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Everything You Know About Negotiation is Wrong
83 Plays2 years ago
In this episode, Brian and Dan explore the limitations of negotiation soft skills and the challenges of scaling them within organizations. They delve into the difficulties of relying on psychological tactics and the need for a more methodical approach to negotiation. So, if you're ready to challenge your beliefs about negotiation and learn the truth behind effective negotiation strategies, tune in to Everything You Know About Negotiation is Wrong on Close Mode.
[00:01:52] Negotiation training involves establishing desired outcomes. It includes tactics like the flinch, where reacting subtly can make the other party think they've overshot.
[00:03:52] Negotiation is like a dance, a psychological warfare to get the best deal. It requires soft skills and expertise.
[00:07:11] Failing to address the core issue of negotiation, even with extensive experience and partnerships, results in a continuous struggle to select the right approach. The challenge lies in determining which arrow to employ in response to the opponent's moves, as there are numerous options available. This process becomes virtually impossible and seems rather overwhelming. It's intriguing how even seasoned individuals, like myself, fell into the trap of creating solutions based on mistaken diagnoses. Having recognized this flaw, I eventually chose to part ways with my Harvard partner, as their approach only perpetuated the same ineffective pattern.
[00:12:49] Organization wanted fuel escalation clauses in contracts. The organization we worked with was a fleet rental company. They desired more fuel escalation clauses in their contracts to shift the risk back to the buyer and balance the risk as gas prices fluctuate. They received training on how to incorporate fuel escalation clauses into contracts, leading to a significant increase in the number of deals with such clauses, from 20% to almost 80%. This had a profound impact on their profit margins, as noted by the CFO. This differs from mere tips and tricks.
[00:14:28] 97% probability in sales forecasting impacts planning.
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Transcript
Misconceptions in Enterprise Sales Negotiation
00:00:03
Speaker
So Brian, I'm somebody who's done some negotiation training. I've read a book on negotiation, you know, so it's not like a totally new world to me, but I know there's a lot to know here. There's a huge subject, right? There's lots of books written on the topic of negotiation now, and I've read Chris Voss's book, Never Split the Difference, and I've done some training.
00:00:24
Speaker
but in the pre-interview we talked about the fact that you say like most of what people know about negotiation as far as for enterprise sales specifically is Wrong is is out of date is not working. Tell me more about that. What do you mean by that? Well, I mean it'll probably help a little bit to go back historically. So I was an enterprise Sales VP
00:00:47
Speaker
Right. I was a negotiation consultant and I had been leaning on a lot of the, in fact, my business partner was a negotiation professor at Harvard. So I was leaning on all the traditional stuff that I knew as well.
00:01:02
Speaker
Most of us think of negotiation as sort of a soft skill, right? And you kind of never know what the other side is going to do. So they don't think of it as a repeatable process or something that you can forecast. And so if you look at negotiation books, there is literally 99 negotiation strategies, 101 negotiating tips.
00:01:28
Speaker
And the latest one I've seen is the 53 truths of negotiation. So when, if you think you never know what's going to happen, it's sort of like you're going in a hunt and you know, you need all these, all these different weapons and all these because you don't know what's really going to work. And so that's how people think of negotiation is that it's, it follows no patterns. You never know what the heck's going to happen. So therefore I have to be prepared for pretty much everything.
Ineffectiveness of Traditional Tactics
00:01:52
Speaker
Yep. Now in the little bit of negotiation training I've had, like there has been some training on like, you know, you want to try to get all the information. Well, first you want to at least establish what do you want? What does success look like for you? What does the walk point look like for you? Like if you can't get this deal, then you're walking from the deal. So you have to at least establish like what the boundaries of what you're hoping for are.
