The business of doing the

businessbusiness

- April 2011

Devised by C Morris - www.evolve.ie

Customer Perception LadderCustomer Perception Ladder

3

ValueValue

PartnerPartner

1

2

CostCost

Value AdderValue Adder

Commodity BrokerCommodity Broker

The Big 8The Big 8 – P.A.R.T.N.E.R.P.A.R.T.N.E.R.

• Perception (supplier status)

1. Commodity broker

2. Value adder

3. Partner

PP• Awareness

(of their business)

1. Media / gossip

2. SWOT - entry level

3. SWOT/Chart/Director

AA

3. Partner

• Relationship(vertical)

1. Entry level

2. Middle management

3. Regular – Top brass

RR

3. SWOT/Chart/Director

• Them (our perspective)

1. Once off

2. Yearly commitment

3. Strategic partnership

TT

The Big 8The Big 8 – P.A.R.T.N.E.R.S.P.A.R.T.N.E.R.S.

• Number of(products)

1. One

2. Two

3. Three plus

NN• Euro margin / profit

(of their business)

1. Low

2. Medium

3. High

EE

3. Three plus

• Relationship(horizontal)

1. Entry level

2. Order taker & manager

3. Level two &

Successor/Influencers

RR

3. High

• Spend(percentage of)

1. Ad hoc

2. Preferred supplier

3. Total

SS

Account Management WheelAccount Management Wheel1. Perception -Supplier Status

2. Awareness

Of their biz.

3. Vertical

8. Spend

Percentage of

1

2

3

3. Vertical

Relationship

4. Them – our

perspective

5. Number of products

6. Horizontal Relationship

7. Euro margin

Account Management WheelAccount Management Wheel1. Perception

Supplier Status

2. Awareness

Of their biz.

3. Vertical

8. Spend

Percentage of

3. Vertical

Relationship

4. Them – our

perspective

5. Number of products

6. Horizontal Relationship

7. Euro margin

Account Management WheelAccount Management Wheel1. Perception

Supplier Status

2. Awareness

Of their biz.

3. Vertical

8. Spend

Percentage of

3. Vertical

Relationship

4. Them – our

perspective

5. Number of products

6. Horizontal Relationship

7. Euro margin

Account Management WheelAccount Management Wheel1. Perception

Supplier Status

2. Awareness

Of their biz.

3. Vertical

8. Spend

Percentage of

3. Vertical

Relationship

4. Them – our

perspective

5. Number of products

6. Horizontal Relationship

7. Euro margin

NEGOTIATIONNEGOTIATION

Concede in areas of lesser importance to

gain in areas of greater importance

GREAT NEGOTIATORSGREAT NEGOTIATORS

KNOW TWO THINGSKNOW TWO THINGS

(1)THE VALUE OF THEIR PROPOSITION

�Belief in their product or service

�Ability to Communicate that Belief�Ability to Communicate that Belief

�Competitor Knowledge

�Industry Knowledge

�The benefit to the purchaser

(2)(2)

6 Principles Of Negotiation

�Distinguish the issue from the personality

of the negotiator

�Agree Objective Criteria

�Innovative Option Creation�Innovative Option Creation

�Be Specific

�Interests versus Positions

�Zonal Negotiation

Preparation for NegotiationPreparation for Negotiation

Preparation 1

• Prepare must have objectives and wish

lists

• Know what is out of bounds

• Get into their shoes – What are their • Get into their shoes – What are their

objectives

Preparation 2

• Decide Fallback Position (theirs and yours)

Preparation 3

• Prioritise Tradables

• Know what they are

– Price, Volume, Term, Payment, Delivery,

Warranties, Testimonials, RecommendationsWarranties, Testimonials, Recommendations

• Construct the Value of the Tradable to

both parties

Preparation 4

• Construct best and worst trading limits

Preparation 5

• Plan What If’s

Top Tips for Negotiations

1) Give them what they want – On your terms

2) Avoid Dilution

3) Give nothing for nothing

4) Win-Win is better for long term business

5) Summarise very regularly5) Summarise very regularly

6) If you think you are far apart – propose first

7) Don’t just state grievance – propose a solution

8) Watch for signs of flexibility

9) Ring fence areas that you won’t budge in

10) Open realistically – move carefully

Top Tips for Negotiations

11) Always remember to be strong on the relationship

12) When you make a proposal – Shut Up (Invite response)

