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Negotiation Ninja Tactics for Successful Deals - Outside Sales Talk with Mark Raffan
00:27:45
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- [00:00]
A
So let's just say you wanted to sell more product or you wanted to sell more service, or you wanted to cross sell a certain thing. What's the worst acceptable deal for each of those things that you want to get? What's the best expected for each of those things that you want to get? And then that creates a range, right? That creates a range of acceptable outcomes for each of the things that you want to negotiate. And if you get in that range, congratulations, you've gotten a good deal.
- [00:26]
B
This is Outside Sales Talk, the best podcast for outside salespeople. I'm your host, Steve Benson, and we're here to chat with the world's top sales experts so that you can get their best sales tactics to level up your game. Welcome back to Outside Sales Talk. Today we're talking about Negotiation Ninja tactics to win successful deals. We've got Mark Raffin with us here and, and he's an expert in this. He's the founder and CEO of Negotiations Ninja, which is a training and coaching organization that is really designed to help people up their negotiation skills up, level them. Mark's a renowned, world renowned expert in persuasion and negotiation. He has worked for some of the largest organizations in the world and has been referenced in Entrepreneur, Forbes, Thrive Global and many other publications. He's also the host of the Negotiations Ninja podcast. Mark, welcome to the show.
- [01:26]
A
Thank you so much for having me. I appreciate it.
- [01:29]
B
Absolutely. Well, why don't we jump into the negotiation stuff since, since you're the expert on that. Why, why is there's so many negotiation methodologies and strategies out there? Why, why is it beneficial to have different negotiation methodologies in your, in your quiver of arrows? As a salesperson?
- [01:51]
A
People often think that once they've learned a way of negotiation, that it is the way of negotiation and they become ideological and dogmatic about that specific way. That's a bad idea. Don't do that. It's silly. Because if you get stuck in one way of doing something, what's inevitably going to end up happening is that people that you negotiate with are going to learn how to deal with that thing and then obviously you're not going to be able to get to as good value deals as you probably should. So our advice is to read broadly, read widely, learn lots from lots of different people. We'd love it if we were one of those people. And also once you do that, you're able to approach negotiation from multiple different perspectives with multiple different strategies.
- [02:39]
B
Makes a ton of sense. And I guess, tell us for the novice, tell us some of Those strategies and how salespeople can employ them. What are some examples of these different negotiation strategies?
- [02:53]
A
I think less than the examples of the strategies that are available are the mistakes that people make when they go to negotiation. Most people don't even have a strategy. Most people go into a negotiation and they wing it. And that's the single biggest area where I see most people fail in their negotiations. They don't have a strategy that they go to. They don't plan and prepare. They go into the negotiation, kind of wing it, walk away with a deal, and they're like, yay, I got a good deal. But there's nothing to be able to determine whether or not that even was a good deal because they haven't planned for the negotiation in the first place. So I would like it if even people had a strategy that they could be able to vary that based on. But the truth is that the vast majority of people don't have a strategy. Most people just go in and wing it.
- [03:40]
B
Yeah, makes sense. What's your favorite negotiation methodology? I mean, I know you're a proponent.
- [03:49]
A
Of using, try and tie it in a number of different negotiation strategies into what we do. So if you think of negotiation as a spectrum, on the one side you've got the super collaborative win win style negotiation. On the other side you've got the. I'll take everything that you have, Jim Camp style negotiation. And then there's everything sort of in between within that negotiation context. And we try and take the best of all worlds in the way that we approach negotiation because we don't think that you should be Approaching the negotiation 1. Sometimes you have to be collaborative, especially when it comes to conflict and diplomacy and those kinds of things. And other times you need to be able to get all of the value out of a negotiation. Think for example of hostage negotiations, right? You can't really compromise with a hostage situation. You can't say, okay, kill these seven hostages and I'll take three and then let's call it a day, right? So you've got to try and get all of the value, which in that case is all of the people out of that negotiation. We tried the best of everything.
- [04:58]
B
Got it? Hopefully most of most of our customers aren't negotiation negotiating, hostage situations. But it's usually more about, you know, how can these two organizations partner and walk away with a good deal that is profitable for everybody?