00:02:15
Speaker
Um But I can kind of see where you're going with this because i've heard a lot of tactics like the flinch, right? If they throw out a quote and you're like, oh, you know and you're like You react to it in such a way maybe more subtly than I just did like a whoa. Yeah, you know Um, but to give them kind of the feeling that oh, maybe they overshot it, right? You're you're saying like tactics like that
00:02:35
Speaker
Those aren't gonna get you very far at least not in the enterprise sales well Buyers are taught with a lot of tactics and those tactics are very effective to sellers right because many times they have the absence of a really good plan so in the absence of a plan you know there's a thing in negotiation called anchoring the other side anchor
00:02:53
Speaker
has huge impact you react to that if you don't have a plan buyers are taught this thing of nibbling right where they come back after the fact and they ask for just a little more and they nibble nibble nibble and so the reality is that it.
00:03:08
Speaker
You're not preparing in a systematic way. And maybe the other, I wouldn't even say the other side, the buyer is preparing a systematic way, but they do have a set of tricks that work. And, and my fallback is if you want to counter tricks with tricks.
00:03:23
Speaker
then you're really not gaining much. And especially in terms of relationship, if I'm playing games, if you're my buyer and I'm playing games with you, um, that doesn't really work. And I do like to say that that facts Trump tricks every time. So it, but, but if you're trying to, to react to the other side's tricks and anticipate the other side tricks, there's so many things that they can do that it's virtually impossible to do that. I mean, unless you're like an AI psychologist in your brain and you can map all that stuff out. Yeah.
A Systematic Approach in Negotiation
00:03:53
Speaker
Yeah, so the reason why you're saying that, at least from getting it from you, is that it's a soft skill and that it's kind of a dance, right? Learning how to do trick for trick. They throw out their tricks, you throw out your tricks, and onwards we go with this negotiation dance, this psychological warfare thing going on in order to get the best deal for each, each one's trying to get the best deal. And you're saying that that, if we're playing that game, is it generally going to be a losing proposition?
00:04:21
Speaker
Unless you have somebody that has that kind of soft skill that knows how to dance that dance really well Are you saying like that? There's just a better method that you know if you just apply this better method like you you don't even have to dance that dance anymore yeah, I there is there is a better method and and
00:04:39
Speaker
And it's sort of like, you know, I've had people ask me, what happens when the other side yells at you? You know, it's like, there could be what happens when the other side, there's a long list of that, right? And when the other side yells at you, by the way, it's like, I really don't care if you're focusing on facts and you have a very systematic approach.
00:04:56
Speaker
You don't really care, I don't care about the delivery tone that comes to me. But this stuff is very, I think the thing is for buyers, it's really, really effective, right? In fact, the most common buyer tactic in the world is I can get the same thing from your competitor cheaper. And they keep saying that because it works. In the absence of a really good plan from a salesperson, those tactics are really, really
Challenges with Soft Skills
00:05:21
Speaker
effective. And if you're gonna try to counter that with another trick,
00:05:24
Speaker
Um, it's, it's, it's breakeven at best maybe to answer your question. Yeah. So you're saying the skills, the soft skills are, are going to favor the buyer almost every time. Yeah. Because, because they, yeah. Yeah. Because they're the ones with the power. They're the ones who have the money, right? So they have the power of the choice in this, this deal. So the soft skills are what is going to lend, lend, lend the skills to the favor. Yeah.
00:05:50
Speaker
Yeah. And it's very hard to scale soft skills. It's very hard to repeat them, right? It's so dynamic when you think of two. And in these days, many times there's a couple of players on each side of the table. So everybody's firing these arrows. And if that's what you're trying to focus on, the 101 truths, the 99 strategies, you know, it's, those make for very interesting classes. And I think what's happened over the years is,
00:06:15
Speaker
A lot of sales BPs have run their teams through negotiating classes and they walk out of the class and they say, wow, that was really interesting. And I really liked Dan. He was a great facilitator. And so they walk away and say, that was a great training class because people liked it. There's a massive difference. Um, and, and I think you talked about like hostage negotiating. It's fascinating and it's very cool. And I actually liked listening to some of those videos. It's a very difficult thing to scale.
00:06:39
Speaker
and to use and to anticipate and to repeat kind of you know to install a process into the organization it's very difficult to install a process of soft skills and that it still goes back down to this fundamental this base that we believe that you never know what's going to happen.
