Negotiation and Closing Strategies

The student will learn about different factors that decide a purchase decision and we will look into the similarities between the sales phases and the McKinsey Loyalty Loop.

In this session the student will learn about the three teams that are involved in decision-making, what drives them, and what to focus on. We will look into a decision-maker mapping example, and finally, we will look into our role in the procurement game and how we should react if we are an incumbent vendor vs. a new entrant.

We will look into strategies for single-vendor and multi-vendor procurement. Commercial strategies are discussed and we will look into the preparation of the negotiation strategy for lone-vendor and multi-vendor scenarios. The student should download the Negotiation Preparation Checklist to use during the remainder of the course.

The student will learn how a typical procurement scoring system is working and what to focus on in order to influence it. We will also look into how we can simulate how big price premium we could get if we have a good idea of the scoring system and our competitors' responses. The student can download a RFQ template together with a price premium simulation model. Finally, we will look into the increased trend of Sustainability requirements in RFQs and why compliance is getting more and more important.

According to our experience, the vendor with the most information is up to three times as likely to win the bid. In this session we will look into competition and what we should focus on when analyzing them. We will look into a competitor mapping template, where we are listing observed competitor tactics during the different phases so we can build mitigation strategies and tactics.

In this session we will cover the importance of creating a war-room team and how this team will help you during the three phases. The main advantage of war room teams are to reduce the risk of wrong decisions as experts from different organizations are supporting the tender and customer interaction.

Must-have requirements directly impact the customer's ability to achieve their business objectives, maintain regulatory compliance, and ensure customer satisfaction. Meeting these must-haves strengthens the vendor-customer relationship, facilitates long-term partnerships, and enhances the vendor's reputation in the industry. The student will reflect on their customers' must-haves.

It is important to understand your customer's value drivers. Value drivers are factors that contribute to a company's growth, profitability, and long-term success. We will look into some common value drivers and showing an example of how we could help to contribute to one of them. The student will reflect on their customers' value drivers.

In the session about Time Constraints we will look into three different areas:

• How to understand customer time constraints and how to look for hidden time constraints

• Procurement- and negotiation phases and why the procurement team might split the procurement in different phases

• A typical tender timeline and why it is important for us to understand the timeline

Depending on your perceived value there is a zone in which you and the buyer will be willing to do a transaction. This zone is called the bargaining zone. Your job is to enhance the bargain zone and end as high as possible within it. The student will reflect on their customers and how to identify the bargaining zone with each of them.

BATNA is short for Best Alternative To a Negotiated Agreement. The BATNA is a very useful concept when it comes to determine the end values of the Bargaining Zone - the highest price the buyer is willing to accept and the lowest price the seller is willing to accept. We will look through an example, and what is essential in order to determine the BATNA.

A concession and ask plan is among the most important preparation you will do before a negotiation. We will look into a concessions-and-ask model and some examples of how to use it. The student can download the template and start to plan for concessions and asks for the next round of negotiations.

Preparing more than one offer is a good way to break deadlocks and to make customers understand the value of your solutions. It also shows that you are listening to their concerns and are willing to consider solutions that are satisfying all parties. We will look into different examples of alternative offers and what should be avoided when building them.

It is important to build rapport with your counterpart as this will help you during negotiations. Sales professionals that have built rapport are up to four times as likely to end with a successful negotiation. We will look into eight different ways of building rapport with our customers.

The buyer's level of satisfaction is a function of their feelings about the deal. You need to manage their expectations as early as possible in the sales cycle. We will go through four different kinds of customer expectations and ten different ways to manage them.

In this course, we are talking a lot about the value of listening. This is particularly true during negotiations. However professional the procurement team is you can often get subtle cues about how you are ranked or where you need to improve. Remember that a good salesperson talks 20% and listens 80%, how would you otherwise be able to understand what the customer is really looking for?

