“Pulled ashore and stunned with a stick”, or how to sign a contract on their own terms
Denis Sidenko, business consultant, trainer, talks about the art of negotiations, tactics, rules and techniques that will help the seller not to give up under the pressure of the buyer; explains what is most important in negotiations, what is their basis and how to prepare for them on a specific example from personal working practice
One day, at a negotiation training session, a woman came up to me and asked, ” We make cakes. Recently signed a contract with the network. They gave us a discount of 44 % with a minimum of 46 %. I’m thinking: did we win the negotiations or did we lose?»
This is a common question. People often believe that a deal is a victory in negotiations. In fact, winning is your deal.
There are many approaches to negotiating. But it is important to understand the principles. This gives awareness both in the preparation and in the conduct of negotiations. Otherwise, you won’t notice as you swallow the bait, you’ll get ashore, where you’re not defenseless, and then you’ll be stunned with a stick (perhaps in the form of a pen to sign the contract) and thrown in the tank for the same.
What is the most important thing in negotiations?
No. Not even preparation for negotiations. And what was before them — the primary stages of sales. Nothing spoils negotiations like a pre-reset price. It will be the target of the attack.
What can be given before negotiations?
All the USP of the company and products;
All bidding variables in a comparative summary (best quality on the market, first place in terms of delivery time, advanced quality standard);
The power prices for end consumers. It is possible according to dealers. It is possible for an annual period (indicating the seasonality and improvement of the technology);
Comparison of sales of your products with competitors ‘ products;
Passionate hints about special conditions based on the results of negotiations.
Your original sentence should be worded like an octopus where each tentacle is looking for the “point of need” of the client. And negotiations are an indicator that one of the tentacles has hit the target. Otherwise, negotiations will begin remotely. “The Manager wants to see the price first. The Manager said that it is pointless to meet at such prices.”
Basis of negotiations
If you have an appointment for negotiations and if you do not confuse them with the first meeting and presentation-they want to negotiate with you. Logical?
And how not to mix it up? After all, sometimes in negotiations, the first meeting happens at the same time — and without a presentation in any way. Very simple — goal! When setting up a meeting, you need to accurately discuss the purpose and agenda of the meeting. If both sides clearly understand that the results of the meeting will be a decision on the deal, then there will be negotiations.
And by understanding the basics, you can take the shiver out of your knees and start thinking. Yes, they want to make a deal with you. The proposal put pressure on the”need point”. And now the task of the negotiator is to find it. And neutralize!
Preparation has many stages and differs depending on the type of negotiations, the chosen strategy, positioning, the company of clients and the situation in your company and in the market.
But there are two key questions for preparation:
What do we know about the client’s company and the negotiator?
What do they know about us?
And the second question is more important. But it’s not that complicated. Knowing the answer to it, you will understand the scheme of negotiation moves and attacks of your counterparty. And in most cases, they see you as “one of them.” And they will act stereotypically. Your task is to understand the stereotype of perception of companies in your segment. Do you know your competitors? You need to understand how they behave in negotiations. You’re not sure? Suppose! Simulate the behavior of an active, but not the most prepared negotiator from competitors.
Imagine what lures and hooks it swallows and how it is “pulled ashore”.
What is the “shore” that I have repeatedly mentioned? This is a set of rules and role models that one negotiator imposes on another during negotiations. In other words — the logic of behavior that each experienced negotiator tries to “sell” to another. If he does not, he will be dragged to the “shore” himself, where there is nothing he can do.
Strategy in negotiations
Let’s simplify the situation with strategies a little. We specify the tasks.
Negotiator task # 1: Hide all your need points and find out your opponent’s need points. All techniques are aimed only at this.
An additional axiom: if you are a seller, you are initially a weak side, since your main point of need is obvious-the conclusion of a contract. That’s why your task is more difficult and interesting. The strong side is the one with the money. You need to be a strong point. And it’s possible.
