The Audible-Ready Sales Podcast
The Audible-Ready Sales Podcast

Episode · 2 years ago

20. Negotiation FAQs & Best Practices w/ Tim Caito

ABOUT THIS EPISODE

We’re using this episode to run through the most frequently asked questions we hear about sales negotiation. 

Listen as Tim Caito discusses best practices managers and sales reps can instill into their negotiation process to ensure their business and procurement buyers view their solutions as valuable. 

He’ll cover:

  • How to navigate relationships with both buyer contacts and procurement professionals to improve the buying process and provide value for all stakeholders, including yourself.
  • How sales reps can influence required capabilities early on, to show their solutions are the best fit for the buyer’s requirements, while minimizing discounts.
  • Three things managers can do to continually coach on rep negotiation skills and drive seller behavior away from discounting.

 

Check out this and other episodes of The Audible-Ready Podcast at Apple Podcasts, Spotify, or our website.

Here are some additional resources on the negotiation and procurement : 

Sales Procurement On-demand Webinar with Tim Caito

Tools & Resources for Building an Elite Sales Negotiation Process

On-demand Webinar | Selling and Negotiating on Value

The best way to deal with request for discounts in the moment is to start that conversation way before so that by the time you get to that moment, you're in the best position possible to defend your value and justify your price point. You're listening to the audible ready podcast, the show that helps you and your team's sell more faster. Will feat your sales leader sharing their best insights on how to create a sales engine that helps you fuel repeatable revenue growth, presented by the team at force management, a leader in BTB sales effectiveness. Let's get started. Welcome to the audible ready podcast. I'm Rachel Clip Miller with force management, and I'm going today by Tim Kato. Tim, welcome, Hey, Rachel, are you good? Good? Many of you listening note him from his work with your own companies, and a lot of that work really runs the gamut of sales effectiveness. But Tim, I know one of the areas that you love talking about the most is sales negotiation. That's right, and you've worked on both the buy iron seller side, so I know that that dual lens makes you a great person to give some tips on sales negotiation and some of the things that those of you listening are dealing with on a day to day basis. Tim and I just did a Webinar on the internal process and your companies that support sales negotiation and, as with any of our negotiation webinars, we get a lot of questions. So today what I wanted to do is take some time and run through some of those most frequently asked questions about sales negotiation and, not surprising, a lot of the questions that we get often have to do with procurement, so to let's start there. If what do I do if I've got my business user and that business user definitely see the value of my solution, how do I keep procurement focused on value and not on price? Yeah, really good question, Rachel. So to answer that, she got to keep a couple things in mind, and we have covered this on some other other podcast but I don't want to make sure I talked about specifically. First thing we need to keep in mind is procurement professionals have internal customers, that business stakeholder. That the the question was focused on. That procurements internal customer. Right. No procurement person wakes up in the morning and says I think I want to buy something. They're always buying on behalf of somebody else. Now the thing we need to keep in mind is our business stakeholder might be one of several people, internal customers, the procurement professionals paying attention to the business user might be the ones that are using our products or services, but there might be someone in the technical community that has a perspective as well that might run contrary to what business user, business user once the latest greatest stuff by tea person says. I...

...would just assume we use what we currently have. Is expect as opposed to expanding our technical stack. Now, if we only have our business users interests in mind, we think the procurement person is just not paying attention to what they want. But put yourself in that precurement for you know professional buyers mode for a minute. They're trying to balance a ton of interest across their organization, some of which are in conflict. So, rather than just assume the professional buyers being difficult or not acknowledging the needs of the business user, I think we need to move upstream and, for our purposes, expand our view of who could be giving that procurement professional input. Now the best way to do that is early, early on, before we get to the ladder stage, is actually reach out to the procurement professional and ask them about the decision process they're going to be managing. Now it's an interesting thing. I'm not there to position my products, I'm not there to, you know, do all kinds of prepositioning. What I'm actually trying to do is get guidance from them on what is the decision process they're managing, because if you think about a Rachel, they're the only ones on their r side who are responsible for actually managing that whole process, and it's in that we can ask follow questions. Wow, where do you get all the inputs that help you determine the decision criteria in that process? When do they come into play? So that that's the procurement professional side of this. The second side of it are the things that we as sellers do with those business contacts that we have, the ones that have those interests that we think procurements not paying attention to. Sometimes we have to give them guidance on their own internal decision process and guidance on how the conversations we've had with them that expose their interests get translated into required capabilities that they know they have to have to have their interests met, and then give them guidance on hauled their required capabilities translate into the decision criteria the procurement professional is managing. So a lot of times we stop that chain prematurely. We hear a business users say, Oh, this is critical and I'm going to make sure I express that and we move on. As sellers, I think the thing we need to do is to finish that that cycle and say, so, let's you and I translate that to the decision criteria. You're going to make sure it gets to the procurement person. Oh, by the way, I've already talked to them and the timeframe to be building those overall criteria is going to occur in the next two weeks. So you know,...

