The 7 biggest mistakes people unwittingly make when ...€¦ · The 7 biggest mistakes people...

www.commercialstrategy4.co.uk copyright © 2016 Andrew Bailey

The 7 biggest mistakes people unwittingly make when negotiating and how to avoid them.

The 7 biggest mistakes people

unwittingly make when negotiating and how to avoid

them.

Are you making any of these mistakes that will be costing you a fortune in lost profit?

By Andrew Bailey Director Commercial strategy4.



Copyright © 2016 Andrew Bailey All rights reserved, including the right to reproduce and section in any format online or offline. No part of this publication may be reproduced, distributed or transmitted in any form without the written consent of the publisher and author. Email [email protected] commercial strategy4 6 Lichfield Street, Burton on Trent, Staffordshire, DE14 3RD.



Dear Reader,

At some time or another we all make mistakes, what is important, of course, is that we learn from them. The feelings and emotions we experience from not achieving what we want in negotiations can range from frustration to annoyance to despair, not to mention the potential financial impact on our business and ourselves personally.

I’ve worked with many ambitious and talented business people who have lost significant value from their business by committing some common but critical negotiating mistakes, and on many occasions they were not aware of what they were doing wrong or could have been doing better.

However, and here’s the thing … all of these common mistakes can be rectified. This book contains simple and practical advice to help you negotiate better, achieve more valuable deals and grow your profit.

The insight and tips presented here have been gained over many years working with business people across many industries and sectors. The solutions have been tried and tested in real situations and proven to deliver better results.

Being aware of these common mistakes and taking action to avoid them will have an immediate impact on your results.

Here are seven of the most common negotiating mistakes I come across and some strategies to avoid them. Understand the issues, use the advice and tips and you WILL negotiate better.

Yours …



Mistake 1

Thinking the negotiation starts at the end of the sales process.

“The secret of getting ahead is getting started”.

― M Twain



Most people treat negotiations as starting when the buying or sales process is nearing the end and price becomes an issue. It’s almost as if the mention of numbers triggers the negotiating behaviour to start.

Experienced negotiators know that there are opportunities to increase value (to you) or decrease the value (of the other side) all the way through the deal making process.

A failure to understand that the negotiation starts the moment you engage with the other party means you run the risk of missing opportunities to influence things in your favour.

Have you ever been in a situation where the person you want to come to an agreement with asks you for something during your meetings, such as, a presentation to their team, some samples of your product or demonstration of your service? If you have, then you may have been guilty of giving away value (and incur cost) without getting any commitment from the other side.

If you regard the negotiation as starting when you first meet the other side, any requests they make of you should be considered as opportunities - for you to build your value. For any request you should think about two things:

(1) How you can use the request to build your value. For example if you are asked for a product sample make sure it gets into the hands of the people who will use it so you can make sure it fulfils their needs and you can discuss potential high value product improvements specifically for them.

(2) Ask for something in return. If what you have and do is valuable you shouldn’t give away anything without getting something of value in return (a core principle of negotiating). Using this example, if you are asked for samples then ask to be able to discuss the product with end users, get their feedback and build this into your sales approach to enhance the value of your product.

If you approach the negotiation as starting from the beginning of your relationship building/sales process you should think about the ways you can influence the other party throughout this process. Some of the ways you can do this include when, what and how you communicate, who is involved in the process, your opening statements or positioning, how you frame your requirements and how you can use anchoring techniques to build your position.

Tips: • Remember that every time you communicate with the other party it is an opportunity

to build your value and influence the outcome. • At every stage of the relationship, don’t give away value however small the request. • Use all your communication methods to re-inforce your key messages. • Before you negotiate make sure there is a commitment from the other side to buy/sell.



Mistake 2

Failing to prepare and plan thoroughly.

“Success does not consist in never making mistakes but in never making the same one a second time.”

― George Bernard Shaw



We all know the expression “a failure to plan is a plan to fail”, well it’s no different with negotiating.

Below are just some of the areas to think about when you prepare for any negotiations:

ü Why are you negotiating - do you really need to?

ü What are your goals and objectives for the negotiation?

ü Understanding the motivations and objectives of the other side.

ü What strategy you will use, what strategy will the other side use.

ü Getting in the right ‘mindset’ to negotiate.

ü Your opening position or proposal.

ü The likely objections you may have to overcome.

ü What concessions you are prepared to give.

ü What value you want from the other side and any conditions to the deal.

ü How you will implement the deal and hold the other party to account.

