Everything You Know About Negotiation is Wrong

Transcript

Dan Sanchez [00:00:03]:

So, Brian, in the last episode, you talked about how failing to plan is planning to fail when it comes to enterprise sales negotiation. We talked about how the tips and tricks, like, sales or negotiation training doesn't work. It's only putting, like, Band Aids on a massive problem of not not planning for how to close this deal. So Now that we've covered what's not working, tell me a little bit about what what is working. Like, what does it look like to build a plan that closes a deal?

Brian Dietmeyer [00:00:33]:

I'm excited to do that, actually. It was very frustrating to talk about what's what's what's broken without saying, wait. We have we have a better solution. I wanna share that. So it it might help. As I mentioned on the first, our first session, I I was a VP of sales, was a negotiation Consultant trainer, worked in 47 countries, partnered with a Harvard professor, had been doing this for years years, thought I was pretty darn good at this. Right? And And, we ran a research project in 19 countries for 2 years, and it was focused on a a lot relating to negotiation. We had a couple throwaway what I thought were throwaway questions in there about about buyer tactics.

Brian Dietmeyer [00:01:14]:

And and we had long since published our research. And just on a whim about 7 or 8 years ago, I had, one of my teammates here who's a a data analyst, on a whim said, can can you go back in? Take a look at all those buyer tactics and see if, there's anything you can learn from that. And she came back to me and said, you know, 2 weeks later. And imagine, by the way, Dan, thousands and thousands and thousands of really mean things that buyers said to sellers all over the world and all these different industries for 2 years. So I don't know what the heck I was expecting, but I wasn't expecting this. She came back and said, okay. About 50% sits over here And about 47% sits over here. And even though we may not be great at math, but I didn't you just told me that 97% Of what buyers said to sellers all over the world and all these different industries and all these different languages falls into 2 categories, and she said yes.

Brian Dietmeyer [00:02:10]:

And I made the huge mistake of to to a data analyst of saying, okay. You must have done that coding wrong. I went back and recoded it, Sent it off to my partner at Howard, and and it turns out she was right. That 97% of What buyers say to sellers in a negotiation is completely we can anticipate it almost at at a perfection level, And it's only gonna fall into 2 categories. Now the words are all going to be different. But, if if you think about the way politicians are trained, they're not trained to respond To every single question, they're trained to say, you're gonna get 4 categories of question. You know, national security, economics, And here's generally how you respond to those. And that's what occurred to me in that moment is are you kidding me? We know within 97% probability What the buyer's gonna do across thousands of deals over the next year, I know that today, and that deal is not gonna close for 9 months.

Brian Dietmeyer [00:03:06]:

I know what the negotiation conversation's going to be. Does that change the way we think about how we prepare reps? It should because it's in sharp contrast to What you and I spoke about in the last episode, which is we never know what the heck's gonna happen, so we prepare for everything.

Dan Sanchez [00:03:22]:

So if we can know ahead of time, we can plan accordingly. But now you got me you got me, like, leaning in. I'm like, Brian, what are the 2 questions? What are they going to ask?

Brian Dietmeyer [00:03:31]:

Well, Yeah. It's it and it's not so much about what they're gonna ask. It's what what they're gonna do is they are going to and and so, you know, Anybody who might be hearing this, think about deals you've been in or deals where you've coached other people, your team. The buyer is gonna refer to his or her alternative, And then they're gonna put pressure on you to give stuff away. This is the core problem with negotiation. And, again, all the words are gonna be different. But there Is

Dan Sanchez [00:03:56]:

that the 2 things?

Brian Dietmeyer [00:03:58]:

Yeah. That that's the 2 categories that the tactics follow is they're gonna refer to their alternative.

Dan Sanchez [00:04:02]:

50% and the 47%. Yeah. So what they're gonna refer to the alternative. They're gonna ask for you to give stuff away.