...what's your plan to make sure your critical decision criteria end up on that list? So it's kind of like bringing both sides together from a process standpoint. Rachel, I think that's the biggest reason. But the last thing I'll just mentioned on this. For sellers it's easy to cop a bit of an attitude about professional buyers. You know they're difficult, they're getting in the way, they don't listen to their own business users. But what I found in you know, human behavior is usually there's a reason for it and it's not because they're cranky or, you know, they don't care, they only care about their own metrics. You know, usually it's because they're either trying to balance a bunch of conflicting interests or they don't have visibility to all the interests and without that visibility they of course default to the things that they can easily see. So, you know, it's just take those, you know, procurement professionals part of the process, connect it with the business users part of the process and make sure that we don't reach, you know, inaccurate conclusions about the procurement professionals motivation or intent in this whole process. We can actually help them do their jobs. I will mention Tim has a Webinar on dealing with procurement and there's a lot of great tips in that webinars. You should check it out. I will link it up in the show notes team. You mentioned it earlier, this idea of starting early. We always get a lot of questions. I'm getting away from the price discussion minimizing the discounting. How do I negotiate on value over price? And I know you repeatedly answer work harder to show value and start earlier. Right, right, and you know the the trick on this one is again just to keep a few things in mind. A lot of times we find ourselves in discounting discussions is because countless sellers before us have established that as a conversation we will all react to. In fact, ironically, Rachel, we've shut ourselves in the foot, if I could use that term. We've had some self inflicted wounds on this. You know, over the years you hear the phrase called you've got to leave a pound of flesh in there for procurement, as if we artificially inflate what our pricing would be in anticipation of procurement wanting an additional five percent off. We feel like now we've got the margin in there and we're ready for that moment. You know, the problem with that is it becomes a self fulfilling prophecy. Right, we taught the procurement people that we put padding in there. We put what's the word of use cushion? We put cushion in there so what we've actually done is created job security for them, because everybody does it. They know that's the way the game gets played. Now.

It's funny to me, Rachel, when I see selling organizations that do that. They put five percent of quote unquote, buffer in there or cushion in there, and then the customer asked for seven percent and they come back or, you know, huffing. Can you believe that customer? Well, yeah, I can. We've taught them that right. So. So, number one, know that there is a long established pattern of behavior that were likely going to be swimming countercurrent with when we get into this topic. So what does that mean? That means we have to change the conversation much earlier, and it's not in you know, playing a game of WHO's going to blink first on pricing. That's old school tactical guidance right. This is about dealing with customers for who we want an ongoing relationship with and we frequently tell them we want to be your partner, and the first chance we have the demo how we're going to operationalize that relationship is we throw some tactical games at them. I don't think that's consistent with where we're going. So what does that mean? I think very purposefully. What we need to do from the very beginning, while we are selling right is to double down on helping the customer define their requirements to move from where they're at to where they want to be, you know, what they're talking to us about, and not just focus on the outcomes. You know, of course customers want to save money, of course they want to be more efficient or proficient, of course they want to lower the risk. Those are outcomes will serve them really well in us, if we go one step further and translate those, you know, outcomes into their required capabilities they're going to have to put in place to achieve those outcomes. Now we get two benefits from that, Rachel. The first one is it sets up our ability to create competitive advantage if we can influence some of those required capabilities in a way that aligns with our differentiators by definition, if they stick to those required capabilities, we're going to be seen as different and better. The second thing that that does simultaneously is it enhances our negotiating position when we inevitably get asked for a discount or get mandated a discount, we've got that value you were talking about, already established our value related to their required capabilities. What we're going to tell them and show them is that we are by far the best fit for their requirements and, as a result, we are going to be able to maintain our price points. We're going to be able to mandate or at least protect our pricing in that discussion because...

