I just finished writing Chapter 19 of my new book, Think and Sell Like a CEO, due out in September from Entrepreneur Press. It's on the topic of negotiating. I thought since the first quarter of 2002 is all but done, it might be a good idea to share with you some of the most advanced tactics that I've ever seen for the all important task of getting what you deserve (or giving up as little as possible). Here's a glimpse of what I've learned so far from the people I considered to be the wisest, most experienced people. Not too surprising, I imagine. Let's look at the most profound yet subtle strategies for wise negotiating.as practiced at the top.
1. Pick Your Battles Carefully
CEOs who sell and negotiate successfully know that sometimes even the most valiant fight may not be worth the potential loss it entails. They know it's up to them to assign value to the campaign they decide to take on or decline--not outside forces like sales vice presidents or prospective customers. In other words, good CEOs are more likely than most other businesspeople to "walk" when they sense there will be no alternative to a bad deal. They don't negotiate a deal just to be able to say they've negotiated something.
Karin Bellantoni, CEO of I-Mark (the company that specializes in "permission-based" voice-mail messaging systems), puts it this way: "I'll only negotiate with people who can hear my message."
2. Leave No Loose Ends
Once they take on a negotiating project--or any project, for that matter--CEOs make sure everything on the "hot list" gets taken care of. They can't afford to leave any loose ends in a negotiating session, and they commit to following through on all their commitments. You'll want to do the same. (Side note: Every CEO I interviewed for this book had some personalized strategy for making sure that nothing "fell through the cracks.")
Joe Gustafson, CEO of Brainshark, knows both sides of the "get it done" equation: "I'll run fast and far from salespeople and prospects who cannot clearly commit to what needs to be done." Moral: Before entering a negotiation, make your list and check it twice!
3. Know When to Ask, Not Just What to Ask For
Successful CEOs know that you can't reap what you don't sow. Their actions always seem to be in accordance with the "ebb and flow." They get involved early in important deals, they know when to wait, and they know when to push. This trait comes in handy in negotiating sessions.
Emil Wong, CEO of Latitude, attributes this trait to an ability to be involved throughout the sales process; he points out that the sales and negotiating functions are really interwoven. "You've always got to be 'closing' for something," he says. "I need to get involved early in the sales cycle. I can't wait until we're losing the deal or until we're at an impasse. I'm not big on waiting until the bottom of the ninth to get things done."
4. Don't Take Shortcuts
CEOs have certain values that they just won't compromise. That's not to say they are stubborn, but they do know how, when and where to draw a boundary. Ill-advised departures from guiding principles can carry huge costs, the most important of which are non-monetary: lower self-worth, lower esteem, damaged reputation and damaged self-image, to name just a few.
Keith McCumber, CEO of DayLite Systems Inc., has a core value that says (as he puts it): "Learn to recognize early on when we're looking at a situation in which we're unlikely to be successful. I allow people to fail . but making the same mistake twice is out of the question." This translates, in his case, to highly focused negotiations, and hardly any that drag on interminably.
5. Turn Envy Into Energy
Successful CEOs are happy with what they have and who they are. That doesn't mean that they don't want to grow and prosper. They just know the importance of being happy with what is taking place in the here and now.
That may not seem like a trait for successful negotiation, but it is. Envy saps energy and poisons relationships; admiration of another's positive traits and accomplishments is a supreme compliment that helps you focus on what you need to improve in your life, your business, your relationships, your finances--and your negotiating posture.
Sam Katz, CEO of Sam Katz Inc., says: "Don't try to be a wise guy! Skip the typical sales spiel--which usually covers something negative--and stay on-purpose." (Sam also points out that we tend to play power games with people we envy, and he advises against this: "Whenever you're in a negotiation never, ever interrupt the person doing the talking." His reasoning? Interrupting that sounds like interrupting looks like an attempt to shift the power, control and authority away from the other person and onto you. Not a good idea.)
6. Avoid the Other
This is a great (and simple) "negotiating tactic" that more than one of the CEOs I interviewed for this book mentioned. It is also one I've used regularly over three decades of negotiating with CEOs and other high-level contacts.
