B2B Street Fighting Blog
Tags: business negotiations
In her book The End of Competitive Advantage, Columbia Professor Rita McGrath states:
"Long term structural advantage is gone and being replaced by a series of short term transient advantages."
This means we need to do two things to survive:
- Constantly innovate.
- Get these innovations into the hands of our salespeople as soon as possible to leverage them as quickly as possible.
We’ve spoken with multiple leaders that tell us the following story:
- We saw a competitive opportunity and developed a new product or service, acquired a new business, etc.
- We announced our new and improved value proposition at sales kickoff.
- Product and marketing produced playbooks and enablement took the team through rigorous sales methodology training.
- Financial incentives were put in place.
By and large the sales team didn’t make the transition but kept selling the old value proposition and solution.
Why is this, given the steps above taken by the organization? The #1 reason?? The confidence of the sales team. Salespeople do not want to take the risk of losing a deal or losing face having new conversations for the first time in front of a customer (even if we’re in front of them on a screen).
To start, a study of email, telephone and face-to-face negotiation (published in Harvard Business Review) notes the following:
- No surprise but the best outcomes for both sides were reached face-to-face
- On telephones, it was more win/loss where one party ended up with a significantly better outcome
- Email negotiation had the highest level of impasse (50% vs 19% face to face)
Given our choices of text, email, or phone calls, we strongly suggest video conferencing as the next best alternative. I think we’re all aware that “if an email can be misconstrued…it will.be.” Which is why we all know to be very cautious with our written word absent verbal and physical cues as conflict can easily arise. Interestingly, I did just read an article that emoji’s might actually help replicate some of that human interaction and clarify intent with email! 😊
Keep in mind a few facts when you’re forced to conduct negotiation via email:Read More
B2B buyers are now mimicking B2C buyers. We are all aware that the role of retail salespeople is dwindling as buyers buy online. All the information is out there in terms of what everybody else thinks of the product, its features and benefits, how users perceive it, how your service is rated, etc., so we no longer need that sales rep.Read More
- Waiting until the end of the quarter / quarter-end promotions
- Waiting until 30-45 days out to plan for renewals
In fact, Harvard Business Review (HBR-8/2017) reports these same issues:
- Decreased deal size and win rate results for an estimated $98 million per year in lost revenue for the average company.
- Conversely, it represents a potential gain of over 27% in revenue per company if properly addressed.
How did we let this happen? Market pressures from Wall Street and investors, irrational competitive behavior, internal quarterly pressures to “make our numbers;” they all contribute to the problem.Read More
Traditional negotiation training, as you no doubt already know, consists largely of memorizing long lists of tactics, countermeasures, and tips and tricks designed to prepare sales teams for every possible negotiation situation. This is based on the assumption that in a negotiation you never know what’s going to happen, and must, therefore, be prepared for anything. But what if I were to tell you that despite what you’ve always heard, 97% of what a seller is likely to hear coming out of a buyer’s mouth in a negotiation cannot only be anticipated, but also, if not nullified, at least greatly reduced in its power? (1)
It’s true. We can do it.Read More
We win deals when we:
“Show customers how we meet their business needs at higher confidence and lower risk than alternatives.” (1)
Winning has become more difficult: close rates are at an all-time low (49.6%), and actually lower than the odds at a craps table! (2)
Why is this? One reason is the end of sustainable competitive advantage. Our value, competitors’ value, and customer needs are all changing real time. In order to win we need to map each transaction and prove how our value meets needs better than their alternatives. As salespeople we need access to real time content that helps us capitalize on a series of short term transient advantages.
We call this competing at the speed of change.
“79% of B2B buyers believe the content provided by sales reps is very influential in their vendor selection, yet 75% of sales content created by marketing is never used by sales.” (3)Read More
According to the Journal of Personal Selling & Sales Management, American corporations spend $7.2 billion every year on sales process, account management skills, negotiation, and opportunity management training—an average of $347,000 per company. However, beyond proprietary (and perhaps biased) consultants’ reports and high-level academic papers on change, little information is available on whether those making investments are achieving a return that is at least equal to—if not better than—what they are spending.
We are inclined to think that ROI is highly unlikely given the CSO Insights report that stated: only a quarter of reps consistently use their company’s accepted methodology more than half the time, only 10% resolutely (greater than 90% of the time).Read More
We’ve consulted on over 20,000 negotiations in over 45 countries for 16 years. The most common issue we see is:
“Very seasoned negotiators having a price conversation absent of the value conversation.”
What does this mean exactly? Imagine for a moment that you work at a high-end steak house and you encounter this scenario:
- You are seated a table and are ready to order. You order the Filet Oscar, the house specialty, which is listed at $42 on the menu.
- You continue that you would like to pay $16 for it because that is what you paid last night for dinner (you fail to mention it was a plate of tacos at the restaurant down the street).
- Your server goes to find the manager to ask for an adjustment to the bill to give you the discount.
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