Tuesday 11 September 2018

It was an intriguing September evening at Goodwin Procter’s offices in Cheapside, London. John Moss and Chris Smith (JA Consulting) began by presenting the reasons why negotiation and persuasion are crucial when engendering change.

John kicked off by outlining the importance of marginal gains within the current definition of business development—negotiation, change programmes, account management and sales. Chris built on this by highlighting the importance of embedding confidence—not just capability and skills—to ultimately enable better business conversations.

John and Chris were supported by Rachel Turner (Accounts and Financial Reporting Director at BDO), who provided anecdotes about her interactions with BDO partners and suppliers, supporting teams, and her own career. These anecdotes often emphasised the importance of controlling expectations and adding value to your clients—while also recovering costs.

Is persuasion the same as selling?

The room agreed that persuasion and selling are interchangeable.

Selling is often poorly defined in business development circles, where it is traditionally associated with deception rather than persuasion and mutual acceptance. John pointed out that organisations often overlook the consumer perspective, despite what we know as consumers ourselves—that the traditional definition clearly doesn’t work!

In the context of negotiation, persuasion is about getting the client to align with our approach.

How is negotiation defined?

Despite the best efforts of those in the public eye to redefine the word, negotiation is the process of reaching mutually acceptable terms.

As John very succinctly stated, negotiation is two organisations moving towards each other to achieve an outcome both are happy with. As it often begins with a set of subjects that are not agreed upon, there must be a period of collaboration following the negotiation. This allows us to understand where and how to leverage forward momentum.

How do we achieve common ground?

Common ground is a background for the buying journey, as illustrated below:

Pic 1 Sep 18 Report

This diagram is especially useful as it highlights a key point—that negotiation often takes place too late in the process.

From the client’s perspective, the journey progresses as follows;

  1. the status quo, with no immediately apparent opportunity for change;
  2. a reason emerges to do something differently;
  3. the client assesses the potential outcomes;
  4. the client develops formal and informal selection criteria to give reasons for their choices;
  5. the client attempts to find solutions by talking to suppliers;
  6. the client assesses how well the suppliers’ solutions deliver the required change and solve any problems;
  7. the client decides on the best solution.

With these steps in mind, John went on to discuss the basis of the model. In the context of selling complex services and associations, behavioural psychology is becoming increasingly useful as a tool to encourage more effective business conversations.

How we do we help the buyer in this journey?

The above question was initially posed by a McKinsey study that examined 132 common behaviours among top sales people. The study argued that the best way forward was to shift the focus away from selling to buying, accelerating the steps towards the period of collaboration directed by the client journey.

However, two challenges need to be overcome within the current and future marketplaces to ensure that the client makes the right choice:

  1. How do we use marketing communications and research to understand the client and know where they are?
  2. Relationships are no longer always face-to-face; it is often harder to shape the client’s needs online before it is too late in their journey.

How do we get in their head?

At this point, Rachel gave some great examples of how her team at BDO gets into clients’ heads.

Client-listening exercises are at the heart of their approach, using a standardised feedback agenda with questions designed to encourage conversations. This enables the BDO team to directly assess the client’s value in, the client’s own words (or lack thereof), through an open conversation. Importantly, BDO brings no assumptions to the table.

How do we measure our effectiveness?

Chris began by returning to the basics of marketing planning with Return on Marketing Investment (ROMI) and the importance of measuring Customer Lifetime Value (LTV). He stated that not only should the effectiveness of marketing and business development be measured through brand development and effectiveness, but also through a shift towards lead generation and marketing spend driving growth.

It was agreed that the challenge of brand metrics in a B2B environment lie primarily in client relationships. This emphasises the importance of being clear about what this looks like during the planning stage.

Chris went on to cover the importance of developing metrics to understand when your organisation’s pipeline and client-development initiatives are working effectively.

In the case of other marketing tactics, such as events, Chris examined how metrics can be compartmentalised. This could include calculating the number of attendees he would want to speak to at an event and the potential percentage of these attendees being converted into leads. This all acts to link marketing expenditure back to the pipeline so we don’t deviate from our aims.

For promotional activities, such as press coverage, metrics like conversion rates achieve a similar link with pipeline development.

How can we convert leads into prospects and negotiate a mutually beneficial client relationship?