00:06:58
Speaker
and tips and tricks and psychological skills, where you sit at the table, all those kinds of things. I just heard this last week, someone saying, well, now everything's on Zoom and the buyers don't use their camera.
00:07:11
Speaker
You know, what should, what should we do with that kind of thing? And it's like, those things will come at you all day long. And it's this constant frantic yikes. How do I pull into the 80 arrows I have in my quiver and just, you know, is it arrow 57 that I pull out now in response to their arrow 27 it's virtually impossible. And it, and it's kind of crazy to me, like I said, having, having done this for a while, I haven't written books on it. Having worked with a Harvard professor building our content. I fell into that same.
00:07:40
Speaker
notion of building a solution that's based on misdiagnosing the problem of negotiation. And so in, in the main, what I would tell you this sort of foundation or the soul of this problem is we believe this is the problem. So then therefore we architect a solution that, and that's, that's what's broken and that's what's missed. In fact, I ended up buying my partner up from Harvard because after many years of doing this, I'm like, no, that's kind of just more of the same. It's more of the same and it's interesting and it's fun again, but it's not effective. Yeah.
00:08:11
Speaker
So maybe you do a sales training with a hundred reps of these old tactics and all the different tips and tricks you can use to try to get your buyer to move.
00:08:22
Speaker
I'd expect that a few of them would pick it up because a few of them maybe already had some of them of these soft skills naturally. And with learning just a few pieces, they can become like a little Chris Voss and can use these negotiation skills in order to win. But what happens as a result of teaching these regularly to your Salesforce to a company?
00:08:42
Speaker
What, what comes to mind as you were saying that is, uh, I've had people say to me, you know, the great thing about negotiation training is you walk away with one or two things you're good. And so that's kind of what I'm hearing you saying that, that maybe someone learns a thing that works in a moment. And, and by the way, no, my answer to that is absolutely not like you take sales reps out of market for a couple of days.
00:09:04
Speaker
And your entire, like they do the smile sheets. They say, I liked it. They walk away with one or two things that's worth it. Absolutely not. And, and, but that's the sort of common belief with this. That's the standard at which negotiation is held, which is just, it's, it's a terrible standard to say, I'm going to spend this money on the training. I'm going to, I'm going to lose this opportunity cost of people being out of market. And if we, if they put a smile on the sheet and, and they learn one or two things that were cool.
00:09:32
Speaker
Then it's worked.
Impact of Traditional Training Methods
00:09:33
Speaker
It feels productive. It feels productive. And by the way, it's checked off my list. As the leader, I can go back to whoever and say, yes, our people are terrible at negotiating. They're getting the butt kicked by procurement. And we did negotiation training. And you know what? Most things are going to remain the same. But it's like back to what you were saying earlier. If a rep learns one or two things, my old partner, the Harvard professor, who's still my friend, he used to say that it's sort of like Vegas.
00:09:59
Speaker
On balance, it's a mathematical fact that we lose. Everybody that goes to the house wins more often, but people keep going. And his point is they keep going because every now and then they win. And I think that's the other thing I was thinking about when you asked that question is, yeah, I went through the training and I got this cute little thing and I did it and it kind of helped me so it was worth it.
00:10:24
Speaker
And that's the standard at which negotiation is held. And even if, if you look back to sales training was that way, if you go back 20 years ago, sales training was all interpersonal skills only. Right. And it was many, many years. It was like Miller Hyman and a couple of other that came out with this notion that selling is a process.
00:10:44
Speaker
It's a, it's a, you know, step by step, you can map it out, you can architect it. And, and that was a massive shift, right? Salespeople was all about personality skills and literally look, look at the pictures on his desk, you know, it was that long ago and compliment his family. You know, that was the extent and that's kind of negotiation training for the most part is, is like 20 years behind where, where sales training is sales trainings, much more analytical and step by step now.
00:11:11
Speaker
What does it look like if companies continue to stick with the tips and tricks method of negotiation training? Like what happens to their sales?