Negotiator’s task # 2: Give your opponent a win! But on your terms.
Let’s go back to the case of cakes. This is a common situation in FMCG. Arm-twisting, bargaining position. I have a lot of experience working with large clients. Including networks. That’s why I often bring my own cases to visualize the principles.
The case of the author
I give a little in a simplified, structural form. In it, I will give some “top view”, explaining the essence of what is happening. Negotiations with the chief Baer of the Federal network of the first three. FMCG segment product. Perish. Positioning is initially middle + up-middle. I’m taking samples and a marketing kit at the same time. That is, there will be a first contact and a presentation before the negotiations. This is normal.
Acquainted. Chief Baer, grocery Baer (assistant), Manager. Baer has positioned himself firmly. Position. Sphere of influence. Short questions to the point: “There are many of you here.” Scolding the assistant. It is immediately clear-there will be no ceremonies. Negotiations will be tough. If I give the slightest slack, of course.
Diagnosis: the presence of the first person with the “retinue” — interest in the transaction. Distribution to assistants is a weak organization of the process of interaction with suppliers. Two points of need. But the first one is veiled. The reasons for interest may be different. The assumption is that the backlog from the plan, you need to increase sales. And what dramatically increases sales in hypermarkets? New items! (Training gives you an understanding of the values of the people you are negotiating with.)
Short presentation. The main message: “you didn’t have such a product on your shelf” — maximum distance from competitors. In negotiations, the main emphasis is on comfort in work, clarity of management, fast delivery, merchandising. (We press the second point of need.)
Go to prices. And, of course — the first blow to discounts. Opponent’s attack: you understand which company you came to. We are not interested in this price. We need the maximum discount. (Baer is already ready to hear the usual “we are only ready to make 35% for you”.)
Protection: what are the prices? This is a special price for you. We don’t have a retail price list. Final prices for such products vary significantly in different regions. If we are going to discuss discounts — we will discuss your mark-up. And who am I to dictate your margin? (An attempt to “pull the fish ashore”. If I started discussing discounts, I would be pinned to the wall by the traditions: “We do not work with contractors with a discount below 48 %” and would be dragged to my “Bank”, where I would not have a chance to play something other than “well, another 5 % and on the hands”. A competent counterattack linked the concepts of “discount” and “margin” and “failed” the attack, replacing the goal with a dummy.)
Attack: our product is newer, better, and therefore more interesting for the buyer. (“So” is a logical conjunction. Justification of the thesis.) At the same time, you can make a good margin on it with a margin for any shares. Turnover per square meter will be at least three times higher. In commodity terms. In monetary terms, it depends on the final price. You can evaluate it yourself. (Testing the need point. The weak side becomes the strong side. She offers money.)
Defending your opponent: everyone says so. They promise mountains of gold. But the buyer decides. And the buyer likes good prices.
Diagnosis: no one says that, otherwise a counter-measure would have been prepared. So far, common phrases. The fish is slowly dragged to our “shore”. And already disoriented. But I want discounts. And without them, it is not comfortable to agree. Will continue to look for our weaknesses. You need to put the decision in the hands of your opponent. So, somewhere you have to become fools.
Attack: you know, if you are sure of increasing sales when the price decreases — the price includes 10 % for write-off and refund. (Actually 30 %.) If we sign a contract without a refund, I am ready to remove this 10% from the price. How do you like this offer? (Baer understands that 10 % of returns is too small a figure, that in the best case scenario for this product group there will be at least 15-25% of returns, which will fall on our fragile shoulders. And that’s where we were stupid, and she’s on a horse.) For dojima — few guarantees low prices. After all, discounts are a way to get a guarantee of the minimum price on the market.
Attack: plus, we guarantee under the contract that no network that we are currently negotiating with will receive similar prices for the entire duration of the contract.
Baer triumphantly declares that discounts are not necessary.
The contract was signed. No discounts. On our terms.