Biasing is often creating issues during negotiations, for both parties. According to McKinsey de-biased decisions can improve ROI by almost 7%. In this session we are going to go through eight biases and how we can counter them. We will also talk about how we can use biasing towards our customers. Many examples later on will reference this session.

Total Cost of Ownership (TCO) is a better indicator of value than the price and should be a higher prioritized financial factor. Focusing on TCO makes it possible to argue for your added value. We will look into a TCO model and an example which also will be available to download for the student to build their own TCO model to go through with the customer.

Unless your strategy is low-price/high volume you want to avoid commoditization of your products and solutions. Many procurement teams will argue that all products are the same and they will only choose based on the price. We will look into strategies and tactics to avoid commoditization and also how to avoid e-bidding.

Having learned about bias we can use bias psychology together with other techniques like SPIN to influence the customer during negotiation and tender preparation. We will go through six persuasion techniques and touch upon SPIN selling.

A typical commoditization strategy is to tell your vendor that a competitor is much cheaper and ask if you can match their price. As a vendor, it is important not to lose your head, instead, use some of the strategies we are going through in this session. We will go through probing and thought-provoking questions, and learn how to stall for time to do research before giving an answer.

As in the case with price pressure statements there are different techniques to ask probing questions. In this session you will find some probing questions for the following situations:

• Is your price not meeting their budget, or is your value argumentation too weak?

• Probing different alternatives to reducing the price

• How to ask for concessions

There is no deal before it is closed. Being able to close a negotiation is crucial for reducing further price/T&C/product concessions. In this session we will go through how to probe if the time is right for a close, and we will go through twelve different closing techniques.

In a study of Marketing Wizdom, only 2% of sales occur at the first meeting. 80% of prospects say ”no” four times before they say “yes”, while 92% of salespeople have given up after four “no’s”. However, keeping on to a prospect has an actual cost and an opportunity cost assigned to it. In this session, we will look into probing questions regarding the reason for the problem and we will also look into a game of poker.

We all have customers we can’t afford to lose. What do you do when your key customers decide to play hardball? We will in this section look at six different focus areas that could help us morning forward.

Within a week after the tender is won or lost you should conduct a learning session and document improvement areas as well as successful strategies and tactics in order to be well-prepared for the next negotiation. In this session we will go through how to document gaps and how to create mitigation strategies. The student will be able to download a template to use for filling in gaps and strategies for their customer.

Delivering on your commitments in a contract is crucial for several reasons. It is one of the most efficient ways to increase trust and customer satisfaction which will put you in a strong position for the next negotiation. Also, the cost of acquiring a new customer vs. retaining an existing customer is 5-25 times higher. We will go through four benefits, and five focus areas.

It is important to conduct an organizational update immediately after a contract is signed and before the delivery process begins. We will look at six areas why it is crucial to update the organization and I will give an example of what can happen if you don't do it efficiently.

In a previous session, we learned about the impact of delivering on our commitments. In this session, we will look into six additional areas that will increase customer satisfaction. Building customer satisfaction is crucial in order to generate repeat business and the evaluation stage is the most efficient time period to do it.

By analyzing the competitors and RFQ requirements you should have considered descoping your solution to facilitate an apple-to-apple comparison, create alternative offers, and enable upsells after the contract is signed. In this session, we will look into typical descoping areas and how to incorporate them into our internal business case, or how to trade them during the sales cycle.

The student will test the knowledge of the different parts of the course by a case study and compare and reflect upon the answers with the suggested possible answers.

The student will reflect upon four areas of importance that have been covered during the course. A template for self-reflection can be downloaded.

Five more in-depth test questions will be asked. The student can compare with and reflect upon suggested answers.

A one-slide summary of four of the most important areas we covered during the course.

Four books and two articles are mentioned. You can find the url to the articles here:

Negotiating with a Customer You Can't Afford to Lose:
https://hbr.org/1988/11/negotiating-with-a-customer-you-cant-afford-to-lose

9 Tactics for Better Remote Negotiations:
https://hbr.org/2021/07/9-tactics-for-better-remote-negotiations