purchase order for the full amount, with payment for Phase 1 now, and a delayed payment for Phase 2 and beyond (given you trust the Big Brand’s purchase order, and given that your margins allow this delay).This pays the full amount, maintains your value pricing, establishes that value and price into the future, and only delays a partial payment.

Similarly, you may re-configure your product mix, or the territories to which you initially deliver, or create a rollout strategy, to allow the sale to close while protecting your margins.

If you don’t ask, you won’t know how to offer the solution.

This is part 2 of a 4-part series of weekly posts on the Tactics of Successful Negotiation:1) Standing up for your value;2) Learning the pace of negotiation;3) Overcoming your demon voices; and4) Coming from Abundance–the real power.

Your demons play in your head and make you a weak negotiator: they say, “You really need this account,” or “They can get anyone to do this, they don’t have to choose me for this consulting work (or product mix).” “Can I really deliver what I am promising?” And even, “Why should they listen to me?” Every new email of negotiation, every question from the client or customer can make you doubt your value, your price, and your likelihood of closing the sale.

Some of these noises in your head may be true, but you are the one doing the negotiating, so the Big Brand has already chosen you, at least initially (this is not a request for proposal competition).

The secret is to notice, repeatedly, that your demons get it wrong. They whisper in your ear that you cannot win, that the world is set against you, that anyone else can do what you can do or deliver what you are selling, and so on.

From this context, everything looks dreary, and you dread even the simplest negotiation. And you should, since this attitude is setting you up for failure in selling your product or your service.

From this perspective, every objection to your offer looks like a criticism. And it is rarely a criticism, as companies don’t actually negotiate with vendors or consultants who do not promise some value to them. So if you are in the negotiation, it is just that – a negotiation. Not a criticism of you, your offering or your product. It isn’t about you at all. It is about budgets and allocations, and internal power politics, and everything except you. So, get your ego in line, and silence those demon voices.

One company executive told my client, “I would hire you in a second for that work, if money weren’t an issue.” This relieved my client of his weeks-long dread that he had offended that executive by pitching an aggressive solution to the problem with an appropriately aggressive price tag. In their conversation, price was not mentioned at all, only the executive’s budget. In fact, the price was acknowledged as appropriate by the opening statement.

In another case, the negotiations went on through several phases, and all of the questions turned out to be about each level of management proving the worth of the product mix to the next level up. When the deal (not changed at all from the beginning proposal) reached the decision maker, there was enough material for her to sign the deal without question.

None of the back-and-forth communication ever questioned the value or the price of the proposed product, its mix, its price or its terms. My client suffered doubts, and suggested we offer concessions each time he got email on this subject, when the email was all about the buyer’s internal system for selling up the management ladder.

One of the tactics of building confidence is noticing what actually happens in the real world, separate from your dreads of what will happen. After noticing what happens, you must then remember each instance of success (or the reasons for failure) until you turn your context from your doubts and demon-voice nay-saying into a grounded assessment of what is true about your position, your service, your product, and your reputation in the real world.

If you are a glass-half-empty person, this will take some time. But persistence will help. Keep notes if that works. Have someone around to remind you.

This is part 3 of a 4-part series of weekly posts on the Tactics of Successful Negotiation: 1) Standing up for your value; 2) Learning the pace of negotiation; 3) Overcoming your demon voices; and 4) Coming from Abundance–the real power.

Context is a powerful vehicle for your success in the world.You can come from Abundance (the trust that there is enough in the world for everyone – that is, your glass is half full and more will come soon), or from Scarcity (the surety you must compete for every small gain – that is, your glass if half empty and likely poisoned).

Essentially, you must move through the world as if you had everything you need (this is called “coming from Abundance”).From this context, your proposed work that is under negotiation would be interesting to do, if the client can pay for the value you will deliver to them.  If not, not.  You don’t need it if they don’t want to pay for it.  Of course you can negotiate, or meet them halfway, or make allowances for their situation, or be generous, and come to terms on a gig.  But you must come from the Abundance of not needing any of it, because that is the position of strength.

This context of Abundance must hold in your center, even if you are “broke and alone,” as we say of the mantra of the Demon.  From a position of Abundance, the gig or sale you turn down because it doesn’t meet your criteria or your margins will open the window to the next sale, which will be better for you — more interesting, with more respect, and in which you give more value.

And this is not airy-fairy positive thinking, although the context is positive.If you accept a sale or a gig that is high-maintenance, or low-margin, or will clearly involve un-compensated scope creep, you have set yourself up to fail in several ways:you will over-work the contract; you will remove yourself from your ongoing networking and marketing activities that predict your next sales; you will add a time-burden to your day that may affect the quality of your other work; and if your margins are compromised – you won’t make any bottom line revenue for all your trouble.

Better to leave yourself open to the next opportunity, or upsell an existing client, or pursue that marketing opportunity you now have time for.The winning isn’t about the sale – the winning is to add to your profit line, which creates the next Abundance for the next opportunity.

Here is a 4-part series of weekly posts on the Tactics of Successful Negotiation:1) Standing up for your value;2) Learning the pace of negotiation;3) Overcoming your demon voices; and4) Coming from Abundance–the real power.