Negotiations Part 2

Last post I went over some basic success I had in a recent negotiation. Today we will go over another case study to present some new ideas. Recently I have taken the task of Project Manager for the implementation of a SaaS service for my company. Over 7 weeks, I researched every possible option for this SaaS product that we wanted to implement. 

1. Research is key- I touched in this briefly last post. When you enter a negotiation you want to be the     expert on all things related to the negotiation. You should be able to quote stats, have data on competitors and the company you are negotiating with, and know additional pieces that you can dangle in front of the person you negotiate with. 

Through my research, I discovered that there are 3 great SaaS products that would fit the needs of my company. I proceeded to notify the salesmen of each of these different companies that I would be deciding between 3 companies, and I told him directly which companies they were and why we were considering them.

2. Friendly Competition - Think of this as the Ebay success principal. People inherently like to win and they especially don't like to lose when it is to their direct competitor. This is the case with all negotiations, if you have options then you will have the upper hand needed to help secure the best deal.

After initial negotiations there became a clear leader to be our SaaS provider, and I was ready to present this company as the future product for our needs, but that doesn't mean you can't negotiate a little further. This company had multiple points of interest for negotiation. The training fees, and the implementation fee seemed to be the easiest points to get a little better rate on. We were fine with the monthly fee and the term of the contract and so I preceded to work on the points of concern.

3. Lose to win - Good negotiators will start a further negotiation with a concession and a semi-guarantee of a future deal. For example, I said "We have narrowed down our choices to your company and ___, I am ready to present your company to our CEO as our solution if we can get a few things ironed out. I don't see a problem presenting the term of the contract and the monthly fee, but we will need to work further on these implementation fees." You have to pick your battle with negotiation. If you aren't willing to compromise on some areas then neither one will win. It is also key to show the light at the end of the tunnel for the negotiation.

After presenting concerns to salesperson, I presented some tier options that would fit within the price that I envisioned for the training and implementation fees. We came up with some ideas and I was able to reduce the implementation fees by 40%.

4. Work together - have some ideas ready to help come to an agreed conclusion. If you just say that you want X and expect them to reach it without providing any concession or feedback, then you will most likely not end up where you would like to be.

My negotiation ended with a 1 year contract term reduction, 35% reduction in monthly price and 50% reduction in implementation and training fees. I consider that a successful negotiation.

Part 3 of negotiation next post.

MBA Skill # 129 - Getting out of a Gym Membership with No Fee

Gyms are notorious for having some of the hardest contracts to get out of and the most persuasive salespeople. Even whole sitcom episodes have been aired based around not being able to "quit the gym". What does that have anything to do with negotiation, and how did I get my wife out of her gym pass 1.5 years early without penalty? This real world example is one of many in my NEGOTIATION STATION series that I will be going over in the next few weeks. This post will consist of some basic negotiation skills tied into my getting out of one of the hardest contracts in the world.

Keys to MBA Negotiation Skills

1. Explain your side of things in a strategic way. Look for ways to be vague and specific at the same time. In business terms, mention specific terms of a contract. Talk about the past and future relationship you have established with a company or vendor. 
1. GYM  EX: I focused on my future excitement about the gym, rather than my wife who has passion for other areas of exercise. 
2. Have answers to every question that may be asked. Do some research on the basic sales questions that the person you are dealing with may bring up. 
1. GYM EX: much like in business negotiations, the gym teaches its employees to focus on the benefits of the gym and use emotional ploys to keep its members. I was able to get through these by focusing again on my satisfaction and then the point of my wife exercising in different avenues then I do. 
3. Remove any assumptions before the person you are negotiating brings them up. This is part of the research portion of your negotiation. Make sure you write down a list of your assumptions in the negotiation and come up with solutions or answers to every assumption.
1. GYM EX: I took care of this in my first sentence with the gym customer service by stating my desire to keep my pass and possibly upgrade my pass in the future, while removing my wife's pass due to lack of use. 
4. Prime the person you are negotiating with long before the negotiation takes place. This will allow for the maximum possible bargaining chips for you to use later on. 
1. GYM EX: We were fine with keeping our contract at month to month after it was up for renewal last time, but of course the gym wants you to be locked in for several years. I renewed the contract, but made sure there was a cancel at any time w/o penalty clause, and I also negotiated a new 20% lower rate since we were giving them something by signing the 2 year contract (even though it had an exit clause).
5. Search to see if there are bigger pieces in the pie. This means find out if there are other places they might be willing to concede on in place of places they don't want to concede. 
1. GYM EX: much like with any other subscription based company, the gym wants to know they have people in contracts. Look for ways to sign this contract, but on your terms. That way they are happy that they have you in "their" contract and you are happy because you got a reduced rate or other benefit. 

These are the very basics of negotiation in my series of case studies that I have done over my years of experience in working with vendors, clients, and in my own personal negotiation.