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StreetSmart: Negotiation Question #3: How Can I Prepare 3 Paths Forward?
27 Plays1 month ago
In this episode, Brian Dietmeyer talks with Carrie Welles, Vice President and Partner at Think Inc., about the strategic use of Multiple Solution Options (MSOs) in negotiations. They explore how presenting multiple tailored solutions can empower sellers, maintain control during negotiations, and meet diverse stakeholder needs effectively. This insightful discussion is packed with practical tips and real-world examples, making it a must-listen for anyone looking to enhance their negotiation strategies and achieve better outcomes in complex sales environments.
Timestamps:
00:23 - Introduction to the topic of buyer tactics and negotiation predictability.
01:06 - Discussion on the third critical question in negotiation preparation.
01:34 - Exploring the concept of Multiple Solution Options (MSOs) and their benefits.
05:21 - How MSOs address the needs of various stakeholders within a buyer's organization.
09:41 - Building and structuring effective MSOs.
14:34 - Potential risks and pitfalls of presenting multiple options in negotiations.
18:11 - Final thoughts on the strategic advantages of using MSOs and a success story.
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Transcript
Introduction to Street Smart Negotiation Podcast
00:00:01
Brian
Hello and welcome to another episode of Street Smart, The Negotiation Podcast. I'm Brian Dietmeyer CEO of Think Inc. Business Negotiation Redefined.
00:00:12
Carrie Welles
Hello, Brian, and I'm Carrie Welles, vice president and partner with Think Inc.
00:00:16
Brian
It's nice to meet you.
00:00:18
Carrie Welles
Nice to see you. How are you?
00:00:20
Brian
Oh, good. Thank you.
00:00:23
Carrie Welles
Good, good. All right. So what are we talking
Predictability in Negotiations: Buyer Tactics
00:00:26
Carrie Welles
about today? so So just to remind people where we've been. We've talked about how negotiations are predictable. And beyond that, our research proves that 97% of any buyer tactic falls into two categories, something to do with the alternative to you.
00:00:42
Carrie Welles
or price or giveaway pressure. And then to add some more ideas, we have given three good questions that will help you effectively prepare for any negotiation that you're up against, no matter the
Key Question in Preparation: Multiple Paths Forward
00:00:56
Carrie Welles
complexity. So the first question was, what are the consequences to either side if we do not agree? Second question was, what does a good deal look like if we can agree?
00:01:06
Carrie Welles
And today we're talking about that third question and the power of that behind it. So Brian, what is that third question?
Using MSOs for Control in Negotiations
00:01:15
Brian
As they tame my old neighborhood in the South side of Chicago. Question tree. Question tree is, can I prepare tree paths forward?
00:01:22
Carrie Welles
All right, very good. So that rolls into though the one of the best subjects and topics, which is multiple solution options.
00:01:34
Brian
Yep.
00:01:34
Carrie Welles
All right. So what are multiple solution options, which we know we fondly call them MSOs. And how do they help sellers maintain control in a negotiation?
00:01:46
Brian
Yeah, I, I love these. I've used them. I've used them. I had step kids who were little kids. They've moved out now, but I used to use them with them. ah You and I use them in business all the time. Uh, but in personal life, they work as well. So, but let's start with the problem that we're solving, you know, when, when we give, so we're talking about multiple paths forward, right?
Shifting Focus with MSOs: From Fulfillment to Strategy
00:02:07
Brian
So when we have one path forward, that's usually here's the price of our product.
00:02:13
Brian
right at the price of our solution and the natural human inclination is to say i want the price of that product or solution cheaper so that's that's the problem that we're getting after and you you all know when you put it out there you respond to the ah rfp inevitably you know that or or some other demand for something's going to come back.
00:02:22
Carrie Welles
Mm hmm.
00:02:33
Brian
So, and but the other part of the problem with that is too, is when we're responding with one offer, we're usually responding, the customer has diagnosed their own business problems.
00:02:45
Brian
They've prescribed their own solution and then we respond. And what we're doing in that moment is order fulfillment, basically, right? And, and so how do we change that conversation from what they are ordering to what they should be ordering, right? Something that's better for us and for them. And how do we do that while not disrespecting them? Uh, multiple solution options is one way to get, uh, accomplish a lot of that.
00:03:11
Carrie Welles
I agree with you. I love them. I don't think there is one negotiation since I've learned that concept that I don't prepare three multiple solution options for the customer every time.
00:03:22
Carrie Welles
And it's not only because we teach you stuff, it's because it works. It works so well.
