Everything’s negotiable – and here’s how to do it

February 18, 2013 By

During the Civil War, President Lincoln was urged by a friend to give up Forts Sumter and Pickens and all government property in the Southern states.  In reply, Lincoln said, “Do you remember the fable of the lion and the woodsman’s daughter?”

“Aesop writes that a lion was very much in love with a woodsman’s daughter.  The fair maid referred him to her father.  And the lion went to the father and asked for her hand.

“The father replied:  ‘Your teeth are too long.’”

The lion went to a dentist and had them extracted.  Returning, he asked again for his bride.

“’No,” said the woodsman.  “Your claws are too long.”

Going to the doctor, he had the claws removed.  Then he returned to claim his bride, and the woodsman, seeing that he was unarmed, beat out his brains.

“May it not be so with me,” concluded Lincoln, “if I give up all that is asked?”

I learned a long time ago that you can’t give anything away in negotiations without receiving something in return.  I also know that the most important term in any contract isn’t the contract.  It’s dealing with people who are honest.

negotiation - harvey mackayBefore you start any negotiation, look beyond the title and make sure that the person you’re dealing with is in a position of authority to sign off on the agreement.

No matter what industry you’re in, or how far you go in your career, the ability to effectively negotiate can make the difference between success and mediocrity.  It doesn’t matter whether it’s a multimillion-dollar contract, a job offer or a house sale.  The rules of good negotiating are the same.

  • Know what you want.  Don’t go to the table without a clear, realistic idea of what you want to achieve.  It will help you negotiate with confidence.
  • Ask for what you want.  Don’t be afraid to make the first offer.  You’ll set the tone for the discussion, and studies suggest that the negotiator who goes first usually comes closer to getting what he or she wants.  While I often counsel people to let the other person go first, someone has to start the process.  I have found that either way, I need to be clear about my expectations or I will be disappointed.
  • Understand what your adversary wants.  A successful negotiation should satisfy both sides.  Instead of trying to crush your competition, find out what he or she hopes to get, and try to work together toward a solution that works for you both.
  • Don’t concede unilaterally.  Usually one side or the other has to give something up.  If you offer something, be sure to get a comparable concession from the other person.  Giving away something for nothing will be taken as a weakness to be exploited.  The playing field needs to be level.  You don’t have to accept being bullied.
  • Don’t rush.  Time can be your friend if you’re willing to wait for the right deal.  If the other side senses a deadline, he or she may be motivated to hold out until the last minute, or try to force you into accepting unreasonable terms.  Be patient and let the time pressure work against the other side.
  • Be ready to walk away.  This can take a certain amount of courage, but it’s necessary to avoid being backed into an agreement you don’t want.  If possible, keep an ally in reserve – someone with the power to approve or reject the deal.  This can give you an out if you need to turn down a deal, or motivate the other side to make the best offer possible.
  • Listen.  Sometimes what the other side says is not the same as what they want.  They say the price is too high, but their most important demand is quality, which almost always costs a little (or a lot) more.  Pay attention for cues that will help you direct your response to a better outcome for all.

Financier J. P. Morgan once wanted to buy a large Minnesota ore mine from John D. Rockefeller.  So Rockefeller sent his son, John D. Jr. to talk to Morgan.

Morgan asked, “Well, what’s your price?”

He was unprepared for the response.  Junior said, “Mr. Morgan, I think there must be some mistake.  I did not come here to sell; I understood you wanted to buy.”

Mackay’s Moral:  There is no such thing as a final offer.

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Knowing Something About Your Customer Is Just As Important As Knowing Your Product

May 17, 2012 By

 

On a national sports radio program recently, the two talk show hosts were discussing star quarterback Peyton Manning and the enormous impact he is having in his new football home, Denver.  They mentioned that Manning had already learned the entire playbook, but even more interesting was the fact that he learned the names of the entire press group and knows as much as he could about them and their families.  One show host opined how “brilliant” that was of Manning, and what is most impressive is that he took the time to read and find out as much information as he could.

Perhaps he does this because he knows the value of scouting reports, which colleges and major sports leagues use to assess their competition and draft choices.

I don’t know if Peyton Manning is familiar with the Mackay 66-Question Customer Profile, which I wrote about in my book, “Swim With The Sharks Without Being Eaten Alive.”  However, Manning certainly knows the power that it yields when used properly to build relationships.

I have been preaching about the power of the Mackay 66 for my entire career.  It’s a tool to help you humanize your selling strategy.  To be successful in life – and especially in sales – you must have a deep-down burning desire to help people.  Studies show that you can’t talk business all the time. Your customers are people first!