...we best fit their required capabilities. Now, if we can't do that and we have failed to establish required capabilities that differentiate us, guess what? Were in the Hov Lane towards a price only negotiation. But so that that's the irony, right, Rachel, the best way to deal with requests for discounts in the moment is to start that conversation way before so that by the time you get to that moment you're in the best position possible to defend your value and justify your price point. Yeah, this topic to kind of leads into this next question. That comes from managers, people who are trying to reinforce this idea of making the high bigger, starting early, getting sales people off that product conversation and into the value, value conversation. How do you encourage managers to reinforce these points? Yeah, well, you know, again, ironically, it's through the questions we ask. Whether it was time that I was have been a sales representative managing territories and accounts, whether it be time that I was a frontline sales manager, whether it was time I was a leader of a global sales team. And again now as a as a person that comes in from the outside and helps people increase their selling effectiveness. I have found that the questions we ask, if we consistently ask those questions, what are sellers do is they figure out. Every time I bring this conversation back and I tell Tim this one's likely going to need a discount, he asked me the same five questions and you know it doesn't take me very long to know that when I say I don't know the answer to those questions, he is going to push back on the need for a discount. Like one of the questions is, if they don't work with us, what's their most likely alternative and what are the impacts of that? She I don't know, Tim, they just told me they needed a five percent discount. I'm just trying to get that approval from you. Well, guess what, if we don't know what they're alternative is to us. You know, my question to you is, why would we give five percent when we don't even know if they're alternative can do what they need to get done and at a minimum, what have we done the differentiate ourselves? Well, guess what, if they know I'm going to ask those questions every single time, they're going to have those conversations with the customer and they're going to start exploring that information earlier. And when I do that that sets up wonderful coaching opportunities for me. So if you came in and and gave me one of those requests, Rachel, whether it's discount or special terms, or can we adjust our product this way or that way? Can we can we change our our SLA's ket what?...

Whatever the conversation is, because these occur not just with the people that are trying to drive the sales part of the conversation with customers. Think about other folks across the spectrum of the customer engagement process. Rachel. Is it seas that are negotiating with the customer on the requirements for a proof of concept? Is it's someone on our implement implementation team working on some of the service level agreements or slas that we're going to be operationalizing into our agreement and be held accountable towards. Is it folks that manage the ongoing relationship with customers who may need to negotiate renewals or expansion opportunity? So so this topic comes up all the time. So I say it. Managers, established the questions you're going to consistently ask, ask them and be ready to coach in that moment when someone says Gee, Tim, I'm not sure I understand what the impacts are of their most likely alternative. I don't even know if I know what they're most likely alternative is. That creates a coaching moment for me as a manager to go back into all the tools and methodologies that we've installed, hopefully force management ones, and leverage all those tools in those coaching moments to help the seller understand. How do I go back and find that information out? What new ideas do I want to be positioning into the conversation with some folks know I call that anchoring. What are the things you're going to try and anchor into the discussion? So to me, what managers can do there's three things. Number One, ask the questions. Consistently. That will drive seller behavior to take advantage of those coaching moments and all the touch coaching tools you have available to you. And the third one I didn't mention before, Rachel, but I think this one is maybe the most impactful. The managers themselves need to be the Alpha users of these methodologies that have been installed. This is not a moment where you can get away with saying do as I say, not as I do. We are teaching every single moment. We're worth our sales teams. So if we want different behavior out of them, we have to demonstrate that behavior in the way that we interact with them, the way that we interact with customers when there were with them and, plus, Rachel, the way we manage the internal conversations consistent with these ideas. That make sense. Yes, great answers plenty for managers to take away from that and your own teams. Let's get into some more tactical questions to him, sort of a rapid fire here. This came from our last webinarm. How do I best use uncovered metrics to defend price in the negotiation? Well, I...

...would say uncovered metrics and I'm going to take a stab at what that might mean, and it could be it could be one of two things. Metrics that we've been pacted with other customers that this particular customer for some reason is not acknowledging, or we just have it hasn't come up yet. Or the second reason would be that this particular customer kind of will generally acknowledge that those metrics are there but they've not measured any baseline. They don't even know how they would measure it right now. So you know, an example that sometimes would be end user satisfaction. You know, if you go with our solution, people like the DASHBOARDS, it's intuitive and everything else in the customer says. Yet that's interesting to me, but I don't measure it right now and in fact I'm not entirely sure I could measure it. So I'm assuming that might be an example of an uncovered metric. So there's one of two things you do. Number one is don't try. If it has a met ex both, it's going to be really hard for you to justify it, especially if you are deep in the process and you're saying you know what many of us say, which is well, several of our other customers have found this, this and this. You say that late if you're basically saying to the customer, trust me, this will be a benefit to you. Now, Rachel, who say that exact same thing. Early many of our customers have found these three measurable impacts. That allows us to follow up with the customers say, how do you measure those today? Who, besides you, will both items be relevant to? So my point here is kind of blending that point with the next one I want to make. We have to find a way to make those uncovered metrics relevant to this particular customer, and I think that the key to do that is to establish it way before we want to reference it as a benefit of our solutions, but more importantly, is to start mapping out who it is that those metrics would matter most too. And what we find, Rachel, a lot of times is those metrics we see in other parts of the marketplace and with other customers are actually relevant to the particular customer we might be talking to right now. It's just that this contact doesn't understand the significance of those metrics. Are Use the one I just use and user satisfaction. It could be someone in precurement. That's you know or someone in on the technical team that is saying, well, you know, and user satisfaction is really not an issue for us. But if you're the CIO that struggling with retaining really high caliber talent to be able to build their next generation offering, you might have to look at and user satisfaction a little...

