This week’s Flip Side coverage comes from last week’s webinar on negotiation hosted by Think! Inc. The primary speaker was Brian Dietmeyer, CEO and President of Think! Inc and author of several books on negotiation including Strategic Negotiation. Although this event was predominantly geared to a sales audience, negotiation is negotiation. If you aren’t sold on the connection to procurement performance, read on to learn more about the ‘moment of truth’: when a sales person is facing their procurement counterpart across the negotiating table.
The Evolution of Sales/Selling
Sales used to be all about relationships. Because of the personal skills required to excel in this environment, the general belief was that sales people were born and not made. In the mid 1980’s, sales training became more focused on business process discipline and common language. This took a step away from the human relationships and corresponding need for interpersonal skills. Ultimately, the roles of a sales person is to make good decisions – which requires data and a decision making framework. Traditional sales training is becoming less and less effective. The focus of effective sales professional today is to assist their clients to make better value-based decisions with a compensation structure that matches appropriately. Effectively making the transition to the next stage of being a value-added seller is about having access to more data.
Patterns in Negotiation
Why Winners Win: When looking at ‘deal forensics’ or in depth win/loss reviews with customer input, there is a clear answer to why winners win. Winners win because they show how their solution meets the customer’s needs better than the alternatives with lower risk. The challenge is successfully doing this one deal at a time. The supporting conversations must be granular and consumable (or fact based) and require analytical rigor, which can only be achieved after understanding how to meet customer needs.
Buyer Tactics: The moment of truth for a sales person according to Dietmeyer comes in when they are being pounded on price and threatened with an RFP process. Research done by Think! Inc has uncovered that in 97% of moments of truth, the buyer will (a.) reference their alternatives and then (b.) ask for something from the sales person in order to move forward. The goal of effective sales people is to prevent this moment from coming to pass by not allowing the process of sales to be distinct from the process of negotiation.
Buyers Meeting Point Reaction
If sales is working with a process discipline that better integrates selling and negotiation, procurement should do the same. Most sourcing process diagrams have a major step for negotiation, but clearly this is something we should be considering and acting upon from the moment we kick off a project.
Examples of how we can carry this out include the information we ask for in an RFx and what we do with it, how we position the desired relationship with the selected supplier(s), and the criteria for participation in each round of the event. We may also better leverage access to business owners or high level decision makers during the process, particularly as related to in person supplier review meetings.
To think we can effectively flip the negotiation ‘switch’ at some arbitrary point in the process is unrealistic and sacrifices leverage and opportunities for learning more about what the other party values most. As was stated in the original event description, negotiation should be a 'predictable exchange between two or more parties rather than a series of random [and I would add reactionary] tactics and counter tactics'.