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StreetSmart: Building a Repeatable Negotiation Framework
21 Plays10 days ago
In this episode, Brian Dietmeyer talks to Carrie Welles, Vice President and Partner at Think Inc., about building a repeatable negotiation framework. They explore the common pitfalls in traditional negotiation tactics and introduce a simplified, data-driven approach that predicts and prepares for buyer behaviors with remarkable accuracy. This insightful discussion is a must-listen for anyone looking to refine their negotiation strategies and achieve better outcomes with a straightforward, effective framework.
Timestamps:
00:53 - Introduction to the topic of building a repeatable negotiation framework.
01:10 - Discussion on the common problems with traditional negotiation approaches.
02:58 - Explanation of the need for data over traditional negotiation tactics.
04:15 - Detailed breakdown of three critical questions to transform negotiation preparation.
07:11 - Exploration of creating multiple paths forward in negotiations.
09:18 - How long the negotiation process should take depending on deal complexity.
11:37 - Summary of the negotiation framework's sustainability and ease of coaching.
13:15 - Closing remarks and the importance of preparation in negotiation success.
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Transcript
Introduction to Street Smart Podcast
00:00:01
Brian
I'm Brian Dietmeyer CEO of Think Inc. Business Negotiation Redefined.
00:00:06
Carrie Welles
And I'm Carrie Welles partner and vice president with Think Inc. Hi, Brian. Nice to see you again.
00:00:13
Brian
You as well.
00:00:14
Carrie Welles
All right.
Building a Negotiation Framework
00:00:14
Carrie Welles
So today we are, our episode is on building a repeatable negotiation framework. So that's what we're going to focus on. And to do that, we, we probably need to go back and, uh, have a little more conversation on, on some of the concepts that we discuss.
00:00:31
Carrie Welles
So let's start with. What's the problem? that most approaches to negotiation are
00:00:40
Brian
Yeah. And, and you're right. And for for those listening, I mean, and each of these subjects we're going to talk today, there's deep dive episodes on the rest. So yeah, we're, we're going back for a quick recap for you and then pulling it all together.
Predictability in Negotiation
00:00:50
Brian
So the problem with most approaches to negotiation is that people who have been teaching and writing about this stuff think it's random. They think you never know what the heck the other side is going to do. So then if you, if you define the problem that way, then you define a solution that prepares you for everything, right? And that results in a long list of tips and and tricks. And you know we talked about it in the last episode about a book that just came out, 53 Truths of Negotiating. Interesting, but really difficult.
00:01:22
Brian
to scale and put in real life when you're out there working. So if you redefine, we have redefined the negotiation problem. It is and almost entirely predictable. It's 97% predictable. We know what the other side is going to do, and I won't bore you with our research and our real life work to prove that out, but we know within 97% probability buyers are going to come to us. They're going to refer to their alternative and attempt to commoditize us.
00:01:47
Brian
They're then going to use that commoditization effort to ask for stuff. That's the negotiation problem. And if you define it that way, then that's what we have to get after. It's just those two things.
00:01:58
Carrie Welles
Just those two things. Right. And you remind me to mention that so many of our clients like what we do primarily because it is so simple. It's so straightforward. The framework is, is just really simple. Okay. So, so that's the problem. So then talk to us, summarize the solution if you would.
Importance of Data in Negotiation
00:02:17
Brian
Yeah. So what, what we need is data. We don't need, you know, I think of it as arrows in your quiver. A lot of the other negotiation approaches put 40 or 50 arrows in your quiver. What we need is data. And in the book, B2B street fighting, I joke that the modern day street fighter is a geek, right? Who has better data on the two areas where we're going to get pressure. We know they're going to compare us to the alternative. We need better data than they do about why us, we know we're going to get.
00:02:42
Brian
concession pressure. In fact, we even know pretty much where it's going to come from. So we have to, we need data on both of those things and we need to plan and start changing the conversation. We know what the conversation is going to be. Six months from now, Carrie, I know all the deals we're going to close. Someone's going to come in and say, I can get the same thing from your competitor cheaper. We need to get better data on both of those things and start changing that conversation early.
00:03:06
Carrie Welles
Okay, so it sounds really simple. So how do we do that?
Key Questions for Strategy
00:03:10
Brian
So we prescribed three questions. What are the consequences to both sides if you don't agree? right Which gets after that, you know them referring to their alternative thing.
00:03:20
Brian
What does a great deal look like for both sides if you do agree? And then the final question is, how can I prepare a three-pass forward? So yeah, that's it. It's it's three questions.
00:03:31
Carrie Welles
Yeah. Okay.
00:03:33
Brian
Yep.
