Who Are You Negotiating With?

There’s a funny scene from the movie Just Go With It with Adam Sandler where he’s negotiating with a young girl about paying her for a small acting job. It’s an interaction that’s all too familiar… the young girl starts with a huge request to get paid $600/day plus other perks, Sandler comes back and offers her $50/day with no perks, she comes back and says $500/day, he comes back and offers $300/day, and they have a deal. After shaking hands, Sandler reveals that he would have paid $500/day and she said she would have done it for free to get the experience.

It reminds me of countless times early in my career where I offered clients a discount before they even asked for one, or where I’ve seen salespeople hold back offering a more robust option for the client because they convinced themselves it was too expensive and outside of the clients budget. In all of these cases, we can see that the majority of the time - negotiating is something we do with ourselves as opposed to with our prospective client. We convince ourselves that we’re asking for too much, before really understanding the value we bring to the table for the client.

Negotiation is something that should happen very naturally, and occurs throughout the buying process where the seller is working to understand the clients need and what they really value, and the buyer is trying to understand what the potential supplier has to offer. Below are a couple common examples of where I see people negotiating more with themselves, and are missing out on what the client really needs and is willing to pay for.

Your Dates, Our Rates

I had a manager that used to teach us to position ourselves with the client... "Your dates, our rates." We were in a business that built mini ad-campaign websites for clients, which typically took 45-60 days to design, architect, build and launch. We'd often have clients come to us and say they needed it in 2-3 weeks. Our old way was to hammer the team internally to get it done, and the sales team would beg leadership to let us take the deal - at our standard rates. We were negotiating with ourselves.

We learned that what was of most value to the client was getting the project done within a specific timeline. On our side, we would need to figure out how to shuffle other client projects around, bring in more staff, or pay extra for overtime work. All that costs more time and money to get the job done. Our new mindset was that if the client wanted it faster, it would cost quite a bit more which was completely logical and clients had zero objection. This resulted in an instant revenue and margin increase - all for the same service we were offering before. Plus it made the customer feel better because they knew they knew we were committing to a more focused production process, resulting in a higher win rate.

Payment Terms

I was recently working with a technology company who had staggered payment terms for the work they did with clients, which typically took about 6-months to implement. Their payment terms were 25% up front, 25% mid-way through development, and 50% at the end. They had set these terms years ago in an attempt to make it easier for the client to accept, but over time often were tight on cash flow which seemed unnecessary because this is a profitable business with an important service offering.

The company decided to change their standard terms to 75% up front, and 25% upon completion of the project. A massive change from their existing setup, which would require a strong commitment from the client up front. The sales team revolted, but the clients CFO stood firm that these were very fair terms. What was happening was that the sales team was assuming clients would resist, and got all worked up over the possibility and concern that a new obstacle was being added to the sales process. The CFO made it clear that the company wasn’t going to lose a project over this, but these would be the standard terms to start. If the client pushes back hard, we'll address it then.

Fast forward a few months later and the sales team said they got an objection to those terms maybe 1 out of 20 times. These new terms meant the clients were more committed to the project, salespeople were paid faster, and the company had an immediate improvement in cash flow.

Trust Yourself

There’s a great book I read recently called, You Have More Influence than You Think, and the core message is that other people are far more likely to say yes to our requests than we assume. The book shares research study after research study about this point, with the summary being that people are twice as likely to say yes to what we want than we give ourselves credit for.

Often times, not getting what we want isn’t the result of resistance from others - it’s because we get in our own way, negotiating with ourselves.