John provided some great insight into the role of logic in persuasion, highlighting how logic is, to a degree, subjective, and limited in its ability to influence. The use of logic depends wholly on the client’s readiness to listen, the degree of clarity in the situation, and their resistance to change.

What role does emotion play in the decision-making process?

Emotions can be levered. John advised that the basis for any good negotiation is to have a conversation around what the client might gain by following your logic, supported by a clear understanding of how their emotions drive decisions.

These levers are the following.

  • Negative—what are the risks?
  • Positive—what do both parties gain?
  • Secondary—additional justification for change.

We should tailor our logic to the business needs of the client, backing this up with facts, evidence, and plenty of empathy. It is important to probe the consequences of their decision and tailor our pitch to meet their business needs and internal pressures.

Logic and empathy are a powerful combination

John stressed the importance of knowing what matters to our markets and those of the client. If necessary, John argued, we should educate them (on the basis of sound research).

With this in mind, persuasion should come before negotiation. Negotiation exists to:

  • convince people;
  • reach agreement on a shared resource;
  • resolve a dispute;
  • sell a product or service;
  • narrow gaps in opinion;
  • establish positive relationships;
  • achieve effective alliances.

With a good understanding of the differences and potential for change, we can focus on the areas of agreement and stop negotiating when a deal is fully realised.

The following diagram was recommended as a tool for mapping when parties are likely to compromise their position, walk away, or concede:

Pic 2 Sep 18 Report

Rachel reinforced the importance of measuring the value of your position and articulating it. She supported John’s point that you as a negotiator should not undervalue your negotiating position, and be confident in debrief sessions. The BDO team now uses standard agendas and catch-up sessions to assess the degree of value and time needed for resolving any blockers.

The negotiating parties are pushing back, so how do we manage conflict?

To help answer this question, Chris presented the Thomas–Kilmann Conflict Mode Instrument, a useful model that assesses how people handle conflict. As emotional beings, all of us are subject to the levers mentioned above, and we are all regularly guilty of failing to listen.

Pic 3 Sep 18 Report

This model can be used by the members of a negotiating team to understand their strengths and weaknesses of their position, and to predict where the client is. That information will allow them to decide which emotional drivers will get them where they need to be.

It may seem obvious, but listening goes a long way to informing a negotiating position. Listening builds trust with the client and demonstrates empathy with their position, in turn enabling us to react more effectively.

Now we understand negotiation, what sorts of things can we negotiate on?

John and Chris pointed out that that the best negotiators have a long list of subjects about which they can negotiate, extending way beyond price and contracts within professional services and through to timescales, systems, personnel, project communication, promotional activities, knowledge-sharing activities, management reports, and more.

In terms of cost and value, having a diverse, well-prepared armoury strengthens a negotiator’s position. By prioritising items by cost and value, the negotiator can decide which items are for giving away and which items need a strategy for negotiation.

Pic 4 Sep 18 Report

What do you mean, ‘No’?

As problem-solvers in professional services, we enjoy satisfying our clients despite the occasionally unforeseen costs—we don’t want to be seen as difficult or non-collaborative.

The consequences of frequent failure to say ‘no’ can be resentment and, ultimately, burnout. On the other hand, being empathetic towards the problems on the other side is helpful and honest—forcing us to be more solution-focused.

Chris recommended that taking time to think about requests and respond prevents scope creep and enables a more measured response.

Rachel took this and applied context from her work at BDO. In this example, her team put together a crib sheet, including examples of holding responses, and held regular meetings to ensure everyone knew of any scope creep. This involved logging conversations each team member had with the client in a central location, so that they could be referred to when speaking to the client in more detail. Ultimately, this empowered the client to take control of the decisions and manage expectations when the BDO team were not in a position to deliver as well as they would like.

My key takeaways from the session

We’ve all been there. You’re sat across the table from an important client, trying to second-guess what they’re thinking, looking for any kind of tell to show you’re on the right track. It can feel like there’s no room left to manoeuvre.

It can be a lot harder than it sounds to understand the real needs of our clients, and it takes a level of empathy and patience that many of us don’t give ourselves time to achieve.

I, for one, will definitely be using the ideas brought up in this session around effective planning of the client journey, which should provide more time for negotiations themselves. Hopefully, this will lead to conversations that are more valuable and much less frustrating—for both sides!

Alexander Hamp, Business Development Executive
Oxera Consulting