The most important area to prepare well is defining your goals and objectives. Without clearly articulating these it is very difficult, if not impossible, to build your strategy, approach and tactics. Goals and objectives are often expressed as:

• What you want to achieve - your ideal outcome. • What you intend to achieve - your realistic target. • What you must achieve - your minimum requirements. • What your ‘walk away’ point is, where you will leave the negotiation, the point

below your ‘must’ achieve.

Tips: • Preparation is crucial, spend the time in this area and you will get the most benefit. • Focus on both the analysis, the numbers and the behavioural aspects of the

negotiation such as communication style, meeting location/set up and influencing skills.

Contact us for our complete Negotiation Preparation System.



Mistake 3

Not appreciating that understanding the balance of power is key.

“Let us never negotiate out of fear. But let us never fear to negotiate.”

- John F. Kennedy



Understanding where the balance of power lies in the negotiation is key to developing the right strategy and achieving the best results. Our experience shows that most people underestimate the power they have and, therefore, fail to achieve the results they could and should. We know that the greater your power/strength in the negotiation then the greater your chances of achieving your goals. If you have less power than your counterpart then you may have to use other techniques to achieve your objectives. So how do you assess who holds the power or strength in the negotiation? Here are some of the key areas or sources of power you need to investigate:

• How important is it to you and the other party to reach a deal? • Consequences - what are the consequences of not reaching an agreement? • Commercial arrangement - what is the commercial balance of the relationship? • Value - how much value (tangible and non-tangible) do you provide the other

party, and them to you? • Relationship - how important is the relationship to you and the other party? • Time - how quickly do you or the other party need to reach a deal? • Alternatives - what alternatives are there for you or the other side if you fail to

reach a deal?

Your answers to these questions will determine where the balance of power lies. For example your negotiating strength will be lower if you need to reach a deal quicker than the other side, or if you have a number of suitable alternatives you can use these to increase your strength and leverage.

When you have analysed and understood where the negotiating strength and power balance lies you can create strategies to either make the most of your strength or build on areas of weakness to shift the balance in your favour.

Understanding your negotiating strength or power becomes the start point for developing your strategy for the negotiation. If you are in a position of relative strength you can take a more aggressive stance, if you are in a relative position of weakness you may need to adopt a more collaborative approach.

Tips: • Do your research thoroughly to understand both your and your counterpart’s

alternatives, they may not be obvious. • Understand as much as you can about the other side and their strengths/weaknesses. • Be as honest and objective as you can in your analysis otherwise you may

inadvertently over or underestimate your position. • Underestimate your strength and it will undermine your confidence.



Mistake 4

Not understanding the importance of having the right mindset for negotiating.

“You can achieve anything you want in life if you have the courage to dream it, the intelligence to make a realistic plan, and the will to see that plan through to the end.”

– Sidney A. Friedman



This is about being fully prepared, confident and up for the challenge. Too often I see people neglect this area and go into negotiations feeling apprehensive, unsure and not in control. One way to avoid these feelings is to get into the right ‘mindset’ or ‘attitude’ for the negotiation and to use various techniques to be in control of yourself and how you interact with others.

Much has been written in recent years on the impact of having a positive outlook on results, understanding how the brain works through neuroscience, eliminating limiting beliefs, NLP and so on. I’m not going to go into detail on these areas - there are more qualified authors on this subject than me, however, having the right mindset is important to the outcomes you achieve. Here are some of the areas that you can develop into your ‘negotiating mindset’ and approach.

Confidence - this comes through thorough preparation, rehearsing your approach, sound strategy and a belief in your value.

Positive attitude - go into negotiations believing you will achieve the outcomes you need and want, visualise what success looks like and how you will achieve that success.

Building rapport with the other side - research proves that we are far more likely to do business with people we like and are like us. Focusing on likeability and building rapport can set the scene and get both sides in the right mindset for good negotiating outcomes.

Seek to understand the other person(s) - there are many techniques around to help you understand the outlook, motivations and characteristics of others. If you can do this it will give you greater insight into the other persons motivations and decision making process and how they may approach the negotiation.

Focus on your communication style - we all see the world differently and all have different communication styles and preferences. Understanding how to communicate in ways other people prefer can make the process much easier and avoid confusion and potential conflict.

Tips: • Be confident in your negotiating position. • Rehearse the main points of your negotiation such as your proposal and counter

arguments. • Exude confidence in your verbal and non verbal behavior. • Build rapport with the other party. • Be positive about the outcomes and confident in your walk away position.



Mistake 5

Not having a process and system to follow.

“If you can't describe what you are doing as a process, you don't know what you're doing.”

W. Edwards Deming



Great companies use systems and processes to make sure the results they achieve are not in doubt, they don’t leave things to chance or just ‘wing it’. They know if they follow the right process they will achieve the right result, not once but time and time again.