- [05:14]
A
But that's right.
- [05:15]
B
At the same time, I've heard you say that the win win mentality is a myth when it comes to negotiations.
- [05:23]
A
I Do agree with that? Yeah.
- [05:26]
B
Why would that be a myth?
- [05:27]
A
Yeah, it's a mistake in terms of mindset. And I think a lot of people approach negotiation and win win thinking that there can be a win for both parties. Now, that doesn't necessarily mean that you can't be collaborative, but it does mean that there isn't such a thing as a win win because there is no possibility of both parties winning. Right. First of all, that would be called a draw. Right. So the terminology in and of itself starts off on the wrong foot. Second of all, it's impossible to know the full value of the deal over the lifetime of that deal. And so it's impossible to know whether or not both parties are going to get 50% of that deal or an even split of that deal. So that in and of itself doesn't make sense. And even if you could know the full value of the over the lifetime of that deal, in order to be able to do that, you would have to be fully transparent with each other, which is never going to happen. You would also have to make sure that you were quote, unquote, fair with each other. But what is fair, really fair is based on what my perception of what fair is. And fair is also based on what your perception of what fair is. And that makes fair subjective. And so I think the mindset of win win is a dangerous mindset to be in because it presupposes that you should create a win for the counterparty. It's in their best interest to create a win for themselves. It's not incumbent upon you to be able to create that win. Now does that mean that you shouldn't collaborative? No. Obviously there are situations where I want you to be collaborative in the approach to problem solving and value creation and all of those things, but be very cautious about trying to create a win for the counterparty.
- [07:23]
B
Really interesting perspective, which I think you don't. You know, before this and researching, speaking with you, I, I really had never heard that, that articulated just in that way. But it, it makes a ton of sense to me. Why do many salespeople often feel compelled like they, they have to make a deal even if it's not in their best interest.
- [07:55]
A
They just don't, they don't know where they're willing to walk away from the deal. Biggest problem that I see in the vast majority of sales deals is lack of preparation and lack of knowing where to walk away in a deal. And so salespeople, inevitably, because they're compensated, generally speaking, on top line revenue, right in the revenue that they bring into the organization. The incentive for them to hold the deal by not discounting 10%, 15%, whatever it might be, is very, very low. They don't know where they should be walking away from that deal to be able to maintain the value of their organization and the value of the good or the service or the software that they sell. And, and so inevitably we actually put them into situations where they make those deals because we don't instruct them on how to walk away and where to walk away from the deal. It's a massive mistake and it destroys brand credibility and it destroys the overall value of what you're selling.
- [08:51]
B
And profitability. Do you, do you recommend profitability in a big way? When you consult with organizations, do you make recommendations that they don't comp on the top line but instead comp on the bottom line to more, more align the sales rep with the, with the organization? Because I, I hear a lot of people talking about that and certainly in thin margin businesses, I, that's something that I'd be a proponent of. But I, I, when I see us, when I see sales comp plans, they're almost always in the top line and, and which you know, clearly causes a little mismatch. If you have 30% margins and you know, you give away 15% of a margin in the top line, you didn't just give up 50% of profitability, you just gave up 50.
- [09:33]
A
Right.
- [09:34]
B
If you give a 30% discount, you don't, the company doesn't get anything for doing the deal. And if you give a 35% deal, you just lost money. So what, how do you, how do you advise people that you're consulting with, to deal with, with compensation plans?
- [09:51]
A
Yeah, I do generally recommend that they compensate based on the margin that's contributed for the overall deal. And oftentimes I find that the success of that recommendation is based purely on the culture that pre exists my arrival. So if you've got a bunch of salespeople that are making massive amounts of money as a result of getting paid on top line revenue, the likelihood of that changing within a culture is significantly low. But if you can do that from the beginning of the organization or you're still small enough to be able to make those changes, then those are the changes that I generally recommend. In most software businesses, for example, it's really difficult to implement because the margins on SaaS are so bananas that it really doesn't matter to a large extent where they comp their salespeople and how they comp their salespeople but they'd be able to retain a lot more value and maybe we wouldn't be in the tech sort of glut situation where we are right now if they had managed it better. So yeah, it's, it's a, it's an interesting situation that a lot of sales leaders get themselves into. Where I do see it successful and where I have seen teams compensate based on margin are generally in product led businesses. So I see it a lot in MRO businesses, maintenance, repair and operations. So like safety goggles, boots, ppe, those kinds of things. Those kinds of businesses most of the time are compensating based on margin and I see it a lot in labor based businesses, so augmented labor, supply consulting, those types of things because obviously their margins are tighter. So those two industries, I see the margin conversation happening a lot more. But tech, biotech, pharmaceuticals, pretty rare for you to see anyone compensated on a net margin or gross margin basis.