00:03:26
Brian
yeah
00:03:28
Carrie Welles
Okay. So we know there are multiple stakeholders in any deal. So how do, how can we use MSOs, multiple solution options? Sorry, I shouldn't use the acronym. to address the needs of of various stakeholders within a buyer's organization.
Addressing Stakeholder Needs with MSOs
00:03:44
Brian
Yep. Well, we, we think about, as you know, we use this format of strategy initiatives and ops to say, look, people buy to execute their strategies, right? But then there's initiatives in place. You know, people set their strategies. This is where we want to go. Then there's initiatives in place to kind of operationalize and let's start making those strategies come alive. And then operational or technical technical changes that have to happen in order to enable the whole thing.
00:04:11
Brian
So people are buying to solve strategic initiative and operational problems. So there's stakeholders associated with that. You can guess that the, you know, the execs are at the top and the mid-level VPs are in the middle and operations and tech is is kind of at the bottom. So that is a way to build a solution that really speaks to strategic execution, right?
00:04:35
Brian
And then on the other hand, another solution that speaks to the operational execution, and then something in the middle that speaks to that VP where he or she is in charge of rolling out the initiatives to make this stuff happen. And so it's it's a really cool way, and and and I love when you've got those three stakeholders in the room and you're getting beat up by that ops person, right? But then you lay out the the other two that are solving bigger problems. that's That's how it helps to hit all all different stakeholders' needs.
00:05:05
Carrie Welles
Well, you're making me think that we put the onus back on the stakeholders to have them decide. So that's the beauty of multiple solution options is we give them choices. And we we direct them, we organize our thinking for them, and they get to choose.
00:05:14
Brian
Yep.
00:05:19
Carrie Welles
Now, it's not to say we're going to say yes to whatever they they choose. So I know you're going to talk about that.
00:05:23
Brian
Right.
00:05:25
Carrie Welles
And yet, it does help to frame three different business solutions that they get to decide, OK, what's important and how do I want to solve for this?
00:05:32
Brian
Yep.
00:05:34
Brian
And the key, Carrie, carrie i I think back, we used to call these multiple equal offers and it really confused people.
00:05:34
Carrie Welles
Yeah.
00:05:34
Carrie Welles
i
00:05:39
Brian
But it's a key aspect of building these, which we're going to talk about in a moment, I think, but it's, we have to be ready to accept any one of these three. It should be a varying value to the other side.
00:05:51
Brian
but equal to us, like, well, and, and see that one of the reasons I don't like equal, which is why we get rid of it is we always have a favorite, right? They're asking for number three and we love number one, you know, that kind of thing. So we, we always have ah ah a, uh, sort of dog in that fight. so, but we, we gotta be ready if we're going to put them out there, we gotta be ready to accept them.
00:06:10
Carrie Welles
Right. And they're often certainly not equal in dollar size. So that's another reason I think you're right, it did confuse people.
00:06:14
Brian
Correct.
00:06:17
Carrie Welles
Okay, so so let let's get to some more meat on how do you build them? What are the key components of designing a good multiple solution option?
Designing Effective MSOs
00:06:29
Brian
The first is, is, is titling them. And, and I always think of titling as, as we're rebranding the conversation we're having with the customer. Right. The, the one offer thing is, is here's our, here's our offer. Right. Which is why you and I entitled these multiple solution options. This isn't an offer. This is an option. So we need to title these in terms of, this is so unbelievably important. Title these in terms of way they, ways they impact the customer.
00:06:59
Brian
It's not about, you know, what ah ah it's not about our product and it's not about our service, but the title, you know, so we have a title that addresses, you know, the strategic need, you know, we're, we're going after, you know, 24% growth or something like that. And then the operational need, which we want to, you know, increase, use your adoption by whatever. But the important part is the title is, is we're reframing that conversation that, Hey, customer, this is about you. This is about your business. This is about your strategies, your initiatives, your ops improvements.
00:07:28
Brian
and And then a subtitle, which is a sentence or two, which gets into how, right? So, that, that character you, you well know, and anyone who's listening who we've worked with, this is the kind of the hardest part there. There's an art and a science to multiple solution options and coming up with the title is, is, but we've really got to look at the the different stakeholders in the room from, from strategic down to tactical.
00:07:54
Brian
and And what, what are they trying to accomplish in their business this year? What are their KPIs? And then how, how can we title this thing in a way that reflects that? But then we also have to build out the solution configuration for each, you know, that that are in direct correlation. So number one, that's the title. Are we speaking to the levels of the three different buying influences to a quick subtitle sentence or two under that to make it come alive?