...bit different. So sometimes simply asking the question you know beside you, who else might be impacted by these metrics that we see it, other customers, is a great way to start identifying, you know, there could be some other influencers at play here and like that mentioned earlier on, you know in the answer to another question on professional buyers. Remember, there are a lot of people that determine what good looks like right, what a great deal looks like, and that translates into, you know, those metrics that we can achieve as a result of them installing our solution. So I hope I covered that and if I didn't, hopefully over ask that question. Well, come back in and ask it for a little more clarity to tell what they mean by uncovered metrics. Yes, so you know, that comes to this next question about multiple decisionmakers, multiple influencers. As a salesperson. How do I break down these different personas, the different stakeholders during that process and address their concerns individually? What tips do you have for that? Yeah, well, I actually have a couple tips on that one because this comes up all the time. All right, the first thing I think we need to do is to challenge our definition of what we mean by the customer. But I said a minute ago I'm not sure in a complex negotiation or complex selling situation or a complex customer problem, there is such a thing as BA customer data and practical experience tells us that when it's a really complex situation, there might be five, the ten or twelve key influencers on the customer side. So you know, if there are multiple stakeholders, I would say that's normal. That's number one, right. Secondly, who? We have to recognize that that that's big a problem for them, of their side is it is for us. You know, I sometimes walk out of meetings and say, if you all would just make up your mind or what you want, I could tell you an answer. Well, imagine I did to get my car and go right but or in today's world I get to end by zoom meeting and go, but they have to stay there and they have to work it out. And oddly enough, Rachel deaths, who is usually the person has to sort through all those diverse and sometimes conflicting interests? A lot of times it's the procurement person. That's their job. So I think if we keep those two things in mind, then what we could do is we can pick into problem solving mode early on, do a few things, not only find out who's involved in making the decision, but to ask ourselves and the customers who will be impacted by this decision. You know people with a lot of influences that do not even know a decisions about to be made, and our job then is to access them, have our normal value based conversations and find out from...

...them what are their interests and then translate those interests into required capabilities. Or right back to that topic. Right, I understand what your interests are. You want to retain key technical staff. Great, translate that back into a required capability for this upcoming decision that's going to be made and then guide them. What is it that you're going to do to make sure that your requirements that were really impact your outcomes are going to be represented in that list of decision criteria that procurement is going to use to compare alternatives in the marketplace and try and figure out what's the best fit for you. So when what I'm doing that I'm not only adding value to how they look at solving their problem, especially those key influencers, I'm actually also serving the precarement professional who many times lacks both that visibility that what those more diverse interests are, and they might even lack access to some of the folks in their own organization. So pulling that all together actually, by getting all those different, multiple perspectives on the customer side together, I'm actually doing what they all, including US, want to make sure happens, is that they don't buy a mistake. The worst thing that can happen is they go through an entire process of determining what they're going to do and make a commitment only to find out later on they miss someone or something along the way and ended up in unintentionally buying a mistake. So part of this answer, Rachel, is actually knowing some realities here. There's no such thing. That's the customer problem for them just as much as it is for us, and also an attitude. I'm a problem solvereign that situation and while I might think I shouldn't have to help them figure it out on their side, my attitude is that's a huge opportunity for us and it creates significant momentum in the sales process and our ability to differentiate ourselves from from anybody else talking about that problem. Yeah, okay, great, great. The next topic, RSPs, is comes up a lot in a lot of the topics that we cover. Not just a negotiation. But here the question is, is there a strategy that you would recommend for messaging in bids or proposals knowing that there will be a follow up negotiation stage? Yeah, okay, here's the thing I've found. Right, great. So this kind of goes back again some age old wisdom and selling. Right, nobody likes an URFP, except for one, the one we helped write, because that's the one that theoretically should favor us. So if I explode that concept a little bit more and bring it into today's reality, what does that say? Well, if I know an OURFP is coming, I want to work my...