- [11:51]
B
Yeah, that. What you're saying makes complete sense to me. When you're in a negotiation, how can you, how can you avoid giving away too much? How can you avoid.
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A
Not.
- [12:06]
B
Not negotiating to a draw, but negotiating to a win for yourself and if not a loss for the other party, you know, the benefit to the other party. But how, how can you avoid giving away too much and ending up on a better, a better situation by knowing.
- [12:19]
A
How to manage your concessions on an ongoing basis? You should know before you go into the negotiation how much of something and what things you are willing to give away. Not to say that you should give it away, but you should know what you're willing to give away. And most of the time we go into a negotiation not thinking that, because in order to think that, you need to be willing to do that in the first place and most people just aren't. And so if you do think of that prior to going in, you actually end up giving away a lot less than you usually do if you don't think about it. So know what you're willing to give away in the negotiation and know how much of that thing that you're willing to give away. And then don't give the full thing away, only give portions of that thing away throughout the negotiation to be able to manage it. And never give it away without asking for something in return. Because if you give it away when someone asks for it and you don't ask for anything in return, then you're just giving it, right? It's a gift at that point. It's not a concession strategy, it's not a negotiation you are gifting something to someone and never expect anything in return. If you give it away, you've got to ask. This whole idea of reciprocity, I think, is great for your personal life and great for culture in general. But if you don't ask for something in return for the thing that you're giving, then you are not going to get that thing because an educated buyer of those things is just going to keep asking and not giving anything. And why wouldn't they? They're in the situation where they're getting more value when they ask. So make sure you ask in return for the things that you're giving away.
- [14:02]
B
Yeah, I've always liked the wet rag analogy, is people and the good negotiators will treat you like a wet rag. They're going to keep ringing until you stop giving water. And so they're all, you, you wanna, you want to not, not be totally dry when they, when you let them, when they stop ringing, you gotta. And knowing your concessions, like you're saying, I think in knowing how much you want to give away and, and when you want to get it, give it away and how you want to give it away, hopefully getting something in return is, is having that plan is so important. How can, how can salespeople benchmark their success? How can they understand the needs and the wants that lead towards their aspirational goals? How can they, how can they benchmark that?
- [14:54]
A
They've got to know what they want in the first place, right? So before any negotiation, one of the serious concerns that I have with a lot of negotiations is someone has no idea whether or not they've gotten a good deal. The only way to know whether or not you've gotten a good deal is not from the counterparting saying, great, good job, you got a great deal out of me. Because obviously they're trying to pump you up and make you feel better about it. So you walk away going, look at me, I'm the best. That's nonsense. Obviously they're trying to do something to emotionally push you in a certain direction. You have to know what you wanted and what your parentality parameters were for those things that you wanted prior to going into the negotiation. So let's just say you wanted to sell more product or you wanted to sell more service, or you wanted to cross sell a certain thing. What's the worst acceptable deal for each of those things that you want to get? What's the best expected for each of those things that you want to get? And then that creates a range, right? That creates a Range of acceptable outcomes for each of the things that you want to negotiate. And if you get in that range, congratulations, you've gotten a good deal. If you don't get within that range, you probably should walk away from that deal because you haven't gotten something that you can benchmark against.