00:08:17
Brian
And then three is the solution configuration. So we've got strategic middle and sort of tactical level solutions at all three levels. And then there's key commercial terms and you and I spend around and around about this all the time, but I do not think you put there all the commercial terms into these because it might get confusing. You know, there's four or five terms that, that both sides are really hung up on. So,
00:08:40
Brian
that, that's, you know, the the three layers is title, subtitle, solution configurations, and then commercial terms. And that whole thing has got to tell a story, right? That this solution and this different commercial terms, I just want to say one more thing about key terms when people wrestle a lot when we're helping them build these about structuring the commercial terms. And, and yeah I think we take everything into risk and reward. Those are two buckets, almost anything, whether it's legal terms, price or volume or length of contract, those represent risk and reward for both sides, right?
00:09:15
Brian
as a customer commits to triple their volume with us, they just assume more risk. So we have to pay them for that risk. Or if they don't want to they don't want to make a commitment to that volume, then they take lower risk. So you know we assume more risk and we're going to adjust price. So to me, that's a really helpful way ah of thinking about how to structure those commercial terms.
00:09:37
Brian
and
00:09:37
Carrie Welles
Yeah.
00:09:39
Carrie Welles
yeah Yeah, and you're making me think because it's such a far cry from what we typically do. which so So I'm sure there's many of you out there who present, who give options to your customer.
00:09:50
Carrie Welles
How do they show up though? It's likely option ABC, option one, two, three, that simply reflects your stuff.
00:09:54
Brian
Yeah.
00:09:59
Carrie Welles
And so Brian, what i I love about what you're saying is it is our chance to let the customer know we've been listening, we understand their KPIs, we understand their key drivers.
00:10:04
Brian
Yeah. Love that.
00:10:09
Carrie Welles
Yeah, and that's what we're solving.
00:10:10
Brian
So what, Kerry, what you just said is I call
Customer Perception and Strategic Alignment
00:10:12
Brian
them fruit baskets. You've been given a fruit basket and you don't like half the crap that's in there. And so you you can't give your fruit baskets, right? You can't, these are the off the shelf. you I love that point that we heard.
00:10:25
Brian
We heard, and not only that, not only did we hear, but most of us that are sellers should be consultants for our customers. We also, not only do we hear, but we're we're going to give you other ideas. So we heard you, that's option three, right? That peace piece of trash you asked for option three, there it is. But option two is a little bit better and option three is a little bit better. And and I don't know but ah about you, Kerry, but I will often tell them that.
00:10:49
Brian
Like, okay, of these three, you said you wanted option three. I think option one or two is actually best for both of us. And I'm not shy about the fact that this one's good for me. And, and I've made the deal richer for you because it is better for me.
00:11:01
Brian
So, yeah.
00:11:01
Carrie Welles
yeah.
00:11:02
Brian
And you know, the thing is that they are asking for option three, more often than not.
00:11:04
Carrie Welles
yeah
00:11:09
Brian
we're moving them up to two. It's not usual that we get them up to one, but it's funny because option three is what they want. Option two looks better because option one's usually such a monster that option two doesn't look quite that scary.
00:11:23
Brian
And so more often than not, in in my history and maybe with yours, i'm I'm seeing customers take two and we're moving them up. We're changing the conversation from this tactical thing to at least moving upstream a little bit.
00:11:32
Carrie Welles
and I agree. I agree. and And one shouldn't be so outlandish that the customer looks at you and says, what is this? i we didn't We've never talked about this. There's no way. And my experience has been it's often a fourth, which is a combination of one and two.
00:11:51
Brian
I would say, what, 99% of the time it's rare.
00:11:52
Carrie Welles
which
00:11:54
Brian
It's such a great point. It's rare that someone's gonna take one of the three, which kind of gets to to your next question.
00:11:58
Carrie Welles
Yeah.
00:12:02
Brian
Go ahead with your next question.
Bridging Data Gaps with Sensitivity Analysis
00:12:05
Carrie Welles
about the data, the data.
00:12:06
Brian
if
00:12:06
Carrie Welles
Yeah, yeah, yeah. So because we know there's no such thing as perfect data. And so how do multiple solution options help to bridge that data gap?
00:12:16
Brian
See, I've looked at your questions.
00:12:18
Carrie Welles
It was
00:12:18
Brian
It's not fake, it's not fake news. I must fed the questions up front for this interview. good And I also do have the thing in my ear, you know, where my producers whispering to me.