Brian Dietmeyer [00:04:08]:

And if if if I referring to the alternative, let's, like, double click on that. I'm gonna try to commoditize you. Right? To say you're you're the same or you're not as good. And if I can do that, then The only reason for me to buy from you is because you're gonna give some stuff away. You're gonna make contract terms easier. You're gonna make pricing better. You're gonna throw some free services at it. If if you're a commodity or at least you don't have as much value as you think you have, then you're gonna win my business By giving stuff away.

Brian Dietmeyer [00:04:39]:

In fact, the most common tactic globally, and this should sound familiar, is I can get the same thing from your competitor cheaper. So refer to the alternative, commoditize you a little bit, and then put pressure on you to give stuff away. The the most if I was At a cocktail party or in an elevator with you and you were to say to me, what's the single most important part about negotiation? It's it's counteracting the same thing. Early. Right? Anticipating that we need to change that conversation. Because if if it is the same thing, the only way we win is by giving stuff away. The single most important piece is is getting ready for same thing or some version thereof. And And if if we then have a value premium, then we can get value pricing or value terms.

Brian Dietmeyer [00:05:24]:

But until we solve for that, we're and we watch a lot of reps and a lot of deal pursuit teams that are told something like that from the customer, and they immediately jump to the commercial terms. Like, oh, do we do we have to meet that? Do we have to do that thing they're putting on us, and how does that fall within our budget? And they missed that first piece about We we need to answer same thing first. Right? So, yeah, we co we coached on $1,000,000,000 of renewals for a software company. And and the most common, tactic from their buyer was, I will do nothing. Right? The alternative isn't always a named competitor. I I will just I will not re up with you. In fact, our customer called that going dark. Our our customers will go dark on us unless we give them this thing, And they would go after right away.

Brian Dietmeyer [00:06:11]:

Well, should we give them this thing? Should we and we had a backup and say, what does going dark really look like for this customer? And then for the next customer, it's not always the same. And how painful is it or isn't it to go dark? And we found out more often than not That it it was actually quite painful. And you said something in the previous episode about buyers, you know, having the power usually because they have they have the choice. They have the money. That that's if if you can counteract same thing, we find in the majority of deals that we've coached on, There's balance power. The guess what? The buyer needs you as well. But most of us go into deals thinking that the buyer has more power Because we have the same thing or something less than somebody else. And if we can counter that, it shifts the power base in the deal.

Brian Dietmeyer [00:06:57]:

That's another area. If you look at old school negotiation, it's tips and tricks to increase your power. The only thing that matters in power Is how well you line up to their business needs given their alternative, whatever that alternative is. I'll I'll throw one more fact at you. We've done $12,000,000,000 in win loss analysis. And the gentleman who leads that practice said to me, winners win when they show customers how they meet their needs at Higher confidence and lower risk than the alternative. Customers will pay for that, but we have to know, You know, why us at higher confidence and lower risk than the alternative. So, yeah, it's it's simple.

Brian Dietmeyer [00:07:35]:

There there's a there's a a a book entitled life is simple. It's just not easy. And so what I would tell you is this predictable approach to negotiation is quite simple. This is what buyers will do. They'll try to commoditize you and then put pressure on you to give stuff away. That's the simple part. The not easy part is getting under. Alright.

Brian Dietmeyer [00:07:50]:

Why us? How are we different? You know? What are the specific areas that they're gonna miss out on by going somewhere else?

Dan Sanchez [00:07:56]:

Man, you talking about this makes me think back to the times where I've been a buyer once where I had the power because I was, yeah, I was I was talking to a vendor and I'd lined up multiple vendors had researched the heck out of all of them. And I have my preferred one. Right? But I'm literally pretending to be the preferred one for the other vendors

Brian Dietmeyer [00:08:12]:

Of course.

Dan Sanchez [00:08:13]:

Solely so I can use their data to throw it back at the one I'd like to go with. Because I know they have a few things that work in my favor. They have a better product or a certain way of certain kind of thing that they do that I know is something I want for my company.

Brian Dietmeyer [00:08:27]:

Well, it it it's interesting.