I developed this 66-question customer profile when I was 21 years old.  (Click Here for The Mackay 66)  At MackayMitchell Envelope Company we require all of our sales people to fill it out about each of their customers.

You wouldn’t believe how much we know about our customers.  The IRS wouldn’t believe how much we know about our customers.

And I’m not talking about their taste in envelopes either.  We want to know, based on routine conversation and observation, what our customers are like as human beings.  What they feel strongly about?  What they are most proud of having achieved?  Any status symbols in their office?  In other words, we want to know the person behind the desk.

And remember … this is not just for our customers.  It’s also for our suppliers.  We want the best paper suppliers in the country.  We want the best ink suppliers.

Use the Mackay 66 for employees and competitors – anyone whom you can benefit from knowing more about.  Each time you encounter those persons, you learn a little bit more about them and keep building your list.  You will probably never fill out all 66 items, but 30 are better than 20, and 15 are better than 10, things like education (high school and college), family (married, kids and names), anniversary, hobbies and interests, favorite sports teams, vacation habits, previous employment, professional and trade associations, clubs, and so on.

Question number 66 – Does your competitor have more and better answers to the above questions than you have?

The Mackay 66 is a concept, philosophy and tool.  You still must perform.  But perform and build a good relationship and you not only get the order, you get all the reorders.

You simply cannot know enough about your customers, employees, suppliers and competitors.

Here’s a story that dates back about one hundred years that illustrates the importance of noticing the little things and knowing your audience.

Sir Arthur Conan Doyle, the creator of Sherlock Holmes, was quite impressed with the observational powers of a cab driver who picked him up at the train station after a vacation in the south of France.  As he stepped into the cab and put his suitcase on the seat next to him, the driver surprised him by asking him, “Where would you like to go, Mr. Doyle?”

Doyle was surprised that he knew his name, and asked whether they had ever met before.

The driver said no, which prompted Doyle to ask how he knew who he was.

The driver replied, “This morning’s paper had a story about you being on vacation in Marseilles.  This is the taxi stand where people who return from Marseilles always come to.  Your skin color tells me that you have been on vacation.  The ink spot on your right index finger suggests to me that you are a writer.  Your clothing is very English, and not French.  Adding up all those pieces of information, I deduce that you are Sir Arthur Conan Doyle.

“That, and your name is on your suitcase.”

Mackay’s Moral:  People don’t care how much you know about them … once they realize how much you care about them.

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Tie-Downs Are Critical To Sales

May 3, 2012 By

If you knew two little words that could improve your sales, you’d use them, wouldn’t you?

When you see your customer has some reservations, it makes sense to get the issues out in the open, doesn’t it?

And after the ink is dry on the deal, you should make every effort to make sure your customer is satisfied, shouldn’t you?

So why all the questions?  They illustrate a simple technique – sales tie-downs – that can help you improve your sales.  By getting your customers to agree with you in small steps along the way, you have a better chance of reaching agreement when it’s time to do business.

The salespeople who effectively use tie-downs are more successful.  The ones who don’t aren’t nearly as successful.  It’s that simple.

So what exactly are sales tie-downs?

They are short phrases that can be added to statements to turn them into questions that get your prospective customer to start saying yes long before you go for the close.  You ask these little questions throughout your sales presentation to engage your customer and get them used to saying yes.  Psychologically, they will then be more likely to say yes when you ask for the sale.

John Eliason, CEO of First Financial Merchant Services, a credit-card processing firm in Minneapolis, gives the analogy of Gulliver’s travels.  When Gulliver goes to the land of little people and falls asleep, he wakes up and is tied down to the ground.  Gulliver is the sale and all these ropes are the tie-downs.  John says, “If there were only one or two ropes they would not be strong enough to tie down Gulliver.”

Too often, sales reps just regurgitate their presentations and expect that strategy to work.  It doesn’t.  People tune them out because they aren’t engaged in the process.  The remedy is to ask little questions along the way, and monitor the feedback.  Doesn’t that make sense?

You know what I mean?  Are you following me?  These are tie-downs.  End statements with questions like:  Wouldn’t you agree?  Is that right?  This simple technique serves to tie a statement down.

Tie-down questions can be as simple as:

  • Aren’t they?
  • Can’t you?
  • Isn’t it?
  • Shouldn’t it?
  • Won’t they?

Perhaps you have been using these questions with your customers all along and didn’t know there was a name for this technique.

Tie-downs have to become a natural part of your conversation before you can use them in your sales presentations.  Be aware of your tone so the questions don’t sound threatening or argumentative.  Learning how to use tie-downs effectively takes rehearsal.  Practice tie-downs on your spouse or friends.  Have some fun using them in role-playing exercises with other sales professionals.  That will help you develop a rhythm that will include enough, but not too many tie-down questions.

