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

Episode · 2 years ago

32. How Your Internal Process is Crippling Your Sales Negotiations w/ Tim Caito


We’re diving into the one area of negotiation that many companies fail to pay attention to — the internal process behind every sales negotiation. In this episode, Force Management Senior Partner, Tim Caito explains how refining the internal process can enable your sales organization to increase deal velocity and achieve better outcomes. He’ll cover:


- Internal bottlenecks that hinder healthy pipelines, and how to course correct 


- How to make negotiation and company-wide competency to ensure sales teams can move deals forward efficiently


- The essential questions you can use to evaluate your own, internal negotiation process


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 Internal Negotiation Process: 


- Sales Negotiation: Navigating departmental impact guide

- Building an Elite Sales Negotiation Process [Resource Page]

- A Sales Leader’s Playbook for Negotiation Success

We have a tendency to deal with customer negotiations one tactical step at a time, without a vision of where we're trying to take it. Well, as a result, we find ourselves totally reactive in these kind of moments. You're listening to the audible ready podcast, the show that helps you and your team's sell more faster. will feature 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. Hello and welcome to the audible ready podcast. I'm Rachel Clap Miller, and today I'm joined by our own Tim Kato. Hi Tim, Hello Rachel, and hello everybody. And today we're going to be talked about sales negotiation, but a component it that a lot of organizations may miss when they're trying to get better outcomes from negotiation, and that's what happens internally. Yep, and that is a big, big issue. Rachel. You know, when we do sessions live, it's fun to watch selling organizations when we talk about customer negotiations and they kind of lean in and then I asked them about the internal negotiations and there is a universal reaction to that phrase, some version of all wins or an ouch or yeah, and I know that you've even worked with some organizations that just have incredible bottlenecks and you don't really think about them as you're kind of moving through your own internal sales process, but when you take a step back and you look at them as an organization, it can be eye opening to say the least. Well, as one of our clients recently talked about their internal process, they basically said it's a hot mess and when you step back and look at as an outsider, you really scratch your head. Right, in this particular organization they had eight different silos of approvals,...

...whether it was the services organization, a product organization, a sales organization, a finance organizational legal organization, and you know they had as a result because there were different, you know, functions coming together. In their biggest enterprise accounts you had three different pricing teams that came in. Then there was a whole additional management approval process. So when you looked at and individual wrap navigating that complexity, you can start to see not only is it a bottleneck. But more than anything else, Rachel, it has a huge impact on the value those organizations are able to capture in a negotiation. And you see that value leak out the backside of a negotiated agreement, not because of what's going on with the customer, but because of what's going on internally. Right and I know some of you out there listening are nodding your head and putting your hands in the air telling Tim Kato to preach, because you know it's all too well and you know in some cases we think, Oh man, how do we get here? But they all those systems, as many silos as there may be, they were set up for a reason. But when we add the layers and the layers of bottlenecks into the negotiation process, you mentioned, Tim you're losing value for you as a company. It can be complex for the customer and really it's killing our sales people and a lot of these organizations who are just trying to make their number. Yeah, and you know, just to highlight that a little bit, Rachel, we always ask early on and our engagements, where does a new rep go to get guidance on what good looks like and where do they go to understand the internal approach they need to take to secure that version of good and in almost every case, in those more complex organizations, Rachel, the answer is some version of...

...will you just have to be here long enough, or you rely on your manager? And of course I always chuckle at that one because the manager is likely the manager because they were the Super Rep that successfully navigated and knew how to work through the systems, the shortcuts, and now they're the manager. And guess what they're going to leverage for? You know, the opportunity unities they're trying to support their people, and so you know, your point is one that is exactly right. That structure and that internal approach typically exist for a reason, but what is going on is it typically exists for multiple reasons and those reasons have not been coordinated. We work with organizations that are in a highly regulated industry. Well, guess what, legal is a really important reason to secure those approvals to make sure that we remain compliant with those regulations. But if that's not aligned with the approvals our services organization needs to make to make sure that we're effectively managing those precious resources we have or the product, folks that are looking at evolution of different versions of their product and want to make sure that they're on the most current version so they can support it. You know, the list just goes on and on. So all those are understandable. The problem is they're not coordinated right and I've heard you say before that it just hurts a visibility at the deal. Only certain people know what's going on in the deal and the other people are not able to make great decisions for the company based based on that. And we've said it before. To correct this you need to treat negotiation as an organizational competency, something that that organization needs to function, which also means you need to have a few essential questions answered as a company. The essential questions we talked about a lot with a lot of our areas of effectiveness and with negotiation. We do...

