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“Let us never negotiate out of fear. But let us never fear to negotiate. ― John Fitzgerald Kennedy

Hello, Sales Champions!

We have entered the last month of the quarter and also the last for this calendar year.

A very crucial period when we all have to pull up our socks and leave no stone unturned to pursue all the committed deals and secure the purchase orders to meet their quarterly targets.

So I presume many of your current quarter’s committed opportunities would be in the “negotiation stage” in the Sales Funnel.

While you are preparing and brainstorming with your colleagues from pre-sales, delivery, finance & operations teams, here are three terms that I wanted to get your attention on. Gaining a clear understanding of these terms and preparing on these aspects will increase your chances of winning against the competition. We guarantee gains from these.

  1. BATNA 
  2. DOUBLE S-W or S-W2
  3. ZOPA
  4. What is BATNA? How does it help?

BATNA is defined as the “best alternative to a negotiated agreement”. Let’s understand this from a customer’s perspective. BATNA for your customer is what your customer would do if you failed to reach an agreement with respect to the terms of the PO – namely Price, Delivery lead times, commercial terms and conditions, Warranties, Penalties etc. It’s very important for you to understand this ahead of any negotiation.

In fact, I would alter the BATNA definition as “next best alternative to an agreement” available to the customer.  The question to answer is – If not you, your organization, who would the customer most likely place the Purchase order with? This is where your relationship and traction with the customer comes in handy. You need to have that assessment of your “best competitor”.  The strategy and the tactics that you formulate should be to WIN against that competitor. That is where the second term comes in handy in your preparation.  Read ahead.

  • What is DOUBLE S-W or S-W2? How does it help?

You need to clearly map out the Strengths and weaknesses of your organization vs the “best competitor” in the current opportunity. This is where your Large Account plan “CONQUER” document comes into play and can immensely help. You need to lay out the S-W charts side by side and come up with tactics to highlight the strengths that you bring to the table and also highlight the weaknesses of your competition. The potential gains for your customer going with your value proposition against the possible pitfalls of going with your competitor’s solution. As I have always maintained in all our discussions, we need to quantify this aspect. You need to have clarity on this important factor ahead of all negotiation discussions.

  • What is ZOPA? How does it help?

ZOPA stands for “Zone of possible agreement”. The zone of possible agreement (ZOPA), or bargaining range, describes the intellectual zone in sales and negotiations between two parties where an agreement can be met which both parties can agree to. Within this zone, an agreement is possible. Outside the zone, no amount of negotiation will yield an agreement. As an example, as a best-case scenario, on the quoted price you want to pick up the order with 5% discount and you can go up to offer 8% discount. On the customer side, as his best case scenario, he wants to close the deal at 12% discount and he can go up to 9%.  ZOPA falls somewhere in between 8-9%.

You need to have a feel of this range.

ZOPA is applicable to many factors – price, delivery lead time, warranty terms, penalties etc. This is where you differentiate between your “Queen and pawns” in chess terms. What can you sacrifice during negotiations, in return for some of the critical factors that you cannot compromise on?

List them down. This gives you clarity and therefore the confidence to face the negotiation team from the customer side.

Negotiation is a mental game as much as the details gathered in the form of numbers, percentages, timelines, and data points.

While there are many aspects that are involved in successful negotiations, getting a good handle on BATNA, Double S-W and ZOPA would increase your preparations and therefore your confidence to win against competition and secure that critical opportunity in your favour.

Wishing you the very best in all your upcoming negotiations and in achieving a 100%+ in the END’19 sales quarter.

Take care of yourself & Happy Selling!

Tags: BATNA, Double S-W, ZOPA, Sales, Competition

Reference: https://www.goodreads.com/quotes/tag/negotiation

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