Unfortunately many people in sales don’t ask these little tie-down questions and lose their customers at some point during their presentations.  Give your customer a chance to respond and ask questions of you.  Pay close attention to their reactions, because that will lead you to your next tie-down.

There’s another benefit to tie-downs as well.  They keep you in control and confirm that your customers understand what you are saying during your sales presentation, and that it’s okay to continue.  Are you with me?

Most often, sales people use tie-downs at the end of sentences, but they can be used at the beginning of a sentence as well.  For example, if you are selling an alarm system you might ask:  Isn’t it important for your family to have peace of mind?  Can you see how this will provide safety?

A lot of sales are based on price, so you want customers to agree that savings are important.  You might ask:  Saving money is important to you, isn’t it?  If I could show you ways to save, is that important to you?

Another benefit of using sales tie-downs it that you don’t need a big close, as many sales reps believe. You risk losing your customer when you save all the good stuff for the end.  Keep the customer actively involved throughout your presentation and watch your results improve.

Now let me ask you again, if you knew two little words that could improve your sales, you’d use them, wouldn’t you?  I think you know the answer.

 

Mackay’s Moral:  Use sales tie-downs to lasso more customers.

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When Choice Outflanks Prime

April 26, 2012 By

Diplomacy is all about making the right choices.  When I persuaded my wife, Carol Ann, to say “I do” ages ago, we entered serious negotiations to nail down the ground rules for our marriage.  Then we hit on it.  In our family, I would make all the major decisions, and she would make all the minor decisions!  Many of my friends have asked me, “Harvey, how on earth could that ever work out?”  My answer:  “Very simple . . . There have never been any major decisions.”

Jim Collins is, without doubt, the hottest name in the hard science of business analytics.  He has dazzled C-suites coast to coast with bestsellers like Built to Last and Good to Great.  In the diplomacy arena, Jim’s no cream puff either.  In fact, I think we’re joined at the hip in how we both tackle tact.  Jim’s wife, Joanne Ernst, won the 1985 Ironman Triathlon in Hawaii.  Regarding his wife, Jim has gone on record with this analysis:  “We’ve been married 20 years and we have 50–50 ownership . . . but she holds all the voting shares.”

Smart choice is, indeed, central to any kind of success.  Jim’s newest offering, Great by Choice, written with Berkeley management professor Morten T. Hansen, is all about the power of choice in management.  The authors zero in on 10X companies which “didn’t merely get by or just become successful. . .”  The definition of a 10X company is one that beats its industry index by at least 10 times.

The authors disintegrate some colossal myths about business success.  Take the notion that, “Great enterprises with 10X success have a lot more good luck.”  The well documented finding:  Everyone experiences luck:  “lots of luck, both good and bad—in comparable amounts.  The critical question is not whether you’ll have luck, but what you do with the luck that you get.”  They even have a measure for it:  ROL – “Return on Luck.”

Another assailed fable:  “’A threat-filled world favors the speedy; you’re either the quick or the dead.”  Reality says:  “Fast! Fast! Fast!’—is a good way to get killed.  10X leaders figure out when to go fast, and when not to.”

Read Great by Choice thoughtfully.  It’s jammed with plenty of ideas.  On the other hand, you may have a tough time slowing down.  The text cruises along with real page-turner pace.  The book is sprinkled with lively anecdotes such as Roald Amundsen’s race to discover and reach the South Pole.

How did Amundsen’s team prevail against their rivals?  For one thing, Amundsen learned “as much as possible from practical experience about what actually worked. . . .  He observed [for example] how Eskimos never hurried, moving slowly and steadily, avoiding excessive sweat that could turn to ice in sub-zero temperatures.”

You might think that the heroes in Great by Choice are relentless grinds.  Not by a long shot.  Herb Kelleher, co-founder of Southwest Airlines, “understood that superb customer service naturally arises when people have fun at work. . .”  Kelleher once boasted to 60 Minutes that he was “the only airline president in America that would go over to his maintenance hangar at two o’clock in the morning in a flowered hat with a feathered boa and a purple dress.”

“The 20 Mile March” is another central lesson – this one about pacing.  Want to cross the continent on foot?  Do it at a regular sustained pace, day after day.  Don’t squander your energy in reckless bursts.  Work with “a lower bound and an upper bound.”  Collins and Hansen endorse what they call the “’Goldilocks time frame’ – not too short and not too long but just right.”

Maybe the book’s most jarring revelation is that innovation is not all it’s cracked up to be.  While 10Xers may boast important innovations, they aren’t always “more innovative than their less successful comparisons; and in some surprise cases, the 10X cases were less innovative.”  Discipline counts for more.  “For a 10Xer, the only legitimate form of discipline is self-discipline, having the inner will to do whatever it takes to create a great outcome, no matter how difficult.”