...have essential questions, especially as it relates to your internal process. There you go, Rachel and, and you know you set a lot there. Just want to impact a couple quick things. Limited visibility to opportunities when you're managing in that internal negotiation that's really complex. What ends up happening is we unintentionally rely on the individual sellers or sales teams and their manager to navigate through that complexity. And what ends up happening is each individual group only has visibility to their part of the let's say the internal approval process or internal negotiation. So legal may say yes to one thing, finance may say yes to one thing, product may say yes to one thing, services says yes to one thing, but the only people with visibility to the whole opportunity are the reps themselves usually. And as a result, one group maybe says yes to a concession because it's tolerable to them, as opposed to let's say yes to a concession so that we can get moral what we want in this other area. And so that's where the value gets impacted. So not just a bottleneck, it actually impacts the value the we can capture. And all by the way, you can only imagine the frustration of customers that raise an issue and they have to wait for us to go back and navigate through that system, which usually takes a lot of time. So, you know, to make this work more effectively, Rachel, we do believe there are some things that can be done to your point organizationally that actually make managing that system much more agile and more effective, and we kind of get at those things we can do organizationally through these essential questions, like the first one, Rachel. Right, I...

...can make sure ahead of time that everybody in the organization knows. Are there some high level interest that we want to make sure get protected in every single negotiation? For example, if one of our strategic priorities in the organization is, let's say we're a subscription business or SAS business, we want to mitigate churn, one of the things I know is that our success team that works with the customer and drives not only adoption but drives activation. What ends up happenings when we do that, we minimize churn. So one of the you know, the high level interests is we want to engage with the customer in a long term success plan, not just implementing our solutions. Right. So that might be an example. Or on the customer side they may have high level interest where they're trying to, you know, focus on the number of suppliers they're working with. Or there might be trying to merge two different companies that have recently, you know, one acquired the other one they're trying to launch into a new part of the business one. Are Those high level priorities that we know in every single one of our agreements we want to make sure where focused on. So that's the first one. What specific interests need to be preserved in those customer agreements for both sides? Yes, specific interests. In the next one you mentioned priorities. But then this next question is really what strategic priorities need to be in every deal. On this one is really making sure you're negotiating deals that alignment that overall company strategy well, and that's where you get specific. You know, the next level of being specific. From that first question, now we're getting at the things that go into groud. I've always said, you know, a great agreement should reflect the strategic...

...priorities of both sides. We see this a lot in renewals Rachel, where the source document. When it's time to do a renewal, we pull out the last contract, which may have been done three years ago, which could have been better renewal from an original deal done two or three renewals of go. It could be were operating off of a fifteen year old document that's been tweaked every two or three years. Yet both organizations of likely significantly in fun evolves beyond that and their strategic priors are different. You know, I don't know how topical we want to make this right now, Rachel, buddy, in the business environment we're operating in right now, you know, in this pandemic world were operating in, a lot of strategic priorities have shifted significantly. So negotiating agreements with customers, whether those are big renewals, big new deals or the daily negotiations that take place, ought to reflect the new definition of good right and to me the new definition of good has to be aligned with the strategic priorities for both sides, and that is evolving constantly. Yeah, that's a great point that you bring up about, you know, pulling out the old contracts and if you've signed long agreements, you know you could be a whole new company as fast as these companies are growing right now. And the next question aligns with us. First two is we also need to know specifically what the give gets are that aligned with those interests. Yeah, we know. What do we know, Rachel, is that we are eventually going to get into a back and forth. I ask people up front what percentage your deals will involve a negotiation to close it. And they all go like a hundred and ten percent. What part of your implementations will involve negotiation? What, even though you got an agreement, how much of the implementation will you be negotiating? SLAS, number of users, things like that, and... changes? And they all say absolutely what percentage your renewals or ups cross so will involve negotiation? Always a hundred percent. Rightn I ask them, well, what are you going to start preparing for those? Well, when we're in the negotiation, right will know. I know. I think one of the best things in organization can do is to make sure that those that are involved in negotiation, whether it's the frontline customer facing team or whether it's those approval functions and senior leaders that might be involved in some of the more complex negotiations. I want to make sure everybody's clear what's the priority of list of things we'd be willing to give, or most likely willing to give, in exchange for the prioritized list of the things we'd like to gain in return. By the way, Rachel, to your point, aligned with the strategic priorities in both sides, I'm much more likely going to get the things that are a value to my organization and help the customer gets what's a value to their organization? If I've mapped this out in the beginning and on. Fortunately, when it gets in the back and fourth part of a negotiation, people are typically referencing their historical perspective, not necessarily the agreed upon current perspective of their organization, guided by their strategic priorities. Yeah, it's important to now those give gets and that you're reps, are your teams that are selling the account know what those are. So the next question gets really down to the tactics. One negotiation tactics are challenging us in our opportunities and how do we address them here? or You want to determine where your reps are being challenged across the board? Yeah, and you know, and it's kind of like the first three have to do with our mapping out the landscape of what's going...

