Unbound Growth Blog

How to Make Negotiations Less Painful

Posted by Carole Mahoney

 6/14/18 7:30 AM

How to Make Negotiations Less Painful

In a recent #livesaleslab, we were joined by guest coach, Jane Gentry of Jane Gentry & Company where we talked about some mindset shifts and tips to help with your next negotiation. 

 
 
 
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Carole Mahoney: I'm so glad you joined us today to talk about how to make negotiations less painful. There's not very many salespeople or companies who will take the stand that the price is the price. Especially for smaller companies that aren't VC-backed and cash is king.

What are you seeing that are other common things that people are negotiating around? Because we talk a lot about discounting, and we'll talk about that a little more, but what are some of the other things that you're seeing?

Jane Gentry: I spoke with a company recently that's a SaaS company, and actually was working with their CSMs who negotiate their renewals. A couple of things came up in that engagement that were interesting.

One is something that I see very, very often, and that is that we don't realize that every conversation that we have with a customer is either a negotiation or it is the prelude to a negotiation, right?

For example, these CSMs negotiating renewals. Every conversation they have with their client all year was setting them up for the conversation where we talk about renewals. That was the first thing.

The second thing was this idea of BATNA, which I said to you is part of the Harvard Project with Fisher and Uri, right? Your BATNA is your best alternative to negotiate an agreement. When you understand what your alternative is to not negotiating, or not reaching a deal, or what your customer's best alternative is to not negotiating and agreeing with you, then you understand really where the leverage and the power in that engagement really lives.

Let me give you an example.

These CSMs are working to move their clients to a new pricing model. They were taking the stance that we need to get the permission from the client. We're working really hard to convince them. We can't really convince them of the value chain because we're not adding anything. We're really just changing the price. The industry has changed and this is the way the new pricing model is. 

They're going in like with their hands out begging the customer, "Hey, well, can you do this? Will you do this?" They're kind of pussyfooting around the whole conversation and I said, "What is the alternative for the customer to paying you the new way?" And they said, "What do you mean?" And I said, "First of all, what does it cost them in terms of time and energy to leave your company and go to a competitor?" And they said, "Well, that's a pretty painful process." I said, "Okay. Then when they get to the competitor, what ... how will they be charged at the competitor?" And they said, "Exactly the same way that we are wanting to move them toward." And I said, "So to leave your company is really painful, and they're going to pay the exact same thing at a competitor, and have to restart the whole relationship with a new company?" And they said yes.

I said, "You're having the wrong conversation." You shouldn't be having a conversation about can we move you. You should be having a conversation about how are we going to move you.

Carole Mahoney: Negotiate the how, not the if you should, and realizing that negotiation is not so much of an event as it is a process. But what about negotiating terms in a contract with large companies?

Jane Gentry: A couple things. One is you need to know the beast you're dealing with. In some of these enormous companies where they have the leverage, it's going to be really hard to negotiate a discount.

The best thing that you can do in a scenario like that ... and you should be doing this in all negotiating scenarios, but with big companies, it's even more important. Negotiating starts at the very first discovery conversation. If you're not asking if questions, if you're not asking hard questions, if you're not really understanding the business case, the value that you bring to a client, why it benefits them financially or in some other way of working with you, then you have no opportunity to even have a conversation to get you out of discounting, right?

All of that preparation has to happen. And with a big company, I think you should assume from day one that they're going to want to try to get you to come down off of the price. So part of your preparedness also needs to be, "What's our plan B? What's our plan C? What's our plan D? What are the things that we can move big on? What are the things that we can't move a lot on? What are the things that the customer could do as part of the engagement that we could save them money if they did it instead of us?" 

That was the example that I gave you about a big company here in Atlanta. All of that preparation is what sets us up to not have to discount.

Carole Mahoney: Right. And as well as one of the last things that I think that was an important takeaway from the Sales Lab that you shared was when we started talking about those cultures where if you're not negotiating either in price, or in terms, or scope or something along those lines, then you're actually kind of seen as a fool for not doing so...

Jane Gentry: Yeah. That makes a big difference, right? Americans come into negotiating with a lot of fear and anxiety. There's some kind of weird emotion around money and the money conversation. I treat the money conversation like any other objective that my client has to meet, because money is always a part of what they have to deal with. They have to meet a certain budget. They have to show a certain amount of savings. Whatever it is, there is always an objective that they have around money. So I hit it up front with no emotion in the very first discovery conversation.

In those other cultures, yeah, they just ... they're very pragmatic about the fact that negotiating is part of the sales process. So they don't come at it with all of this squirreliness and emotion attached to the conversation about money. So they're probably very prepared for that conversation. I think we're foolish to not be prepared for it in every scenario, in other cultures and in our own.

Carole Mahoney: It's a totally different mindset. Like you said, for them, it's very pragmatic, whereas for Americans, we tend to have fear and anxiety around it. I shared in the Lab a study that was done that showed 44% of Americans would rather talk about sex, religion and politics, over money, and that's the number one cause of divorce. So clearly, as Americans, it's in our culture to have issues with that.

Jane Gentry: Well, and add a seller who's not meeting quota, add that kind of a anxiety to it, and you just have a big disaster. We're giving away stuff we shouldn't be giving away.

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