Negotiating_with_customers

Negotiating with Customers

Gautham

So you’re close to getting your first customer.

Negotiations with the customer begins even before you meet her ;

with your product pricing

Like it or not, you’re negotiating with your co-founders too,

regarding how the equity should be split.

Learning to Negotiate is a never ending lesson. We’ll touch upon it

through 3 commonly made mistakes that startups tend to make

If this is beneficial, we’ll have more sessions

Before beginning the negotiation; what are the outcomes we should be looking

forward to?

1. produce a wise agreement 2. Efficient

3. Improve (at least not damage) the relationship between the 2 parties

Common mistake #1

1. Get locked in a positional argument

2. Forget the rationale

Let’s deep-dive into this.

What’s a ‘position’ in a negotiation?

Let’s illustrate with an example.

There’s exactly one orange. Jenny and Joey both want the orange. The common position is to split it in half with both getting equal share.

Split by half is the ‘position’

Getting locked into positions is bad scenario. Instead, look at interests and

aim at producing interest based outcomes

What if Jenny wanted the orange peel to bake a cake and Joey wants to eat the fruit? Unless this is explicitly discussed,

outcomes cannot be reached.

Well, we have a better outcome now.

Unless we really probe into what the interests were, we would have gotten locked into position that was undesirable for both, but appeared fair.

For every interest there usually exists several possible positions that could

satisfy it.

Opposed positions != Opposed interests

Common mistake #2

Stop looking at negotiations like a zero sum game. You win, they lose

kind.

A win-win scenario is what should be aimed at.

Explicitly state your interests and reasoning

first and your conclusions or proposals

(position) later.

• Victory != Agreement

• A victory is not what we have to aim for, an agreement is what the goal should be. This is tricky to understand.

• Strong positions leads to egos getting entangled. This is a one way street with no easy way out.

Common mistake #3

Assuming that you are dealing with a soul-less corporation at

the other end.

Most often, you’re dealing with just ‘one’ person

• Are you trying to influence a single negotiator, an absent boss, or some committee or other collective decision-making body?

• You cannot negotiate successfully with an abstraction like “Airtel” or “the HR dept of US Tech”. Instead of trying to persuade “IT Department” to make a decision, it is wiser to focus your efforts on getting one particular Manager to make a recommendation.

• However complex the other side’s decisional process may seem, you will understand it better if you pick one person—probably the person with whom you are dealing—and see how the problem looks from his or her point of view.

• By focusing on one person you are not ignoring complexities.

• Rather, you are handling them by understanding how they impinge on the person with whom you are negotiating.

Explicitly state shared goals, future oriented shared personal goals

Look for items that are of low cost to you and high benefit to them

A relationship goes a long way in reaching a successful favourable outcomes

People in large companies have the same need to appear fair and legitimate. The

other side is more likely to accept a solution if it seems the right thing to do—

right in terms of being fair, legal, honorable, and so forth.

People Problems

• Perception

• Emotion

• Communication

Negotiating is an important skill.

What’s a specific skill you can work on to get increasingly better at this?

Skill at inventing creative options is one of the most useful assets a negotiator can have. It’ll take a lot of practice to get good at this.

This is chance for the S&M junta in the group to get creative and think outside the box.

Not inventing is the normal state of affairs, even when you are outside a stressful negotiation

Inventing Creative Options

• separate the act of inventing options from the act of judging them;

• broaden the options on the table rather than look for a single answer;

• search for mutual gains; and

• invent ways of making their decisions easy.

General Tips

1. Find ways to meet them informally. Try arriving early to chat before the negotiation is scheduled to start, and linger after it ends

2. You want them to feel not that you are attacking them personally, but rather that the problem you face legitimately demands attention

3. Reduce the number of people whose approval would be required

4. Continuously look for precedents, within or outside organisation

5. Threats rarely work, offers work better 6. Write it out in the form of a “yesable proposition.” Try to draft a

proposal to which their responding with the single word “yes” would be sufficient, realistic, and operational.

How far you go in life depends on the number of awkward conversations you are willing to have