- [16:12]
B
Great advice. Know the worst outcome, know the best outcome, make sure you're in the, in the range. And if you're above the best outcome, then you just did it wrong. And if you are you lower than the worst outcome, that's. You got to walk away. And I think that, I think a key message I'm hearing is preparation. Writing it all down, thinking it all through, thinking about the outcomes, thinking about what you're willing to give up, thinking about what you're trying to get. That's really important. How do you figure out the worst outcome? What is the walk away line during a negotiation? How do you place a value on that and why is that important?
- [16:58]
A
Very subjective. I think you have to figure that out for yourself. I can't apply one walk away rule to everyone. So you've got to know, for each of the things that you're trying to negotiate into a deal, what is the walk away line for each of those things? So for example, if it's hitting a certain price, what is the lowest price that you'd be willing to sell something for? If there's a certain warranty associated with something, what is the highest warranty that you'd be willing to sell that thing for? If there's a certain service component to that thing, what is the most service that you'd be willing to offer for that thing? All of those things have to be calculated independently. And each business and each industry and each market, each geography is going to be unique. It would be, I'd be, it'd be remiss of me for. To, for me to apply like one rule to everyone.
- [17:51]
B
Yeah, no, I was actually looking for exactly what you just did. Like what's the, what's the strategy? And it, it's to break it up into pieces and think about the best and the worst for each piece is what I just heard you say, basically.
- [18:03]
A
Right.
- [18:07]
B
What about timing? What, what impact does time have on negotiations?
- [18:13]
A
Timing can be a big impact to negotiations. Your willingness to do something today doesn't necessarily dictate your willingness to do something next week. Because things could affect your schedule, your impact, your business, everything in your world that may affect the timing. For example, if someone's moving office equipment out of an office and you are in the business of buying used office furniture. And you find something in that used office furniture that you say, hey, I really want that thing. It's pretty heavy. Let me take it off of your hands. And this is like the week that they start moving. You say, I'll pay you 500 bucks for that thing. And they say, no way. I'm going to give that to you for 500 bucks. Got to be at least 700 bucks. And you say, no, you know what, that's about where I want to be for now. But if anything changes, let me know. And you leave them your number to call you. They call you at the end of the week after they've moved all the light things, and they say, hey, I got this heavy thing left over. Do you want to take it for the original $500? At that point, you know you've got the deal. And you say to them, I don't think I can do 500, but I think I might be able to do it for 200. And they say, deal immediately. Now nothing has changed except for the time, right. They're at the end of their schedule. That's the last thing that they want to move. They say, if you come pick it up, I'll let it go for two. Done. Now we've got a deal. So the only thing that's changed there is time. And the impact of your questions changes based on the time that you deliver those questions. The advice I give to a lot of salespeople, for example, is when's the worst time of the week for you to ask your customer for a piece of information? Probably Friday afternoon. When's the second worst time? Monday morning. Are there better times than those times? Obviously. So if that's true, and it is, then you should be thinking about when's the best time to be able to make that request and do that negotiation. For example, if you're on time at the end of the day with a legal team, and you know that that legal team has families to be able to get to, and you want to bang through a negotiation really quickly, maybe 3:30 on a Thursday afternoon is a good time because you can get through all of that information really, really quickly. So timing makes a big difference in how you approach your discussions.
- [20:44]
B
And I think there was a nugget in what you just said too is think about the other party, empathize with where their headspace is at. You know, maybe on Tuesday that lawyer wanted to beef up their, their billable hours. On Thursday afternoon, they want to get out of the door, right?
- [21:00]
A
Yeah. They've got little Jimmy's baseball game, and you're in the way of that. So.
- [21:06]
B
Yeah, no, I, I think knowing. Knowing your negotiating partner or opposition, depending on how we look at it, is. And knowing what they're, you know, what's going on with them personally and knowing their timing and knowing their, the way they think about the world is all really important. So that's. And I think that's a part of preparation is. Is thinking that stuff through.
- [21:27]
A
Yeah, absolutely.
- [21:30]
B
Next part of the. The call is sales in 60 seconds. Quick questions, quick answers. First quick question. What are common mistakes that salespeople should avoid when negotiating?
- [21:41]
A
Lack of preparation, lack of planning, lack of knowing when to walk away from a deal, and lack of asking for more.
- [21:50]
B
What should salespeople do when they experience a setback during negotiations?
