Because of the complexity of the negotiation itself and the significance of getting it right, the actual plan for a major account negotiation must be developed with care. In any major account, if the sales team does not develop a well-conceived and coordinated negotiation plan, they are playing Russian roulette with the long-term relationship with the customer and with the profitability of the sales opportunity.
In major accounts, the negotiation process is complex with many false starts, barriers along the way, and from time to time unanticipated good fortunes. Very few, even the most talented, can navigate the journey without a well-developed road map.
Let’s review one four-part framework that can provide guidance for developing that road map:
1. Delineate the major issues.
In major accounts there is not just one issue that requires negotiation. So, the first step in designing the negotiation plan is to delineate and verify that all the issues are on the table. Sometimes the customer will explicitly spell out the issues in a formal “letter of response” to a proposal or presentation. Other times the clarification of the real issues requires a series of interactions with the customer over an extended period of time.
2. Understand the customer’s position.
Once the major issues have been identified, the next step is to be clear about where the customer is coming from on each of the issues. It is critical to have a “best approximation” answer to three fundamental positioning considerations:
- Priority. What is the priority of the various issues and what is the rationale driving that priority?
- Consensus. What is the customer’s position on each of the issues and what is the degree of consensus among the key players on that position?
- Flexibility. How wide or narrow is the “Zone of Flexibility” for the position on each issue and are there any issues where there is no room for negotiation – a/k/a “Showstoppers”?
The answers to these questions must be analyzed within the context of the overall business strategy of the customer. This perspective provides the insight into “why” the customer is taking the positions they are taking. Without the “whys” the subsequent concession discussions will likely turn into nothing more than a back and forth bargaining hassle rather than a creative problem solving negotiation.
3. Establish your position on each issue.
Your sales team must address the three fundamental positioning considerations – priority, consensus, and flexibility. When creating your position there are, however, two additional considerations the sales team should address.
Creating creative alternatives. All the issues being negotiated are not equally important. Ultimate success will be determined by how two or three issues are handled. Success on these issues will be driven by your ability to develop creative alternatives that are viewed as a win for both parties. In a complex negotiation, there is no substitute for creative problem solving. And, the good news is generating creative solutions is not the gift of the few – it is usually the hard work of the many.
Anchoring your message. The importance of anchoring your position is a notion that is consistently underscored in the negotiation literature – and rightly so. It simply recognizes the old adage about “how you say it is as important as what you say.” Whether a glass is perceived as “half full or half empty” all depends on how one frames talking about the glass.
In a sales negotiation anchoring is about determining how your concessions on a given issue are presented in a way that justifiably emphasizes the value of those concessions. The key is avoiding the trap of making anchoring some mystical art.
Perhaps the most practical and, coincidentally one of the best-supported, phenomenon in anchoring relates to the idea that individuals generally do not evaluate concessions in an absolute sense, but rather as changes with respect to some reference point.
So the anchoring challenge boils down to selecting the most effective reference point. Is it: the status quo, a prior contract, a deal reached by a competitor, or some industry standard? But in the end, anchoring is simply about how you help your customer understand the value of your concessions. And, remember that anchoring will always occur, so if you don’t do it; the customer will.
4. Develop a strategy for building the value of your concessions.
It is difficult to overemphasize the importance of this best practice. No concession – whether it is on price, technical support or any other issue – has a fixed inherent value. Top negotiators build and verify the value of a concession before they offer it. This notion is particularly important in major accounts.
Different people in a major account may have differing views about the value of a concession. Also additional value may be derived from a ripple effect in a different division or in the future rather than present timeframe. So, one piece of your concession strategy must be a plan of action for getting the right message, to the right people, at the right time so that the value of your concessions will be optimized.
The least desirable outcome is offering in good faith a significant concession, only to find out, after the fact, that it had very little value to the customer – hence, the deal was lost. The best situation is to provide a concession of significant value to the customer that “costs” you very little. The moral of the story: being smart about customer value is just as important in a negotiation as it is in any other aspect of selling.