B2B Street Fighting Blog

creating value for both sides in b2b sales and negotiation

Posted by Marie Dudek Brown on Mon, Nov 26, 2012 @ 03:37 PM

creating value for both sides in b2b sales and negotiationThe first step in creating value through trading is the pre-work to understand what the ideal trading items are.  It is this pre-work, in fact, that actually enhances the value that is being negotiated in a deal versus simply shifting value from one party to another.  Creating value for trading is actually good for both sides.

Remember that the "buyer" actually represents multiple buyer influences within the customer's company.  Don't lose sight of that fact.  Just as the salesperson represents multiple parties on the seller's side of the deal, the buyer across the table always represents multiple people, departments and buying influences with a stake in this transaction.  

Typically, there is a salesperson who sells to and manages an account.  She comes to agreement with a customer, deems the deal sold, then turns the deal over to the contract manager.  At this point, usually the It the customer is buying and how much he is paying for It have already been agreed upon, and now it's the contract manager's job to negotiate all the terms and conditions.

Frankly, this is a ridiculous idea.  I'm not referring to the contract manager, of course, but to the surgical turnover while all the potential tradable items in a deal are being negotiated.  It puts both the buyer and the seller in a very precarious situation.  On the front end, the salesperson feels price pressure but lacks the risk items on the back end to trade for price.  It also challenges the contract manager on the back end, who doesn't have price to trade because that's already been agreed upon.  At the end of the day, it's all just a bunch of zero-sum risk shifting.

This is how most people think about negotiation, and unfortuately, it's the way most big companies are set up.  Negotiation is turned over to contract managers with little cross-strategizing with salespeople.  In the end, the deal is done but tons of trading opportunities were left on the table, putting more pressure on price.

My poor friends, the contract managers, are getting killed as a result of this strategy.  Or should I say, non-strategy.  Robustness (or complexity or whatever we want to call it) is at the core of B2B negotiation.  To create manimum value for both sides, we want as many moving parts as possible for leverage and for setting up a variety of creative trades (take a little here, give a little there).  Recall the theme here:  the natural complexity of B2B deals is your friend as well as the enemy of commoditization.  We need to embrace it and organize around it more efficiently than everyone else, not make strategic decisions that reduce or ignore it.

Tags: negotiation strategies in business

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