How to negotiate a big deal
Here are the key elements you should consider with closing that last quarter big deal.
Plenty of people will give you advice on how to close a deal. However, what about a huge deal, one that represents a significant percentage of annual or quarterly revenue. It’s a deal in which the CEO and the Board will take particular interest. The trick is to know that closing a colossal deal starts with your very first meeting, that’s because big sales are about so much more than just the price. Here we will look at some of the principles that must be part of such a deal’s planning and execution.
Looking at each element of a deal highlights some critical areas, these can be broken down into three overlapping workgroups, the customer, the negotiation process and business operations.
The Customer
It would help if you aimed to do as much as possible for your customer, doing so will put you in control of the process.
Make your customer look smart. Try to do as much of the thinking as possible, anticipate changes in the law, a good example might be GDPR, or changes in the customers’ market, or perhaps highlight something that your customers Board has been requesting. By making the person look smart, you are seen as a partner more than a supplier.
Save your customer as much time as you can. People are busy, and you won’t be the only call on their time. Presenting documents in the right form and structure is an easy first step. This approach has two advantages: firstly, providing content in the correct format enables you to fulfil their information needs in your words. Secondly, you are saving them time and removing the possibility of translation errors.
Know with whom you are dealing. All sales training includes making sure you know who can sign a contract and those who may have a veto or other interest in the deal. That requirement should be a given. Equally important is each person’s personality, are they interested in the detail, or only the strategy, what information do they use to make decisions, and when they are most likely to be available for a conversation. Knowing this can help you build rapport with influential individuals and provide the right information at the right time.
The Process
Know how to negotiate. People are not born negotiators. Negotiation skills, when mastered, can help in not only getting a better deal for your business. It can also help make the deal better value for the customer. Procurement departments often want to negotiate on price and terms. However, there are many other aspects to a good deal; you should know how important each element of the agreement is to you and your customer. The Schranner Institute suggests there are three categories of importance:
- RED — things you cannot give away no matter what. These are reasons to walk away.
- AMBER — things you might remove or include in a deal if you can make progress in a red area.
- GREEN- these are the least significance elements; it doesn’t mean that they are not necessary. Giving away a Green category item to secure an Amber or Red would be a good outcome.
Business Operations
Don’t hang around. Big deals hate a vacuum, emails, and calls need a quick response and must be answered effectively. In doing so, you stay close to the decision making; letting things fester will cause misunderstandings and lead to miscommunication.
Be close to the deal. You need to be in charge; you must see every communication with and from the customer, for big deals it’s tempting to delegate some of this work, but gaps in understanding and awareness add uncertainty to the outcomes of each stage.
Be a buffer. At some point there will be pressure on both sides for an outcome, if possible you can act as a buffer between executives on both sides, your opposite number will also understand that they will need to fulfil this role in their business from time to time. Predicting when this might happen is an essential piece of intelligence for both sides of the deal.
Eventually, there is always an argument. You need to know that no big deal will be complete without a row. It always comes down to a few critical elements. The trick is to make sure that you and the person you are negotiating with are not part of the row when the row happens. Let that occur outside the critical elements of the deal.
Bring the CEO in only when you need them. All sorts of people are going to want to know about the state of play. Most don’t need to know, smile and look confident, however bad it may be. Others will have to receive briefings early and often. The CEO, CFO and COO are likely to be on this list. It’s advantageous to understand what their information needs are. Face to face briefings are usually the best; you should also have an answer to the question “How can I help?” If you don’t need help, point out when and what help you are going to need. Executives don’t like surprises, so keeping them informed will keep them on your side.
Finance and Control. There are always rules, be aware of them, some internal ones can be bent or broken, external ones can’t be. It may seem the dullest thing in the world but read as many of your customer’s rules and regulations as possible; there is a good chance your negotiating partner hasn’t and that will give you an advantage.
In the end, the skills perfected in negotiating a big deal can become a core skill. There are professionals in all walks of business that have made such work the basis of a career. However, it all starts with the ability to negotiate, and that’s a skill that must be learnt, practised and assessed.
