Have you ever won over a potential client with a perfect presentation but lost them at the negotiation table? Rick Freedman describes what can go wrong and how you can prevent mistakes.
Every consultant, like every fisherman, has a story about "the one that got away," the perfect project that was a great fit, or the one that was "this close."
Many times, great projects are lost due to blunders in negotiating. But there are negotiating tools and techniques that can help you land prize clients. In this article, we'll discuss my "one that got away," what I did wrong, and how I learned to avoid repeating the same mistakes.
The big fish...
I worked as the consulting services manager at the local branch of a large national IT services firm. After months of calling and pleading, I got the opportunity to pitch to the biggest company in my region. This Fortune 50 company was a household name, and, more important to us, a huge user of outsourced IT services, from project services to desktop support.
I brought our best salesman, and we made a powerful pitch that matched their needs exactly. The client told us that they were so pleased with our presentation that they were prepared to start implementation planning even before we negotiated the details of the deal!
My salesman and I went out and smoked a couple of cigars in celebration. That was the last celebration we had. It was a downhill slide from there that ended with us out of the account, and our competitor grabbing the prize from right under our nose.
So what happened? We had the best solution. The customer loved us. We added real value to their project development process by bringing in experts from across our company to help them design their help desk implementation process.
We did one thing wrong: We negotiated badly.
...and how it got away
When I look back on this experience, it seems a perfect illustration of every error that can be made in the IT consulting negotiation process. Here's what we did wrong.
Our chief negotiator was a head-office cowboy who decided he didn't need to confer with us before he came in to negotiate. As a result, we never got a chance to develop a coherent message and determine what roles to play in the negotiation. This led to us contradicting each other in the meeting and stepping on each other's lines.
And because we hadn't huddled before the session, we had divergent understandings of the customer's requirements and of our own pricing policy. Our hotshot negotiator also decided to try and intimidate the client's representative, a ploy that had worked for him in the past but was totally out of place in this situation.
Finally, the local team was granted authority to negotiate, but then the out-of-town guru got on the phone with the client and undermined our decisions.
Looking back on the experience now, our approach was a recipe for failure:
- Our team didn't plan a negotiation strategy.
- Our negotiating team didn't have the same goals.
- The roles and responsibilities of our negotiating team were never clearly defined.
- The power to negotiate was granted to us locally and then was taken away at the last minute.
- We had negotiators on our team who were more interested in "winning" at the negotiating table than in getting the deal
- Our negotiators also failed to separate the emotion and ego of the negotiation process from the desired business result.
If you've ever experienced any of these negotiating blunders, either on your side or on the client's side, you know how frustrating they can be.
I look back ruefully at this missed opportunity, and I've vowed to never experience this bitter disappointment again. What skills must IT consultants have to be sure that we don't succumb to these negotiating traps? Let's examine some basics of negotiation to set a foundation for our discussion.
The basis of negotiation
The word "negotiate" is from the Latin for "to do business." Every business transaction and most personal encounters, as well, involve some level of negotiation. From what movie to see or what restaurant to visit, all the way to the price, performance, and schedule for an information system, conflicting expectations and desires must be resolved, and agreements must be reached.
Although negotiation is a natural part of human interaction, it also makes many people uncomfortable. Lots of us, for example, are conflict averse: When it comes to "fight or flight," we'd rather fly every time.
Others see negotiation as an exercise in deception and manipulation, in which we hide our true intent, try to intimidate or outwit our "opponent," or try to "wait them out" by sitting silently as they present options.
Many books and articles on the subject present negotiation as a set of "tips and tricks" designed to make the other guy squirm. Negotiation, like office politics, is an unavoidable part of business life that's gotten a bad rap because of the way it's practiced by some folks.
So what is the right mindset to bring to the negotiating table?
The best negotiating system I've ever run across was designed by Kare Anderson, the author of Getting What You Want: How to Reach Agreement and Resolve Conflict Every Time and a well-known consultant and speaker.
Anderson's method, which she calls "Triangle Talk," is based on a simple premise: Tricks, manipulation, and subterfuge don't make for successful agreements. Only honest exploration of the needs and desires of the parties and a real effort to find common understanding and common ground will set the groundwork for a successful relationship.
It's important to remember that, in the IT services business, it's relationships we're after, not one-off transactions. That makes it more important for us to engage in negotiations that leave all parties satisfied.
The term "Triangle Talk" comes from the three steps that Anderson recommends for any negotiating situation:
- Know exactly what you want.
- Find out what the other side wants and make them feel heard.
- Propose action in a way they can accept.
Easier said than done, of course, so let's dig into these concepts a bit and see what these steps really require us to do.
What do you really want?
I often suggest to consultants that they help clients visualize the success of a project by asking the question, "When this project is done, what will you have?" In negotiating, it's critical that we ask ourselves a similar set of questions.
- What do we really want from this negotiation?
- What is the minimum we must have to be satisfied?
- What compromises are we absolutely not prepared to make?
Note that these decisions are not just about what deliverables we're prepared to commit to or what budget and schedule we're ready to accept. It's also important that we remember our responsibility to the success of the project and not negotiate away things like change control or robust project management.
I've often seen IT service firms that were very successful at negotiating price and schedule but didn't stick to their guns when it came to enforcing the basic project disciplines. Include elements like working conditions, authority to make decisions, reporting and escalation procedures, as well as the typical "triple constraint" items of time, cost, and performance.
The clearer you are about your bottom-line requirements before you sit down at the table, the less likely that you'll be improvising, or reacting emotionally, in the heat of conflict.
What does the client want?
Finding out what the client wants may be just a matter of asking the question, or it may require some investigative work. The best results include elements of both.
Many consultants, for example, have talked themselves out of jobs by dominating the conversation with references, success stories, and braggadocio. When all we do is pitch, the client is left wondering if we care what they want.
Asking the client about their goals, desires, and "must haves" puts the focus on them and their needs. We take this technique to the next level when we ask the question in context, which is done by being prepared.
When we do our homework on the client and his or her business, the questions we ask are pertinent and meaningful, and they show the client that we're trying to see the world through his or her eyes, not from the perspective of what we want.
Understanding the client's wants also requires us to know ourselves. Many IT consultants come to the table with preconceived notions about what the right solution should be and spend their time, for example, trying to convince the client that they should be using Linux or Java. All of us have other instinctive assumptions about the people we meet and their motivations. Understanding the client's position is an exercise in controlling our impulse to rush to an answer or to judge the other person's motives.
By coming to the table prepared with a clear understanding of our baseline requirements and by absorbing and respecting the needs of our client, we naturally move toward creating a bridge between these positions. Anderson calls this technique "bridging."
By presenting to the client your understanding of their requirements and your ideas for a solution that doesn't require you to compromise your needs, acceptable common ground can be reached.
This column is the first in a series that explores negotiating methods for IT consultants. Future articles will explore techniques for controlling ego and emotion so they don't sabotage negotiating success. We'll also discuss group-negotiating methods.Get weekly consulting tips in your inbox TechRepublic's IT Consultant newsletter, delivered each Monday, offers tips on how to attract customers, build your business, and increase your technical skills in order to get the job done. Automatically sign up today!