00:03:33
Carrie Welles
So let's take those one at a time so we can refresh. And then you can also help our listeners understand about those questions. So let's take the first one. So how does the first one help us comparing it?
00:03:42
Brian
Yep. So what happens to both sides? What are the consequences to both sides in the event we don't agree? Some of you know this as BATNA. Most of us, what's readily available in our brain is the consequences to us if we don't agree, which is I'm going to miss my number. Uh, I'm going to miss my bonus and then I'm not going to be able to get my kid the braces she needs and my kids are going to have crooked teeth. Like all that bad stuff.
00:04:08
Brian
is in our head. And one one of our consultants, Steve Thompson, used to say, that sends us in negotiating scared. So the first question is, what happens to both sides? right The other side should take a deal when it's marginally better than their alternative. The problem is, it's usually not clear to them. They don't know when to accept a deal. So we need better data on on their side. We need to reframe it as a decision to say, OK, if this customer is making a decision between ah ah us and XYZ alternative, could be a competitor, could be building themselves.
00:04:37
Brian
Who should be involved in that decision? What criteria should they be using? And where do we have an edge? The more edges we find, the more power we have in this deal, right? When it comes to concession pressure, we're we we're not going to get beat up as much.
00:04:53
Carrie Welles
Right. Okay. That's great. And then let's turn that to 180. So let's talk about that second question. How does that help us? So what happens if we do agree?
00:05:01
Brian
Yep. Yeah, so what does a great deal look like for both sides of if we do agree, we talked about on a previous episode that most buyers will like line item negotiated with us take one thing, you know, like, oh, you got to lower your price or I want enhanced services, that that kind of thing. And we know that zero sum, as long as we're negotiating one thing, we're just moving value back and forth. So we we have to embrace what I call the inherent complexity. Most deals have a lot of moving parts that we have to reach agreement on, even though only a few are where the pressure is going to come from. But we have to get a sense of.
00:05:38
Brian
does a great deal look like for us? What does a great deal look like for them? Where's the pressure going to come from? And how can we find trades like, Hey, this is a really important thing for us. Not so important to them. Maybe it's introductions to other divisions.
00:05:49
Brian
All right. We know we're going to get pressure on this thing. So let's have that trade. We've got to have those things ready, anticipate where the pressure is going to come from and anticipate trading so we can create value versus just moving things around.
00:05:58
Carrie Welles
Mm hmm.
00:06:03
Carrie Welles
Yeah, and we talked about in a previous episode, not just trading anything, but something that is of equal or greater value back to us. So that's a real litmus test, which is why we should be quantifying very specifically those trades, because it's not, you don't get you know points for just trading anything, especially if it's a bad trade, back to your own company, or it brings in less profitability, but those things that are equal orver or greater value.
00:06:12
Brian
Yep.
00:06:19
Brian
Great. Yep.
00:06:29
Carrie Welles
Okay, and then let's talk about that last question, which is my favorite of the three paths forward.
00:06:36
Brian
Yep.
Shifting Focus from Price to Value
00:06:36
Brian
How can we create three paths forward? It's three different, three different solutions for the customer at three different effectiveness and investment levels. When we come in with one solution, the normal human and inclination is to look at that and go, Oh, that's the price for your stuff. I want your stuff at a lower price. When we come in and say, Hey, Carrie, I have three paths forward. And let me talk to you first about the business impact to you and your organization, the impact I'm going to have on your KPIs with these different Uh, solutions so and then let me express for you the different solutions and and the three options and then attach some commercial terms to those.
00:07:07
Carrie Welles
Mm hmm.
00:07:14
Brian
that just changes unbelievably. So changes the negotiation conversation from the price of the thing to the value of three going forward offers. And as we've talked about in the previous episode, uh, buyers usually don't take any one of those three, but we have them rack them and stack and then we co-create the fourth.
00:07:32
Brian
It's a radically different conversation and negotiation, a value creating conversation.
00:07:32
Carrie Welles
Yeah.
00:07:37
Carrie Welles
Yeah, yeah, completely. I'm reminded too, which is one of the reasons why I love multiple social options so much. One of our clients would often say the best part about it is because we organize the customer thinking for them.
00:07:52
Brian
Yeah.
00:07:52
Carrie Welles
So we'd we we'd begin to introduce some ideas that maybe they hadn't thought about and do it in a really flexible way. Hey, you've got options and how you want to work with us.
00:08:01
Brian
Yeah, and and those of you who listen and know that we often often reference our ex-co-founder and current friend, Max Bazerman of Harvard. Max says that these multiple options act as a sensitivity analysis to the needs of the other side.