...seal at sales conversations with customers so that I am very purposefully trying to establish that list of decision criteria in a way that also not only brings value to the customer but also aligns really nicely with some of our differentiators. So the more I can do that in advance, that means when it's time for us to write our response to an URFP, we could be saying, you know, in that so many words, you said you need a therefore, we have this. You say you need be therefore, we have this, you say you need see. Therefore, we had so were proving our fit to the required capability. So that's thing number one. Thing number two I have a very strong belief that even when they give us an RFP response template, that we usually have an opportunity right a cover letter. So either in the cover letter or our response to the RSP, I think we should use the upfront part of our response as an anchoring opportunity, to remember that concept of anchors. Right, things that are set or done to create a frame of reference for the discussion. Right. Well, what better time to do a review of customer here's what we heard. We heard that you've got these current issues and is creating these problems. We heard you want to get to this future state and here the good things that can happen to you. And, based on our conversation, you told us these are the requirements that you're going to address before you even show them what my solution is. I'm going to re establish for everyone, maybe that diverse group of, you know, key influencers on the customer side, what is the target that we're all collectively aiming at, so that when I introduce my solution in the in our proposal, our response to there AREFP, I already know it's based on what have established up front as the requirement. So think about this subtly to our selling we're shaping the customers decision criteria formally in our IFP response. We're summarizing that. Even some things that might not have been included in the RFP, we're going to add them right there because we're experts and we believe these are key considerations. And then we're going to link our solutions back to the customers decision criteria, to the things that we've anchored in the upfront part of this as a way to again prove we're the best fit. I know where this conversation is going to go. They're going to look at it and say what are the top two or three that they might bring us in for another round, and they're going to be asking us some questions about that, and this establishes our ability to say, when they say, why did you include that piece and why did you include those that service, you know offering in this we didn't...

...ask for it. Well, you also told us you want to get up and running quickly. You also told us your staff is really a stress thin right now. That's why we believe you, though it wasn't in the RFP, it's something you need and that's why it's included now. The last thing I would build into the RFP response, Rachel. It's the concept that we've taught many people in our programs leverage something called multiple options. In other words, instead of just providing one approach to deal with their situation, we're going to provide them a couple of different approaches, not branded according to our offering, branded according to the different business outcomes this customer might want to achieve. For example, hey customer, based on everything we covered in the front part of this, this response to RFP, we had determined there's two different ways we could help you. One way would be too and then you give them a branded name. And the value proposition, example, would be one way would to help you by grade core contact center customer response today. So, in other words, we're just going to narrow down our whole thing we can do, because your primary talking to us about, you know, making your customer context center more efficient and you need to do an upgrade. So I'm going to say the value of that solution is it's the fastest and most efficient way to address your biggest problem right now. But I might say, however, based on other conversations with people in your organization and other decision criteria you talked about, we think another approach would be build the platform for the future, and the value proposition is we not only take care of today's interest. Were also looking at doing that in a way that's mindful that we're going to continue to grow it over the course of the next three to five years. Different kind of solution, different kind of relationship with us and likely a whole lot of additional things we can anchor into the conversation so that, once again, if we get to the back end of this thing, the customer is going to be pushing on us. We've got a lot more items in the discussion. That will allow us to get into a give, get back and forth conversation across multiple items as opposed to just a few. So I know that that was a long ramble there, riffing alttle it right now, Rachel, but it's, you know, break it down to its core parts. One, get involved early in our selling to purposely established customer decision criteria, to leverage that insight in our introduction or cover letter, to our response to the RFP, show how we fit each one of their items and, third,...

...leverage multiple options. That's great. Thank you. Thank you for all these great tips and tricks and best conscious as you shared Tim on negotiation. Well, Rachel, as you know, I've got a lot of gray hair and scars from thousands of negotiation so I appreciate you saying expertise. It's it's sometimes experience, and it is a whole lot of being fascinated by how the conversation goes, with our very best cust humors and prospects and how affective we are in that upfront stage. And then it all seems to go out the window when we find ourselves, quote unquote, negotiating. And you know I have great passion and I know we have great energy around. How do we change the traditional point of view about what a sales negotiation is? That opens up a world of opportunities, not only for selling organizations but for the customers they serve. Right exactly exactly will thank you so much to him. And for those of you who would like some more additional negotiation resources, I've linked several of our best resources in the show notes, so be sure to check us out and thank you. Thank you, Tim. Thank you to you for listening to the audible reading podcast. At force management we're focused on transforming sales organizations into elite teams. Are Proven methodologies deliver programs that build company alignment and fuel repeatable revenue growth. Give your teams the ability to execute the growth strategy at the point of sale. Our strength is our experience. The proof is in our results. Let's get started. Visit US at force MANAGEMENTCOM. You've been listening to the audible ready podcast. To not miss an episode, subscribe to the show in your favorite podcast player. Until next time,.

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