- [21:56]
A
Debrief. Debrief. To understand what went wrong, what went well, what to do better next time.
- [22:05]
B
In your opinion, what is the most important part of a negotiation?
- [22:10]
A
There's two Preparation and asking for more.
- [22:16]
B
How can you become better at preparing for negotiations? What. What is the. The kind of strategy or the outline or the template that you would take to that?
- [22:28]
A
Read practice, study. Read widely. Practice lots. Study lots.
- [22:36]
B
Can you name a habit or a trait or characteristic that will lead to greater success in negotiations?
- [22:45]
A
Shut your mouth. Be more quiet. And why is that you can actually listen to what the person is saying as opposed to thinking of the next question.
- [22:59]
B
What's the greatest sales lesson in negotiation that you've learned over the years?
- [23:04]
A
Have more patience.
- [23:09]
B
As an actionable takeaway, what would you say that the salespeople listening today should do as a first step towards becoming more effective negotiators?
- [23:19]
A
Subscribe to our podcast at Negotiations Ninja podcast. Wherever you listen to podcasts, Spotify, itunes, Apple podcasts, that's the first step.
- [23:30]
B
All right, that. That's fantastic. Let me. And as a little. As a little plug, I've been on your podcast. It's a fantastic one. I think any of my listeners would enjoy it. So I'm going to try to summarize what you taught us here today, because there's some really valuable lessons here. So first, don't get stuck in one negotiation methodology so that you can approach negotiation from many different perspectives and different strategies. In certain negotiations, you need to be collaborative, and other situations, you're going to need to really try to get all the value out of the situation. So there's not one perspective you can come from. Don't wing it during a negotiation. Go in prepared with a clear strategy that you have written down know your know. Know the best outcome, know the worst outcome. Be willing to walk away. That's, let's say that again, you need to know how to walk away. And when you have to walk away from a deal, it's so important. That's, that's how you avoid losing deals is by knowing when to walk away. And great negotiators, they'll make you, they'll, they'll get you to do a deal when you should have walked away. That's, that's how you really lose. And it's important to think about how not to set your sales team up to fail by allowing, by even creating the situation where they can lose deals if you're a sales leader and one way to do that is to, is. Is not to compound revenue but to comp on, on on on profit. The mindset of a win win outcome can be super dangerous since the idea of winning it's largely based on perspective because it's not really possible for both sides to win. And you don't want to be seeking ways to make your opponent win. You want to focus on, on. On how to make yourself win. If there's some grow the pie opportunity, definitely bring it up obviously, but, but your mindset should not necessarily be that of win win. Before you go into a negotiation, know what you're willing to give away and how much you're willing to give away. And be prepared for what you're going to ask for in return. Before any negotiation, create a benchmark to establish a range of acceptable outcomes. And that way you know if you got a good deal afterwards when you debrief. Timing has a big impact on negotiation and how people approach decisions. Empathize with their mindset. Think about things from their perspective. Understand their schedule. Understand when they're less busy, more busy. Try to get inside of their head and think about strategize what's. How am I going to get the best deal based on what I understand about them? Know your enemy. As a wise man once said, remember to debrief after every negotiation. This has been fantastic. Mark. Where can our listeners read more about your work, hear more about you? You mentioned the Negotiations Ninja podcast. What, what else? What are the, what are the contact points for you? If someone wants to bring you into their organization to give their folks some.
- [26:46]
A
Training, easiest place to start is go straight to the website which is Negotiations Ninja. Negotiations Ninja.
- [26:57]
B
And who doesn't want to be a ninja, right? I've always wanted to be a ninja. Well, this has been a great episode of the Outside Sales Talk. If you work in field sales, you'll love Badger Maps, the number one route planner for field salespeople. And it helps to sell sell 20% more and drive 20% less. You can get a free trial@badgermapping.com today. If anyone think of any other sales reps, they could brush up on the negotiation skills that Mark has taught us today. Definitely show the love and forward this on to them. Mark, thank you so much for coming on our show. Your time is really appreciated.
- [27:31]
A
Thanks so much for having me. I appreciate it.
- [27:33]
B
Take care. Till next time, everybody.