Dan Sanchez [00:08:28]:

I've gotten it just by using the quotes other people and being like, well, so and so is doing it, and they actually have this better, and I kinda like that. So but I'd I'd I'd still I'd give you guys the hat tip to this thing, and that's what I'd prefer. But if you could just come down just a little bit. Of course, I remember doing this for a nonprofit. It's like I mean, it's not a huge deal. You're talking, like, $20,000 a month a $30,000 a month contract or kind of thing for a $12,000,000 nonprofit. But I had to I had to I had to try to get everything I could out of it because it was for the cause, man.

Brian Dietmeyer [00:08:58]:

Yes. No. Of course. And and by the way, 2 things come to mind. 1, Buyer's core competency is negotiation. Our core competency is selling. So they they they have an edge. And by the way, we I'm I'm sorry to say this to you.

Brian Dietmeyer [00:09:12]:

We also have a procurement practice and I've worked with buyers and written books for buyer negotiation. They are better prepared and better trained, and then they're coming up against our tips and tricks thing. And and so that part of that story you just told there is you you were in in a better scenario. The other thing that I'll tell you is having worked with buyers, They many times are woefully unprepared to compare the 2 alternatives side by side. And they believe when they tell you you guys are the same, Some of the time they're lying and some of the times they believe it, but they've they've not made, like, a really good decision, a really good holistic analytical decision. And and that's when when we think about countering the first part of that tactic about, you know, you guys are all the same. It's it's Thinking knowing more about that buyer's decision and that buyer's internal customer decision than they do to begin to Change that. Because, again, the number 1 thing we have to sell for is same thing or some variation thereof.

Brian Dietmeyer [00:10:08]:

Yeah.

Dan Sanchez [00:10:10]:

Yep. And I can certainly think of times where I was the buyer, and I was coming up against some software that I knew I knew I could only get it from 1 vendor, and they charged a lot.

Brian Dietmeyer [00:10:18]:

Yeah.

Dan Sanchez [00:10:18]:

And they knew it. But I did my research to try to try to do my best to get them. No. They knew they knew I didn't have it. I tried to commoditize them. It didn't work because they knew they had the goods, and I ended up paying paying full price. I couldn't I couldn't discount them. I couldn't get them to come down because we both knew they were the only option Yes.

Dan Sanchez [00:10:41]:

For Yeah. For what I was looking for.

Brian Dietmeyer [00:10:43]:

Well, that and that that's the biggest Frustration for the buyers who will work with their single source. Right? And we have 1 place I can get this from. But when, you know, back to this buyers, kinda misdiagnosing that idea that you're all the same. We're we're coaching an airline who is buying software to automate their plant floor. And so we had The floor the, you know, plant ops manager and and the procurement group and everybody else in the room, and we're brainstorming what's the most important thing in this deal. And the procurement professional said price. And, and the, the, the, the plant manager, she jumped up out of her chair and said, I don't care how cheap you get it. If it doesn't automate my plant floor, and I don't know where my parts are, and I don't know where my people are, It you overpaid for it.

Brian Dietmeyer [00:11:27]:

Right? So that that's an example of they they may say that, and they may actually believe it, and then it will end up working with us. We have to know that better than than they do because they they do make mistakes for sure.

Dan Sanchez [00:11:39]:

So the 2 things that we know that buyers are going to do is they're going to try to commoditize you by comparing you to come your competitors. And then they're here to try to get things from you, which is either bringing the price down or getting more value ads at the top. Yes. Those are the 2 things they're gonna do.

Brian Dietmeyer [00:11:59]:

And I I would add, yeah, it's not just competitor. It'd do nothing. It's I will build it myself. If you're selling steel, it's an alternative material like concrete. So it's whatever that alternative is. But, yes, they're gonna refer to that alternative And and then they're gonna use that leverage to get stuff from you.

Dan Sanchez [00:12:17]:

And you're saying that because we know. We we know that we know that we know that those 2 things are going to happen. He can build a plan and work accordingly to win more deals.