00:11:19
Speaker
Well, whatever's currently happening is going to keep happening. So something motivated you. You know, we often think of it this way, like organizations, they feel pain in negotiation, late stage stuff, they're getting clocked, ASP is down, margins are down, procurement's kicking their butt. And so they say, oh, we should do this. And then they do it. And it kind of remains the same, but it's checked off the list and everybody says we are happy, but have behaviors changed? Have outcomes changed?
00:11:47
Speaker
You know, negotiations about like leading and lagging indicators. If, if you want to enter, if you want to, uh, take your margins up, you have to look upstream and determine what do we have to be trading in and out of deals. Get rid of those things that kill our margins, bring in more things that add to margins. Tips and tricks is not going to get you there. It's not going to give you the chops to scale that across your organization. And recently for a project we were working on, we interviewed 40.
00:12:14
Speaker
uh, VPs of sales and heads of sales enablement. And almost everybody's frustrated with their late stage. How well am I doing in prepping for a negotiation and getting deals closed? And, and also almost all of them had done negotiation training. And we asked the question, what impact did it have on your negotiation? Did anything happen after the trainers left? And, and the answer was, and, and 100% with all 40 of these companies, we talked to the answer was no.
00:12:44
Speaker
But we did check it off the list. People liked it. And yeah, we probably got a couple things out of it, so it was probably okay. So everything remained the same.
Boosting Profits Through Strategy Execution
00:12:51
Speaker
And I want to contrast that. I keep talking about like the problem with it.
00:12:55
Speaker
Well, an organization we worked with, uh, was a, uh, fleet rental company and they, they wanted more fuel escalation clauses in their contract, right? It shifts risk, um, kind of, uh, back to the buyer or more balances risk as, as, as gas prices shift around and they got trained on, on how to bring fuel escalation clauses into contracts, not any tip or trick.
00:13:22
Speaker
and went from 20 to almost 80% of deals had fuel escalation clauses in there, which radically shifted their profit margins. That was the number one thing that the CFO said was going to impact margins. That's a contrast to tips and tricks. It's no, how do we execute our strategy one deal at a time? What's the strategy of the people who own deal approval, whether it's pricing or T's and C's, and how do we do those things better? That makes a big difference.
00:13:52
Speaker
So in all of this, what I hear you saying is that if you fail the plan, you plan to
Importance of Structured Negotiation Plans
00:13:59
Speaker
fail. The tips and tricks and shortcuts to negotiation aren't working. In fact, it's more akin to the sales training from decades past that we all knew wasn't effective.
00:14:10
Speaker
I'm or efficient in scaling across the sales organization so what i'm looking forward to in our next episode is scaling into looking at what is effective how to build an actual negotiation plan and i've heard you say that ninety seven percent of deals. Follow a pattern if we can identify the pattern we can build a plan.
Universal Principles in Negotiation
00:14:28
Speaker
Yeah. And the question is, if, if you were a VP of sales, Hey, Dan, if I could tell you, you have 300 salespeople, uh, you know, doing 2000 deals a year, if I could tell you within 97% probability, what was going to happen in all those negotiation over the next year, how would that impact your, your planning and your outcomes of your deals? Yeah. And you know, it's funny too, when I talk about negotiation being broken. One other thing I wanted to add in is that the same thing holds true with global negotiation.
00:14:58
Speaker
Everybody says, well, it's all different. You know, and the first time I worked in Japan, I had a Japanese rep say, you don't get it. You know, it's different than America. That's another commonly held belief. You know, one is that negotiation, sculpt skills, you never know what's going to happen. Negotiation is different all over the world. All of those are wrong, by the way. And we have some pretty good Evans to back that up. But again,
00:15:20
Speaker
Then the approach for global negotiation is also built based on the fact that it's going to be different everywhere you go. And there's a certain piece of it that isn't. It's exactly the same. And that's where the wind comes in as saying, I know what's going to happen. I know how to prepare for that. Well, fantastic. Can't wait to jump in with you on the next episode to talk about what is working since now where it's obvious what's not working.