This tactic is all about not inheriting someone's unresolved problem as your own. If I had a dollar for every time I've heard "We don't have that amount of money in our budget," or "We don't have a budget," or "Your price is too high," or "I don't have the authority," or "We can't move forward right now," or "We need this by no later than next Monday," I'd be a millionaire. Look at all these typical responses again, and you'll see that each is an attempt to put the buyer's issues onto the seller's list of problems.
Instead of fighting the problem, putting it off until "later on" in the negotiations or throwing a new one into the mix, what would happen if you approached the problem from the standpoint of finding a solution--of acting as a consultant with the responsibility of finding an outcome that makes both sides happy?
Keith McCumber, CEO of Daylite Systems Inc., urges you to address of the issues whenever they come up. Prompt the issues, and don't pick up any baggage that doesn't belong to you. "Beware of any term or condition that is put off for later discussion. When someone says, 'We can discuss this at a later point--I don't see this condition as being a big problem,' watch out!" This "insignificant" issue is very likely the deal-breaker that will be rolled across the table when time is running out for you, the seller (i.e., it's getting close to the end of your quarter or fiscal year, or some other important deadline is looming). CEOs and other effective negotiators know that people tend to become much more flexible when the time is running out.
Heed McCumber's warning. Don't wait until "later." Deal with the issues now!
7. Do the CEO
To think, sell and negotiate like a CEO, you must understand that more than anyone in an organization, the CEO has the ultimate walk-away power. The power to walk away is the most profound negotiating tactic that a CEO will use. She/he basically says "I am totally willing to pass on this opportunity." There is a big difference in that thinking vs. "I am going to get the price as low as I can before I buy." Walk-away power takes the opportunity past the point of no return. The winning party will convince the other party that they can and will walk away from the relationship (buy or sell). Keep in mind that the goal here is not to actually 'walk'; the goal is to get the other party to do whatever the 'walking' party wants them to do.
Joe Mancuso, CEO of the CEO Club, points out there are two very distinct ways to protect yourself against this tactic:
- Increase your options. If you're looking to contract with a business consultant, make sure you've got at least one other business consultant that you would hire. This way, when it comes to "walking" on the first one, you've got a backup.
- Make sure you don't give too much early on in the selling or buying process. The point here is that "give and take" makes much more sense than "give and give some more." If you and the buyer/seller both invest in the relationship, you're more likely not to run into the "walk-away" tactic at the bottom of the ninth inning.
8. Ask for the
Asking for more than is expected (moving beyond expectations) is a great trait of the CEO. You'll be able to see this one coming if you're a salesperson because you're already conditioned to the "do whatever it takes to get the sale" mentality. CEOs know this, too. Therefore, be prepared, and you may even want to use this yourself when you're on the "seller's" side of the table. By doing so, you'll be modeling an important CEO negotiating trait.
Consider this about asking for more than is expected:
- It's one of the only ways to establish perceived value beyond actual value. Example: ask your prospect CEO if they would be willing to be used as a reference site as soon as they receive their expected result or within three months, whichever comes first.
- It gives a CEO room to "wiggle" later on. She/he can always lower their expectations. Example: in the spirit of "marketing mobility" (Chapter 13 of my book), ask your prospect CEO to allow your products to be included in their quarterly newsletter to their customer base.
- It tends to prevent "deadlocks" in negotiations because it promotes free discussions of the most important issues early on in the process. Example: Asking for payment upon receipt of order in place of the "normal" net 30 will help with your organization's net working capital and put the pressure on the "buying" organization.
- Asking for more than is expected will almost always create a feeling that the other person has won when the expectations are lowered. Example: Giving net 30 in the above case will almost always make the "buying" CEO happy, and you'll be right where you need to be.
The next time you find yourself at the all important negotiating table, keep your eyes peeled for one or more of the eight traits that I've mentioned here. Until next month, Happy Selling!
Anthony Parinello is the author of the bestselling book Selling to VITO, the Very Important Top Officer. For additional information on his speeches, Sales Success Kits and newest book, CEOs who Sell, call (800) 777-VITO or visit www.sellingtovito.com.