Sometimes your company's approach to or attitude about business negotiation actually works against you at the negotiating table.
Your deals tell the market who you are
One impediment to negotiating success comes from a disconnect between account management and opportunity management processes. When properly integrated, these processes ensure that selling fundamentals (e.g., identification of key buying influences, the role played by buyers and value solutions for the client's business problems) are more consistently executed.
One of the major benefits to your company incorporating a more prescribed approach to negotiation into its selling framework is that it lets you strategically influence the marketplace. The deals your company makes communicate to the marketplace who you are as a company, so taking greater control of the negotiating process helps to ensure that the market will see your company the way you want it to be seen.
In the Harvard Business Review (November 2004), Danny Ertel wrote, "I have found that companies rarely think systematically about their negotiating activities as a whole. Rather, they take a situational view, seeing each negotiation as a separate event, with its own goals, its own tactics, and its own measures of success." Further, he added, "that approach can produce good results in particular instances but it can turn out to be counterproductive when viewed from a higher, more strategic plane." In other words, organizations without a negotiation process and strategy are letting their tactics and deals present a picture of who they are in the marketplace by accident rather than by design.
On this front, companies appear to fall into two camps: either the negotiation constraints are so tight that the sales force is not empowered to make decisions, or the parameters are so broad that the market decisions they do make are inconsistent. Aligning negotiation strategy and process allows for centralized planning (strategy) and decentralized execution (process), thereby enabling those closest to the customer to make faster and more effective negotiation decisions while ensuring that companies can present themselves as they want to be presented.
Are you learning from your past success and mistakes?
Another significant benefit of negotiation alignment is that it facilitates organizational learning. We are constantly surprised by the inability of the most efficient organizations we work with to acquire central knowledge about the most common negotiation demands made by customers and by the typical gaps in competitive analysis when they attempt to sell a specific product to a specific customer against a specific competitor. Collecting, organizing and using such information can greatly benefit these organizations, in fact any company, by preparing them to counter anecdotal buyer claims or irrational competitive behavior in future negotiations. Specifically, as companies being to implement a negotiation process they build organizational memory - a database populated with the key elements gathered and learned while negotiating - allowing them to begin to behave more effectively and consistently, thus improving and adding to the bottom line.
If you'd like to know more about our recent research and findings, request our white paper below entitled, Creating and Maintaining Value Ecosystems.