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The Art of Negotiation
- 1. Negotiation Workshop Negotiation Workshop Alan Rassaby Former SVP and General Counsel RightNow Technologies, Inc. August 2012 Copyright Alan Rassaby 2012
- 2. The Customer • The customer is a multi-headed beast • Who is the decision maker in the negotiation phase – Procurement? – The Business? – Legal? • What are their hot buttons? Scars? Copyright Alan Rassaby 2012
- 3. The Account Executive • Some characteristics of a good Account Executive (AE): – Can argue persuasively for the use of our paper over customer paper – Understands who makes the decisions during negotiation phase – Has identified the customer’s hot buttons – Hands off to Contracts Department at the righ t time – Continues to constructively contribute to the discussions after handoff to Contracts Copyright Alan Rassaby 2012
- 4. The Arguments: 4 categories 1. Threshold – Their paper or ours? 1. Technical – How often do we back up data? – Are we ISO, SAS 70, PCI compliant etc? – What are our service standards for application/hosting performance? Technical support resolution? 1. Commercial – Price, price lock in, renewal price lock in, payment terms – Termination for convenience – Acceptance testing 1. Legal – Remedies, caps on liability, indemnities; IP ownership, assignment etc. Copyright Alan Rassaby 2012
- 5. Threshold Issue: Whose paper? Pro their paper: Contra their paper: • May open the faucet • Takes more of our Legal • We may have no choice – time may be the only way to • Opens up too many issues sell above the radar screen • Shifts the focus too far off centre – Too generic – Too one-sided • Hard to administer • Makes us look uncompromising Copyright Alan Rassaby 2012
- 6. Golden Rule #1 Listen to the Customer. People who talk a lot give away secrets. Copyright Alan Rassaby 2012
- 7. Golden Rule #2 Analyze things from the Customer’s perspective. Copyright Alan Rassaby 2012
- 8. Golden Rule #3 Be credible. Copyright Alan Rassaby 2012
- 9. Golden Rule #4 Be prepared to walk away and fight another day. Copyright Alan Rassaby 2012
- 10. Golden Rule #5 Do not negotiate until all the issues are on the table. Copyright Alan Rassaby 2012
- 11. Golden Rule #6 Wherever possible, favor a reasonable approach over hard line approach. Copyright Alan Rassaby 2012
- 12. Golden Rule #7 Faced with an impasse, be the first to give. Copyright Alan Rassaby 2012
- 13. Golden Rule #8 Assume that unreasonable behavior is a negotiating tactic. Copyright Alan Rassaby 2012
- 14. Golden Rule #9 Do not treat the negotiation as a solo activity – use your colleagues to help de-brief and recognize when it is time to let someone else take over. Copyright Alan Rassaby 2012
- 15. Golden Rule #10 Do not be the first to blink. Copyright Alan Rassaby 2012
- 16. Golden Rules 1. Listen to the Customer. 7. Faced with an impasse, be People who talk a lot give the first to give. away secrets. 9 Assume that 2. Analyze things from the unreasonable behavior is Customer’s perspective. a negotiating tactic. 3. Be credible. 8 Do not treat the 4. Be prepared to walk away negotiation as a solo and fight another day. activity – use your 5. Do not negotiate until all colleagues to help de-brief the issues are on the and recognize when it is table. time to let someone else take over. 6. Wherever possible, favor 9 Do not be the first to a reasonable approach blink. over hard line approach. Copyright Alan Rassaby 2012
Editor's Notes
- No surprise that it is often difficult to understand what the customer wants – they frequently have had insufficient time to develop, or are not committed to a common approach to reflect the interests of each. In small organizations, Procurement almost always defers to (and may report to) Legal. Business may be subordinate or peer to Legal. In large organizations, Procurement often predominates.
- 1. Role play. I tell them why it needs to be on our paper. We have over 10,000 vendors. They all do deals on our paper – no exceptions. We developed standard form agreement for services that we use for software services and for other services – like photocopier purchases. This makes it easier to administer. I know that you ahev used your standard agreement in the past but that it before you flew above our radar screen. DELAY> If you want this deal done quickly, it is the only way that we will be able to get anyone from Legal to work on it.
- In his book, How to Argue and Win every time, trial lawyer Gerry Spence says “If I were required to choose the single essential skill from the many that make up the art of argument, it would be the ability to listen”. Note – Karen Silkwood lawyer – never lost a criminal case in 25 years.
- It is very disarming to be seen to recognize the customer’s perspective. Yes – I see the dilemma. Let me tell you the problem that it presents for us.
- The customer needs to believe in you – not think of you as a used car salesman. Again, Gerry Spence – “To win, we must be believed. In a world where people lie all the time, credibility counts for a huge amount.’ He goes on to describe a trial lawyers who complained that he used to win all the time before he he became a skilled cross examiner. When he was a bumbler, he had credibility. As a slick attorney, no one believed him.
- You - There is a lot of power in saying no. The clincher was the e mail that said “Sorry, we cannot work with you” Jayson, Thank you for your comments. I have appreciated your frank analysis of the benefits of working with Nine West. Unfortunately, we cannot proceed with the sale. I am sorry that we have been unable to reach agreement. If you think that there would be any point in talking further, I would be happy to discuss. However, I will assume in the circumstances that you have decided not to proceed with the purchase. .
- 1. There is nothing worse than thinking that all issues are resolved and then finding that there are a bunch more from new players. .
- 1. This is not universally true. Sometimes a hard line approach will set the right tone with an aggressive customer or will shore up the approach of someone else that has been making no headway and now seems very reasonable to the customer.
- 1. This is the Sadat approach – he gained enormous respect with his steadfast enemy and broke an impasse in the Middle East by taking an unconditional first step toward peace. Hopefully, find something that is more meaningful to the customer to receive than for you to give away. That is another reason not to give anything until all the issues are on the table. It is easy to give away something that you do not regard as of value and receive nothing back.
- 1. Look out for positions that do not seem fair or logical – this is usually a negotiating position i.e. a bluff. Terms like – “deal breaker” frequently used are a “tell”
- 1. Do not let your ego get in the way
- 1. Remember that by the time a matter gets to legal discussion, the customer is usually emotionally committed. The reason that we lose so few deals once they enter legal discussions is that we are going through a ritual – the ritual is important. However, it is hard to directly lose the deal at this stage. The danger is that you lose momentum
- 1. Remember that by the time a matter gets to legal discussion, the customer is usually emotionally committed. The reason that we lose so few deals once they enter legal discussions is that we are going through a ritual – the ritual is important. However, it is hard to directly lose the deal at this stage. The danger is that you lose momentum