00:12:25
Carrie Welles
so smart.
00:12:29
Carrie Welles
Yeah, right.
00:12:30
Brian
So yeah, you and anyone who's listening to the podcast knows we referenced Max Bazerman, a lot Harvard negotiation professor who was a co-founder of initially of our business.
00:12:41
Brian
And, and I was negotiating to buy max out at one point and, He came to me and presented to me multiple solution options, multiple path forward, which he should. And I couldn't quickly. So I either take one of these offers or your customer takes one of these offers or they take their alternative. And I had to quickly look at, you know, calculate all that. And I couldn't. And and he asked me, I'll never forget this. He laid out all three and I was sitting there stumped because I couldn't do the math quickly enough. And he said, okay, no, no, don't make a choice of any one of those three right now.
00:13:15
Brian
rank these for me, which offends you least.
00:13:19
Carrie Welles
Yeah.
00:13:19
Brian
Those are his exact words.
00:13:20
Carrie Welles
know i love
00:13:21
Brian
I wouldn't suggest doing that with a customer, but we're friends. And he said, which offends you least. And I was like this one, which was weird because it had stuff in there that I wasn't looking for. and And what he said to me is, you know, afterward, I was like, that was cool.
00:13:33
Brian
And we were kind of, of course, diagnosing what happened during the negotiation. And, and he said, it was a sensitivity analysis of your needs. And I put stuff in to that option. that you aren't even aware of, like moving parts that I thought of. And and that was really cool because we can't know and buyers don't know and we're going to put stuff in front of them.
00:13:55
Brian
that says, wow, that's, I do value that second one better. And it's like, okay, Carrie, why, why do you value the second one better? Cool. What is it? You also put the first one as last or the third one as last. Why didn't you like that one? Great. Let's now co-creation is a thing, right now and selling. And it's been a thing for a while, but how can we co-create the fourth and final option together?
00:14:18
Carrie Welles
Yeah, yeah, okay. that Yeah. And what a great story. I do remember that story. Okay, so but let's talk about the potential risks of presenting options.
00:14:27
Brian
Yep.
00:14:28
Carrie Welles
So there's probably plenty of sellers out there that say, whoa, whoa, whoa, I'm not presenting three options to the customer. And if I lay everything out, ah don't I get, you know, isn't it right for cherry picking?
00:14:41
Brian
Yep.
00:14:41
Carrie Welles
Isn't it right for all kinds of stuff?
00:14:42
Carrie Welles
So what, what are the pitfalls or what are the
Mitigating Risks: Over-engineering and Cherry-picking
00:14:45
Carrie Welles
potential risks?
00:14:45
Brian
Yeah. Well, you just, you just hit on one. my, my friend, uh, former client, Steve Forgione with VWR has been a friend for years, uh, and a Philadelphia Eagles fan.
00:14:55
Carrie Welles
Hi, it's David, you're listening.
00:14:57
Brian
And, and for Gion, I presented him multiple solution options. This is problem one, and I did it many, many years ago. Uh, I over-engineered them and, and what, uh, Steve, sorry, if you hear this, I'm going to do your accent and I'm going to butcher it, but che up and he said, deep Maya, these are multiple freaking confusing options. So that's the number one problem is over-engineering these things, right? Over-engineering the title, the the solution configuration that the terms we We got to keep it, you and I often talk about this being a business fit versus solution fit. You can get into the solution fit details later. This is aligning the two businesses. So that's one problem. You hit the second one, which is cherry picking, right? I want, I want this big, most robust first one at the price of the last one, something like that. And the reality is it's reasonably easy to deal with because.
00:15:49
Brian
ah ah And we we talked about this in the negotiating price episode before price is set based on all the other variables in that deal. Volume, length of contract, t limited liability, SLAs, solution config. So it's like, I can't. I just cannot. Not only that.
00:16:05
Brian
Option one is based off option two and option three is based off, you know? And so these these are all, it's a holistic system and we can move, but let's rack and stack them and then let's find the elements you like and let's recreate and co-create a fourth.
00:16:21
Brian
Oh, and they're there're there's just one more, one more that I thought of too is deal desk. You know, what we found you and I working with customers is this is a different kind of way to get these approved.
00:16:22
Carrie Welles
Right.
00:16:35
Brian
So before, you know, you have your reps start doing these, we've got to make sure that it's working within your deal approval system that we can get ah umma MSOs approved and it's doable everywhere. We've worked in almost 20 years.