By having a methodology, process and system to follow your negotiations become easier to manage, less stressful and less time consuming. People who follow a methodology for their negotiations are more in control, know what they are doing and consequently achieve better results.

A client of ours, who now uses our four stage approach, below, has consistently negotiated deals with major customers and increased prices year on year - delivering significant value to their bottom line.

Tips: • Preparation is crucial, spend the time in this area and you will get the most benefit. • Develop a confident mindset with a positive approach. • Plot the negotiation process and plan what you will do, say and anticipate what the

other party may do. • Think about how the deal will be implemented and how you can ensure this will

happen.



Mistake 6

Not getting the deal agreed, confirmed and in writing.

“When a man says that he approves of something in principle, it means he hasn’t the slightest intention of putting it into practice.”

– Otto Von Bismark



Many negotiations fail to get implemented and achieve what they set out to because there is a lack of clarity on what has been agreed. I know of many instances where negotiated deals have unravelled simply because both parties believed they had agreed slightly different things.

Don’t waste all your negotiating effort without making sure the agreement you reach is clear, concise, written down and agreed by all. Here are some simple ‘rules’ to follow: Rule 1: Have a note taker in your team during the negotiation.

Rule 2: Use your notes to summarise the deal or arrangement.

Rule 3: Try to use the actual language and terminology used during the negotiation to avoid misinterpretation.

Rule 4: Make sure you write up the detail as soon after the negotiation as you can, relying on memory days after the event will cause omissions.

Rule 5: Make sure YOU write the deal up and send it to the other party for their comments and agreement. This puts you in control, adds more weight to the deal and people believe what they see in writing.

Rule 6: Ensure if there is any disagreement the points are dealt with before the deal becomes final.

Rule 7: If legal documents are required make sure YOU brief your legal team.

Rule 8: Always ask someone else to check the documents and make sure you haven’t missed anything.

Rule 9: Keep records of all communications with the other party for future reference.

Rule 10: Make sure you have a formal agreement from the other side, even if that is an email, ensuring it is dated and signed either physically or electronically.

Tips: • Summarise the deal you have agreed and ‘play’ it back to the other party. • Follow up your agreement in writing as soon as you can. • Be in control of the process and don’t leave it to the other side. • Don’t be afraid to go back to the deal if the written agreement is not right.



Mistake 7

Failure to manage the deal when you have agreed it.

“Destiny is not a matter of chance, it is a matter of choice; it is not a thing to be waited for, it is a thing to be achieved.”

― Winston Churchill



This has to be the most frustrating mistake of all. So many times I see businesses - large multi-nationals and SMEs - who spend time negotiating only to forget or fail to manage the deal effectively. Why spend so much time trying to reach a great deal if you don’t implement and manage the agreement to achieve the results you want and intended?

I was called in to work with one well known business that lost in excess of £100k simply because they didn’t manage the deal and hold the other party to account for their side of the bargain.

Make sure you have a plan and process in place to implement what you have agreed and the plan enables you to achieve your desired results. Here’s a useful checklist:

While this checklist is not exhaustive and is focused on mainly on commercial deals, it applies to all negotiations, make sure you have agreed the deal and how it will be implemented in detail. Failure to do this may render all your hard work irrelevant and a waste of time.

Tips: • Make sure the agreement you have reached can be implemented. • Simple is usually better. • Review the agreement and it’s execution at regular intervals to make sure it is

delivering the value you negotiated. • Remember that how the deal works out will influence any future negotiations - think of

negotiating as a continual process.



Our point of view ...

The most powerful drivers of rapid revenue and profit growth are marketing strategy, pricing, value selling and negotiating.

On their own each of these drivers can have a positive impact on performance - done badly and they have the ability to undermine each other, dilute results and severely damage a business’s performance, prospects and potential.

There is a 'sweet spot' - where these four areas combine - to generate the greatest impact on profit and deliver the maximum return for your business.

In this book I’ve focused on negotiating … why? Simply because these tips can be used immediately and will get you better results NOW. Whether you’re negotiating multi-million £ deals, cost reductions from suppliers or capturing the value of your own products and services through value based pricing, being an effective negotiator will undoubtedly get you better results and grow your profit - guaranteed.

If you focus on these four areas then I’ve no doubt that you will achieve great results and earn the profit you deserve for your skills, expertise, time and effort …



No other skill can deliver such an improvement in profit in such a short space of time.

Why not try us out …

Book our Negotiation Taster Session - a high impact ‘taster’ of our approach with lots of tips and secrets on how to improve your negotiating that will

deliver higher profits - all delivered in a 2 hour session.

Here's what others have to say ...

