Can You Trust Your Customer to Negotiate for You?
A few years ago, one of the largest sales organizations in the world communicated the desire to purchase one of our training programs. The scope was to train tens of thousands of sales professionals annually. That got my attention. If we won, it would be our company’s largest and most profitable contract in our history.
We had previously worked with the Senior VP of Learning to implement a leadership development program, and they were extremely satisfied with the results. Because they were familiar with our concepts, the SVP believed we had a better approach to helping their sellers prospect for new customers.
But as with all large deals, it’s never as simple as, “Great, I’ll pay your list price of $300 per person. Can you just shoot me the contract?”
At a Loss for How to Proceed
Once their decision-making team decided they wanted our program, the contract needed to get through legal, procurement, and ultimately get approved by the President. To use funds earmarked for training by the end of the year, all this had to occur within a month and a half.
We were working with several major hurdles to getting this deal done:
- Because of limited funds available, C-level sponsorship was required for an investment of this magnitude. And because of the timing of the request, we couldn’t slow down the process and meet with all the players to demonstrate the ROI on tripling learning’s budget. If we didn’t get it done in a few weeks, available funds would be lost.
- The company had a negative reaction to paying a perpetual license for intellectual property. They signed a similar deal a few short years ago, wasting millions of dollars on a program that was quickly shelved. Also, since this was such a large opportunity, we had no basis for determining a volume discount.
- If we went through several rounds of back-and-forth price negotiations with procurement, we would run out of time.
Initially, I was at a loss for how to proceed. If I just slapped on the cheapest possible price, making my best offer, it would still be well outside their budget and negotiations would start. There just wasn’t the time required and too many layers to follow the typical negotiation process.
Three Simple Words: I Trust You
I decided not to negotiate. My strategy could be distilled down to three simple words: I trust you.
I offered a few data points related to what the market historically pays for content and what they have previously invested to train a smaller audience and then gave the SVP carte blanche to go make the deal happen.
“You know what our content is worth, you know all the players, and you know your organization’s appetite to invest in this type of solution. You determine what you are willing to invest, and I will accept whatever price you offer. No negotiation. I will agree to whatever you can get approved.”
Here was his reaction:
“Quite honestly, I’m speechless. Very bold approach. I had already had Susan figuring out how we can make this work on our end. Wow, the honesty and trust you are displaying is almost overwhelming. I’m blown away. You’re placing the utmost confidence in our sense of fair play, though you are correct – we will approach this with the highest integrity. Wow.”
This was not a manipulation tactic. This was not a move to get a better result. I did trust the team, so why would I negotiate? Why fight? I dropped the rope, the game ended, and the partnership began.
We instantly began working together. They immediately lifted the curtain and revealed the available funds and the probability of getting more. Another unintended outcome that surprised us was they now felt the weight of representing our organization. They suddenly felt responsible for ensuring ASLAN was treated fairly.
The question shifted from, “What are you going to charge me?” to “How do we take care of ASLAN and ensure we get their best work?”
As a result, the SVP and his team did everything possible to persuade the economic buyers and procurement to increase the investment. They became advocates for us. We were friends and team members working together for a common goal. The President signed the deal the day before Christmas .
Did I get a fair market value for my content? Honestly, I’m not sure. But I believe I got the maximum amount of money they could pay for that specific opportunity – of that much I am confident.
If I believed it was a win-lose, they gave me the freedom to walk away, even though I communicated I would honor whatever price they offered. Because I dropped the rope and they were trustworthy, they weren’t going to force me to accept a win-lose deal.
Yes, I could have rolled the dice, let the existing funds evaporate, and attempted to sell the President on investing more. But that wasn’t a risk I was willing to take. I trusted my friend’s assessment of the situation.
Dropping the Rope
I am not suggesting you should let every client determine your price. People tend to fall into two categories, givers and takers. Takers are looking for weakness to exploit, and they win when you lose. Givers focus on a win-win. When working with givers, you may want to consider allowing them to determine the outcome.
Most don’t have the authority to allow the customer to determine price, but think about what other areas you can allow the customer to determine the outcome. For example, payment terms, try it before you buy it, who’s responsible for miscellaneous expenses, cancellation, or even satisfying an unhappy customer. If you have zero latitude, look for any way that you can demonstrate you trust the customer by dropping the rope.
When the tug-of-war disappears, when you trust the other person and are unwilling to play the game, you are much more likely to receive the best value for your product, service, or solution. Over time, the results will far outweigh those from the adversarial approach.
Just the other day, I subleased one of our offices to a good friend in the real estate business. After determining he was interested in the office space, the conversation turned to price. I completely dropped the rope:
“Steve, I trust you. You know more about the prices in the market than I do. You just let me know what’s fair, send me a lease, and we’re good to go.”
The translation was, “We aren’t going to play the negotiation game. You are solely responsible to represent the interest of both parties. If you would like to take advantage of me, you can.”
Living Up to the Trust Extended
But here’s what I’ve learned: no one has. The other parties seem suddenly more concerned with getting a fair price than getting the best price. They live up to the trust extended.
If you try this approach, will you at some point get the short end of the stick? Possibly. But over time, if you build your strategy around trusting the other party, a high percentage will not disappoint.
If you have the authority to attempt this radical, non-negotiation strategy, consider these four factors before giving the customer free rein to dictate price:
- You have a high level of relational equity. Never attempt this approach when dealing with strangers or if you know the person is a taker.
- A fair market value can easily be determined. If the customer can easily see what others are paying for similar services, they are much more willing and likely to represent you equitably.
- You have a high profit margin. If you can’t afford to risk a drop in price, don’t attempt this approach.
- You won’t get fired.
This blog is an excerpt Taken from unReceptive by Tom Stanfill. Copyright © 2021 by Tom Stanfill. If you want to learn more about reaching and converting unreceptive customers, check out unreceptivebook.com.
The best way to get to know us is to know what we value. If we teach it we live it, because what we do speaks far more eloquently than what we say. We’ll always choose people over profits, and we’re most fulfilled and effective when we serve. It drives our culture, frames our training programs and transforms the lives of the clients we partner with.