00:16:47
Brian
found ways to work with deal desks or, you know, whoever approves.
00:16:49
Carrie Welles
Yeah. Yes, yes, for sure. And so you are also making me think that that it's not if it's when the customer gives us pushback. So the pushback is only scary when you agree to it when you say yes, when they when they push back and ask for concession, it's only scary and they're cherry picking when you say yes.
00:17:04
Brian
Yep.
00:17:08
Brian
yeah
00:17:09
Brian
Yeah.
00:17:09
Carrie Welles
Until then, as you have said, what what have we learned, we've learned a lot about what their priorities are.
00:17:14
Brian
Yeah. and and And we trade just like we talked about in the last episode and trading, by the way, I'm not sure we talked about this last time. Trading is sometimes taking things out, right? Customer wants a lower price and it's like, we typically come back and say, okay, we'll buy more volume, you know, or commit to a longer contract.
00:17:14
Carrie Welles
So that's why
00:17:29
Brian
It's also about saying, okay, guess what? That really cool solution configuration just got halved, right?
00:17:35
Brian
You're not getting all that support you thought you had, but yeah, a quick aside.
00:17:35
Carrie Welles
Yeah.
00:17:36
Carrie Welles
Yeah. Right.
00:17:39
Brian
But yeah, when you get that cherry picking, it start trading and trading also sometimes means, okay, I'm going to eliminate that, that cool 24 seven support I gave you. And yeah, I can meet that.
00:17:51
Carrie Welles
Yeah. Yeah. Great point. Okay. Well, we could talk for hours about multiple solution options because it's one of our favorite topics, we probably shouldn't. So what are your final thoughts?
00:18:01
Brian
My final thoughts, one, you you were asking me earlier about, you know, how how does it, how do we get price premiums out of these things for us? And how do we make it a better solution for the buyer? That's really the goal of these, right? It's for, so both sides win. And it's interesting. I just found this for an article I was writing yesterday and it's from behavioral economics research that giving someone three choices, a lot of people say, why three increases deal closure rates by 20% compared to a single option.
Success Story: Comprehensive Solution Adoption
00:18:28
Brian
So let's keep that in mind.
00:18:30
Brian
And so, know, it's, we're, we're talking about deal quality. We're talking about a better solution for the customer. Right. And we're also talking about a richer, more holistic deal for us. So it does, it definitely, changes the conversation more to business value than price. So, and you, you had asked to, to, you asked me to finish today with a story of, uh, MSOs being successful in my own life. And I was presenting it's years ago, so I'll actually use a client. It was KLA 10 core up in San Jose.
00:18:59
Brian
probably 10, 12 years ago, more than that. And, and their training person was looking for us to come in and do a speech at their SKO. So that was option three.
00:19:09
Brian
And then, Oh, thank you. so yeah, they wanted us come in and do a speech. So that was an option. I heard them. I put it in there. Right. And instead of the order fulfillment and just saying, well, here's the price for us to speak at your SKO.
00:19:09
Carrie Welles
And that's the sale kickoff for those who don't know SKO.
00:19:24
Brian
There's two other options and option one, of course, it was very robust and very strategic. And this is a key part of presenting these. We had all the stakeholders in the room when we used to see each other face to face. Now we do it on zoom. And, and as I walked, worked through the three and talked about the titles about what was being achieved, we ended up having them choose option one, uh, which is not always typical, but that was a global rollout of two day workshops and a lot of deal coaching and consulting after in the training person.
00:19:51
Brian
Uh, said we don't have the money for that. We had the money for the sales kickoff speech and the president said, find the money.
00:19:58
Brian
it So there's always some discretionary spend.
00:19:58
Carrie Welles
Oh, nice.
00:19:59
Carrie Welles
no
00:20:00
Brian
So I'm, I'm giving you like a highlight. That was, that was a great MSO presentation, but it more, more often than not, it's moving up to number two.
00:20:09
Carrie Welles
Yeah, yeah. OK, excellent. Well, nice job. So that wraps our session on multiple solution
Preview: Anchors in Negotiation
00:20:16
Carrie Welles
options. And our next podcast, we're going to be talking about anchors, which is a very common and good term to know for a negotiation.
00:20:25
Brian
another right. And another favorite subject of mine is something that will make a huge difference in your deals. Like tactically, you know, what we try to do in this podcast is give you stuff you can use today. So anchors will get there.
00:20:37
Carrie Welles
Perfect. Okay, so we'll see you back. Thank you.