As I stated in the original blog, ”WHY SELL TO CUSTOMER’S OUTCOME?” How does selling to an outcome help you when negotiating a deal – especially the “right deal?” First we need to define what the right deal is. The right deal is one that is good for you, the seller, because it accomplished your short term business objectives as well as advances the company’s business strategy. The deal is also right for you when it is economically viable. The deal is right for the customer when it achieves their short term business objectives, advances their business strategy and is economically viable. However, the third attribute of the “right deal” is that it contains all of the key items that will be necessary for you to deliver the value and outcome(s) the customer is looking to accomplish.
If we have effectively sold to the customer’s outcome, then as mentioned above, we should have proposed a deal that is comprised of the essential elements (products, services, volumes, support, term, etc.) that will be required to deliver that outcome—and we should have gained confirmation from the business buyer or key decision maker that these elements are indeed required to produce the outcome. Therefore, in effect, we will be negotiating not so much the components of the deal, but rather we are now in a position to negotiate the actual outcome the customer can expect. This is a tremendous advantage when “formal” negotiations commence.
A common negotiation tactic employed by many large enterprises is to separate the “negotiation” from the sale. They will do this by formalizing the “negotiation” with procurement as a separate and distinct step in the buying cycle. Many times, the seller is told that he/she can only deal with procurement during this phase and is prohibited from communicating with the business. This practice then allows procurement to treat each item in the proposal as a separate line item to be negotiated alone and typically on the basis of price. Yet if we have truly sold to the customer’s outcome, then everything in the proposal is directly linked to producing that outcome.
Here is how we can use this to our advantage during the negotiation. Let’s assume that procurement declares that our price is too high and if we don’t move on price they will be forced to consider a competitive offer (I know this sounds farfetched, but play along with me here). Instead of simply conceding, we can discuss what we can take out of the offer in order to reduce the price, however it will have an impact on the outcome (perhaps less “outcome” or not meet schedule, etc.). Since we committed to delivering the outcome to the business, we need their concurrence to the changes before we can agree to them.
Or maybe procurement throws up at the hourly rates of your integration and support team. Instead of simply conceding or arguing about the rates, you would be able to agree to bringing in a less experienced team (with a lower billing rate), however that will put the schedule in jeopardy. You’re fine with that as long as the business agrees. Or maybe procurement states that your support costs are way out of line and they must be reduced. Our response may be that the level of support offered (Gold Level) corresponded to the business’ needs for a dedicated support team in order to have a quick response and minimize any downtime. You are willing to reduce the level of support (Silver Level), but again will need the business to agree to a slower response time as well as a non-dedicated team.
In each instance we are making the negotiation not about the price of any item but rather about the outcome. I have found this approach to be especially helpful in getting the business actively involved in the negotiation versus being a helpless spectator on the sidelines. All of the above presupposes that we did indeed sell real value for a critical outcome that matters to somebody important, but those are topics for another blog.
The last in this series of blogs will discuss the advantages of selling to customer outcomes after we have won the deal and it comes time to actually deliver and get credit for the value.