"Andrew is a highly professional person, with an exceptional grasp on both the formulation of pricing and negotiation strategies and the operationalisation of these into practical action that drives real value". Director of GB Programme Management at Britvic Soft Drinks.

"Andrew was able to help us prepare for a critical contract negotiation by assisting us to identify our key strengths and establishing a logical framework in which to guide the negotiations. This enabled us to maximise our negotiation position and undoubtedly helped us to achieve the best possible outcome. His mentoring approach built confidence and enabled us to approach negotiations with a stronger and more positive outlook". MD at Smith and Morris Retail Ltd. "Andrew knows his pricing inside out and back to front. He knows the theory and the practical. He knows how to get C suite buy in and then get it actually implemented at the point of purchase. Apart from all that he's a great sounding board, completely trustworthy and a good guy to have on board". Marketing Director, Aggregate Ind.

"Andrew understands business strategy better than anyone and his solutions always take into account the successful direction of your business. If you need to significantly improve your organisation’s growth and ultimately your future success, it’s worth you checking out Andrew's services.” CEO and business coach.

Or you could take our online Negotiating Capability Assessment™

The Assessment will identify your strengths and weaknesses in negotiating and you’ll receive a bespoke report highlighting the strategies you can focus on to improve your

skills and knowledge.

Call me now on 07808 095825

or email me at [email protected]



Our Negotiating Programmes By it's very nature the NegotiatingPartner™ Programme is specific and tailored in the support we provide for our clients. The expertise and help can include coaching, mentoring and being part of your negotiating team. NegotiatingMentor™ Programme - personalised, ongoing support to ensure your skills are embedded for the long term so you can achieve a permanent behavior change and achieve repeatable successful results.

Some of the unique and innovative tools you’ll use on our programmes:

• Value Selling Playbook™ - create a system to communicate your value in a compelling way.

• Conversation Road Map™ - approach your customer conversations with a value focused methodology.

• Negotiating Capability Assessment™ - the aim of the Negotiation Capability Assessment is to identify your strengths and weaknesses in negotiating and develop the strategies to improve your capabilities.

• Negotiation Opportunity Mapper™ - an important start point is to identify the opportunities to improve results through better negotiating - we do this through the Opportunity Mapper.

• Negotiation Preparation System™ - a methodology to enable you to prepare for negotiations in a thorough and consistent way to achieve repeatable success.

• Negotiating Power Assessment™ - enables you to judge the power and leverage you have in negotiations and ways to move that balance in your favour.

• Negotiation Autopsy™ - a complete dissection of your negotiating and deal

structuring to enable the right solutions to be found to develop your approach.



A little about the author … As you may have guessed from reading this book, what ‘gets Andrew up in the morning’ is helping people earn the profits they deserve for their skills, expertise and the time and effort they put into what they do. As Andrew says … “I see too many people who are not aware that there are solutions ‘out there’, or don’t know what to do or feel powerless to influence their pricing and profit. When their lack of action is based on the fears, myths and belief that raising prices will have a bad effect on their business … that customers will leave them and they will lose money … that’s annoying … because there are solutions out there. There are ways they can be more in control AND these fears and beliefs are just plain wrong and are preventing them from taking action to achieve their goals …” Not surprising then that his purpose is to help people overcome these fears, gain crucial skills, build their confidence and bridge the pricing opportunity gap - the gap between where your pricing and profit is compared to where it could … and … should be. It was during the latter stages of his corporate career in Finance, Sales and Marketing that he discovered the huge power and massive potential of Pricing and the impact it can have on a company’s profit. So much so that he began to specialise in this area and so established his own business with the idea of ‘helping people earn the profits they deserve …’ as the core purpose. Andrew has since gone on to develop his own perspective and unique approach incorporating marketing strategy, pricing, value selling and negotiating as the key ways companies can increase profits quickly with little or no investment, so the benefits hit the bottom line immediately. He has now had the pleasure of working with many businesses from Multi-Nationals to SMEs, private and public sector in a range of industries such as consumer goods, construction, drinks, tobacco, online retailing, IT, printing, leisure, professional services and education. Holding an MBA from Nottingham Business School, Andrew is also a guest lecturer at the School and teaches Marketing to undergraduates. In addition he is a qualified mentor and coach and acts as a Non Executive Director on an education Board and Trust. There is nothing he likes more than spreading the word on these issues and regularly speaks at events and seminars on marketing, pricing, value selling and negotiating. Andrew is actively involved in various bodies such as Fellow of the Institute of Directors, Fellow of the Chartered Inst. of Marketing, Fellow of the Chartered Management Inst. and Fellow of the Institute for Consulting.

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