13) When you ask a question – Shut Up (Invite response)

14) Value your tradable on their terms

15) Slice up your tradable15) Slice up your tradable

16) Give them your specific conditions before your offer

17) Put a price on unreasonable demands

18) Use Trial Closes

19) Use Add Ons and Take Aways

20) Structure expectations between meetings

21) Summarise Your Agreement

The Stages of Negotiation

Stage 1 – Issues on the Table

• Get Issues on the Table (Broadly)

• Demonstrate Openness by starting the List

• Mix up your high priority and low priority

tradablestradables

The Stages of NegotiationStage 2 – Get and Give Information

• Ask questions

• Seek first to understand – then to be understood

• Find out their Priorities – uncover their motives and interests

• Review Issues

• Structure Expectations• Structure Expectations

• Test Assumptions (Why do you have no flexibility on that)

• Probe Motives

• Explore Priorities

• Identify interests and inhibitions

• Be constructive – avoid point scoring and sarcasm

• After Making a proposal – Invite a Response

Making Proposals

• Open realistically

• Credible – facts to support

• Address all key issues• Address all key issues

• At other party’s limit

Intro-Propose-Explain-Summarise-Invite Response

(Don’t just state a grievance propose a remedy)

The Stages of NegotiationStage 3 – Get Clarity

• Understand their proposal

• Clarify – Paraphrase and Summarise

• Get and Give Information

• Get on the same page• Get on the same page

The Stages of NegotiationStage 4 – Signal Flexibilities

• Signal – Watch and Listen

• Flag Flexibility (If it will make a difference)

• Indicate ‘out of bounds’

– `Just suppose’– `Just suppose’

The Stages of NegotiationStage 5 – The Swapping of Concessing

• Trade Concessions

• Be clear / Be specific

• Be realistic – address their real concerns

• Don’t interrupt• Don’t interrupt

• Understand their concessions

• If you doG..then IGG(conditions before

offers)

Receiving a Proposal

Option Yes/No

No – Leaves other party with initiative

Yes – Are you missing a chance of Wish List

� Instant Counter Proposal – Leads to Haggle

� Adjourn – Thinking and Consulting time� Adjourn – Thinking and Consulting time

� Detailed Response – Repackage to make more acceptable

� Considered Counter Proposal – The circumstances that you will agree to what they are proposing

(Give them what they wantGG.on your terms)

The Stages of NegotiationStage 6 – Finalise the Deal

• Trail Closes – are you saying that if I G..

• Questions about minor details signal deal close

• If you agree to the proposal thenG.

• Don’t get greedy• Don’t get greedy

• Conclude and Summarise

• Ambiguity is cleared up more easily at this point

• Agree implementation process

• Write it down

Questions

‘The wrong ones’

• Are you listening to me?

• Do you think I was born yesterday?

• Yeah, yeah, but what do you really want?

• Multiple• Multiple

Questions

‘The right ones’

• Perhaps you could explain your reasons?

• Let me understand what your priorities are?

• Is there anything I can do for you?

• Why is that important?• Why is that important?

• If I do that for you – what will you do for me?

• Under what circumstances would you do what I

want?

• Is there anything else it would be useful for me to

know?

Roadmap

• Prepare for Negotiation

• Introduction and Build Relationship

• Get a shared understanding of Issue

• Get and Give Information

• Summarise Understanding• Summarise Understanding

• Signal Flexibility

• Make Proposals

• Bargain ‘Swap Concessions’

• Agree and Confirm Deal

NEVERNEVER

• SAY ‘IS THAT YOUR FINAL OFFER?’

QUESTIONSQUESTIONS

THANKSTHANKSConor Conor MorrisMorrisConor Conor MorrisMorris

www.evolve.iewww.evolve.ie