Friday Sales Thoughts: Negotiations (with research from Wharton)
At Ambition, we truly believe that part of our mission is to maximize the success of sales people and sales teams. Sales is more than just cold calling prospects, booking revenue, and coaching reps. Great sales process and tactics are core to amazing customer experience. Expect more sales insights from me and the Ambition team.
Recently, Wharton professor Maurice Schweitzer published a paper and subsequent interview on “Getting to Less: When Negotiation Harms Post-Agreement Performance". The research runs counter to some of the popular themes of business and sales tactics that are being pushed by the "experts" today.
A simple through line of an interview Wharton published with Schweitzer about the paper is that while we often think of negotiations as a "battle", where one side must win and the other size must lose, the reality is most negotiations are the start of a relationship: a business partnership, a new job, or similar situations where the negotiation is just a dot in a longer line of working together.
The interview received significant interest in Y Combinator's Hacker News community, spurring insightful discussion and over 144 comments.
When it comes to putting on our sales hat and doing business with amazing sales teams, I personally think the study is a must read. By all means, negotiating is a sport, but its a sport where from a business partnership point of view, we're on the same team.
I think about it like basketball. Even though I would prefer to shoot every time, for my teammate to thrive, I have to pass the ball (and try to do it in a way that puts him in a position to be successful). Partnering with a customer is the same.
I have to "give" - and she has to "get" - for us to both be successful and optimistic about the future of the partnership.
Sales negotiations are ideally the "start" of the partnership, with a relationship spanning both before and after the negotiation result.
As my cofounder Jared Houghton says, "we can make a lot of 'gives' as long as we are getting 'gets' back from the partner".
Here are some really insightful comments from the HN community:
> Negotiating for me is really about creating a genuine win-win scenario for myself and my counterpart. This is impossible to achieve if you are playing (or are even perceived to be playing) 'hardball.'
My basic rules for all negotiations:
1. Be useful to your counter party. (Simply, this means to be well-informed and listen intently. Present any information they need as they need it. Don't be the type to 'bury' the opposition in paperwork when you know they're looking for a few specific details.)
2. Be empathetic to their needs. (Everyone has a reason to show up to the table. If you can identify, with absolute clarity, what they need - you can help them get there. In return, it's often MUCH easier to get what you need.
3. Don't try to win. (The extra 1-5% you might gain in most cases is outweighed by the negativity of the event. If you're negotiating with a future employer, vendor, or potential client, then the value of having them actually want to talk to you is greater than the difference most of the time.)
And lastly, #4 - If your counterparty plays hardball with you, give them a truly fair offer that addresses their needs. If they don't take a fair deal when offered, be prepared to walk away.
> Most business books push a singular narrative around negotiations: Go hard or go home. The advice is tied to the idea that the negotiation table is a place of conflict where one party must best the other.
Good business texts haven't emphasized this approach for a long time. The prevailing negotiation methodology has been "grow the pie" for a long time. In this approach, you're not trying to claim more of the pie directly, but rather make the pie bigger and then claim a larger overall slice.
However, this article is a good reminder that an overly strong negotiating strategy can create friction later in the deal. That's good advice, and it shows the value of good business development.
> My approach to negotiations is described in the book "Never Split the Difference" by Chris Voss.
> Most negotiation strategies attempt to optimize deal terms. This article makes the point that when post-deal relationships are important, it is better to optimize a combination of deal terms and quality of the post-deal relationship. It concludes that a softer approach better achieves this broader goal by yielding a much better relationship even though it might be at the cost of worse deal terms.
I largely agree with this, although the researchers omit the important tactic of developing an acceptable alternative deal with a counter-party's competitor and then focusing negotiation on comparisons to it. Done well, you can still drive a hard bargain in a soft way, while maintaining the relationship by diverting the counter-party's resulting negative feelings away from you and towards the competitor.