00:08:15
Brian
Right? it's It's still, if we say, Hey, Rackham and Stackham, what do you find, you know, most at least effective for you? Oh, why did you stack that one first? Why did you stack that one last? We begin to see parts of all the moving parts of the deal. We're bringing them together holistically and saying, Oh, cool. Let's then let's co-create this fourth one together.
00:08:36
Carrie Welles
Exactly. So let's let's talk about how long it takes.
Adapting Framework to Deal Complexity
00:08:40
Carrie Welles
And as I'm listening to you, We are framing this as a a a simple process, a simple framework for questions. Now, those listening are like, whoa, whoa, wait a minute. I have a really complex negotiation. And we know that this framework will ebb and flow based on the complexity of negotiation, whether you're negotiating you know a couple thousand dollars or you're negotiating multi-million. So give us some advice on how long this process might take.
00:09:11
Brian
Kerry, you know, one of my favorite quotes is from Eric Feldman's book, The Power Behind Positive Thinking. And he says about life, life is simple, it's just not easy.
00:09:19
Brian
And and it's it's kind kind of true. The great news is 97% of what the buyer is going to say falls into two categories. We know what's going to happen. We can prepare for 97% of that by answering these three questions.
00:09:20
Carrie Welles
Mm hmm.
00:09:32
Brian
We call this negotiation blueprinting. And to blueprint a deal, the blueprint expands and contracts. how much What's your sales cycle time? How big is this deal? How complex is your solution? How complex are the commercial terms? It could be. You and I worked with a wine distributor, manufacturer, and they were calling on on grocery stores and restaurants.
00:09:54
Brian
and And we used to have reps five minutes in their car before they walk in, answering those three questions. So it expands and contracts. These are reasonably simple deals with independent restaurant and liquor store owners. for For those of us doing 10, $20 million dollars renewals, we might have three of us in a room answering question one, especially what happens to the other side if they don't reach agreement. Who's who's their alternative? Where do we have an edge? That might be three to four hours with four to five of us in the room.
00:10:22
Brian
The good news is once you've done that, that data you can reuse.
00:10:22
Carrie Welles
Sorry.
00:10:28
Brian
You're going to have to kind of customize it, manipulate it a little bit in subsequent negotiation, but you don't, you don't have to zero base this for everyone at all. It all kind of follows patterns.
00:10:28
Carrie Welles
Sorry.
00:10:37
Carrie Welles
Yeah, that's a great point. And I think that's a great point to end with.
Preparation's Role in Negotiation
00:10:40
Carrie Welles
That framework is sustainable. It's repeatable. It's pretty easy to coach, too, for those managers who are joining us, because you can zoom in on those three questions in one framework, one blueprint, three three questions.
00:10:54
Carrie Welles
Pretty easy.
00:10:54
Brian
Yep. Yeah. And Carrie, i I would, I would end with, with another favorite quote of mine that it's dull and determined effort that drives brilliant achievement. And people often think of like asking those three questions, and, and getting ready for the negotiation, even if it's 20 minutes you prepare for, or an hour.
00:11:14
Brian
People think of that as negotiation planning as it's outside of the negotiation effort. That's the dull and determined effort. But man, when, first of all, that's, that's the most integral part of a negotiation. It's not negotiation planning. It's not outside of the negotiation.
00:11:27
Brian
Great negotiators do that dull, undetermined effort. And then when you're sitting across the desk from somebody and they're saying, your competition's faster, you've already thought through that and you're ready. When they say you need to lower your price, you've already thought through that and you're ready for it. You're ready to put three options on the table. That's the brilliant achievement. that That's where it's worth it. You know, it's sort of like when you step up on stage, you know, you do all the, all the rehearsals until you get off book as an actor and then you do a dress rehearsal and then you step up on stage and it's like, boom.
00:11:57
Brian
I think that's how it works for us in negotiation. We've got to do those, got to do those dress rehearsals. We've got to get off book and we've got to be ready for what's going to come our way.
00:12:05
Carrie Welles
and It's so much more fun. Yeah, it is so much more fun when when you have done your homework and you have already anticipated.
00:12:12
Brian
Oh, you mean it's not fun to get your butt kicked in a negotiation? Is that what you're saying?
00:12:16
Carrie Welles
True.
00:12:17
Brian
Yes.
00:12:19
Brian
You're right.
00:12:19
Carrie Welles
so ah You're unprepared for sure.
00:12:20
Carrie Welles
You're gonna get your butt kicked. And yeah, so exactly that's where the confidence I've seen that so often, even with my own personal practice, the confidence source when you are really feeling prepared.
00:12:31
Brian
Yep.
00:12:31
Carrie Welles
Okay, fantastic. Thanks, Brian. And we'll end here.
00:12:34
Brian
Thank you, Carrie.
00:12:36
Carrie Welles
but Yeah, we'll see you all back for next episode.