A Wall Street Journal reviewer opined:  “The authors’ conclusions sometimes feel like the claims of a well-written horoscope – so broadly stated that they are hard to disprove.”  Not in my opinion.  Great by Choice is plenty more astronomical than astrological and one sure-fire way to steer by the stars.

 

Mackay’s Moral:  Management by choice will always lick management by chance. 

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Cradle-To-Grave Cuba: Poised for Rebirth?

April 19, 2012 By

The 1986 measures taken against South Africa surely hastened the end of apartheid.  In most other cases, embargos are a blunder.  Take Cuba. We started imposing sanctions against Cuba a half century ago.  Where have they gotten us?

The U.S. Chamber of Commerce has put a number to the impact.  It cites estimates that the embargo annually sacrifices $1.2 billion in U.S. exports and revenues.  That’s nearly twice the cost suffered by Cuba, experts contend.  George Shultz, Secretary of State under Ronald Reagan, said in 2009:  “With the cold war behind us, we should simply remove the embargo on Cuba.”

I just returned from my most recent visit to Cuba, having now been there a half-dozen times.  This visit convinced me there will be a tremendous change in Cuba in the next five years.  No one will recognize it from the paternalistic, cradle-to-grave operation that country has been since 1959.  That’s when Fidel Castro took power.

In 1976, I led a 21-person trade delegation to Havana for 5 days.  Our goal was to negotiate future trade with Castro.  That’s also when I learned he also spoke perfect English – after I struck up a conversation with him about his passion for bowling.

When Fidel checks out, Father Time will be the likely culprit.  After all, El Comandante has survived countless assassination attempts and is 85.  Meanwhile his younger brother – the modest and pragmatic Raúl – is really the helmsman.  As to speechifying, Raúl is the short-winded sort, something his brother has never been.  Fidel recently summoned sixty world leaders and harangued them for four hours.  His wife made him rest for an hour, but then the octogenarian came back and pitched for another four.

Raúl, president of the Council of State of Cuba since 2008, is a savvy problem solver.  Smoothly, and under the radar, Raúl has been dismantling Fidel’s classical communist agenda:

  • He’s released a hundred political prisoners.
  • He doesn’t assail the U.S. as the root of all Cuba’s problems.
  • He has organized grassroots feedback organizations for himself.
  • 178 categories of activity are now licensed for private-sector development and entrepreneurship.
  • In the next five years, 40% of the economy will be privatized.
  • Education is revered, and the population is remarkably well schooled.
  • And, tourism has displaced sugar as the single most important force in the economy.

Compared to Jamaica, Haiti, El Salvador, and Honduras, Cuba is a jewel for the average citizen.  The government pays all basic living expenses.  With great medical care, its life expectancy rivals that of the United States.

Life is still no day at the beach for the 11 million people of Cuba.  Raúl is reputed to be as brutal as he is tough.  Officials still get fired for dissing the government, which happened to two of them recently.  Discretionary spending is a fantasy.  The average Cuban income is a paltry $20 per month, since their essentials are basically provided.

With some of the richest soil in the world, Cuba stunningly imports 80% of its food.  When the spigot of Soviet aid was stilled as the 1990s began, a $5-billion lifeline disappeared.  Raised with a guaranteed lifetime job script, the new directive quickly became:  If you want to live, you have to work!  Getting to work is a daily trauma for many on an island outfitted with pre-Revolution 1950s American autos.

Freedom is stifled everywhere.  While many Cuban kids have a Facebook page, Internet access is restricted.  Cubans hunger for the Internet and travel freedoms we take as givens.  They also know a great deal about America.  While bewildered by some of our political quirks, their affection for us yanks is remarkably high.

With the embargo in place, Cuban importing is a do-it-yourself proposition.  Our group of 35 CEOs and spouses saw an unforgettable sight at the Miami airport:  A six-block-line of Cuba-bound travelers standing 4-abreast with shrink-wrapped goods for their relatives and friends.  Their parcels included food, medicine, clothing, blankets . . . and even a washing machine!

Despite sanctions up to a half-million, Cuban Americans fly to their ethnic homeland annually.  Speculation about a possible oil bonanza in Cuba might cause us to look at the embargo differently.  It may take something that dramatic for sanctions to end and for U.S. cruise ships to dock in Havana Harbor.  Meanwhile, one wonders if Washington realizes who is paying the real price.

Mackay’s Moral:  Sanctions rarely speed democracy . . . especially when a regime has already begun to tilt in our direction.

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