...on. What's the relevant context or background for the negotiation? Now we're focusing, Rachel, on who and what are we dealing with coming from the other side? What are those tactics that either historically, we know are going to get laid on us? What are the tactics that are just rampant in our industry. What are the tactics that might be tied to a few specific individuals within this account? All, by the way, what's our tactical plan? Right? But you know, the big one I'm looking at right now is when we work with with folks in negotiations, it's amazing to me how many of the tactical issues that folks are dealing with are very, very predictable and you knew they were coming, like the classic one. Well, they're threatening us with competitive pricing, they're going to send this bit out for a bit and RFP. You know our competitors are willing to buy the business. Well, well, those are certainly challenging. They are way more predictable and the time to deal with those is way upstream. So by asking ourselves that question, what we're really looking at their the question behind the question, Rachel, is what can we be doing now to get out in front of this thing, to minimize the chance that it will have a negative impact on us, to minimize the challenge it will represent, but also, even if we can't proactively deal with it, we're better prepared in the moment when it actually surfaces. Yeah, absolutely, and finally tend the last essential question. I think this one sort of wraps everything up. What is our negotiation strategy? I ask it every time, Rachel. I just want to know, summarize. Don't tell me all the challenges, don't tell me how unreasonable the other side is, don't tell me they've got to do this and they got to I simply want to know what's our strategy. Here's what we found, Rachel. There is an extremely high correlation between someone's ability to articulate their strategy and their...

...ability to execute it. Go figure, but you know, what ends up happening is we have a tendency to deal with customer negotiations one tactical step at a time, without a vision of where we're trying to take it. Well, as a result, we find ourselves totally reactive in these kind of moments. So making something negotiation and organizational capability, part of it is we've identified the optimal strategy for us to take forward. And here's the second part that's important here, Rachel. Everyone on the team understands the strategy and understands what they need to do to support it. I know our listeners, Rachel, will have probably never experiences, but believe it or not, we've worked with some clients where the owners of the customer relationship are absolutely clear on their strategy and someone flies in from externally. Maybe it's a partner, maybe it's a senior manager, maybe it's someone from the product and well intentioned show up and say something that is contrary to the strategy that's being being worked for months and now, all of a sudden, guess what, we now have a challenging negotiation because someone was included on the strategy. So this is actually if you are able to answer that question, what is our negotiation strategy? My guess is you've already answered the first for so I know. For me, that's really the culmination of all of this. Yeah, and to your earlier ten while, the point you've been making throughout this podcast is if you know the strategy, if everyone understands the strategy, that allows you to get ahead of potential problems and work early, which is a key to making all of this effective. Yeah, and you know, Rachel, the the bottom line to...

...all of this. If I could have a word to replace the idea of internal negotiation, that word is alignment. How do we make sure that we are all aligned in what it is we're negotiating for and then we're all aligned on how we're going to go about doing that, which ultimately gets rint you know, translated to alignment with our champions inside the customer on you know, they're going to be helping US manage this negotiations. Of that alignment. I think it's really hard to achieve extra alignment with our customers if we don't have internal alignment within our own organization on our priorities for a negotiation. Are Give gets in the negotiation, our tactics, in the way we're going to management, and ultimately all rolls up to alignment on our negotiation strategy, and that is absolutely an organizational competency. Absolutely well, we have a lot of resources on negotiation. Tim has been a part of a lot of them. We have several webinars, one sheets blogs. They are linked in the show notes, so be sure to check those out and I'll just recap quickly these essential questions. What are the specific interests that need to be preserved in customer agreements for both sides? What strategic priority should be on every deal, or do they give gets that are aligne with those interests and priorities? What negotiation tactics are challenging us in our opportunities and what is negotiation strategy? That's the million dollar question, Tim thanks so much for this conversation. I know a lot of people are going to get some value out of listening to you go through those thanks, Rachel. Appreciate the opportunity to talk to you about it all right, and thank you to all of you for listening to the audibolready 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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