Standardized Negotiation?

There’s a widespread belief that negotiations are ad hoc, with each one different from the next, says Brian Dietmeyer, senior partner and managing director of Think! Inc./Negotiation Solutions and author of Strategic Negotiation: A Breakthrough 4-Step Process for Effective Business Negotiation (Dearborn, 2004). “No one’s ever collected the data to prove that they all follow the same pattern,” says Dietmeyer.

In response to the conviction that negotiations are too disparate to attempt to impose a strategy, companies typically take one of two approaches. Either negotiations are centralized with tight corporate constraints or they are decentralized with decisions made on the street. Either extreme is problematic, explains Dietmeyer. Centralized negotiations lead to delays, a reputation for inflexibility and a loss of business when competitors are able to move with more agility. On the other hand, decentralized negotiations result in inconsistent pricing and messaging, which can ignite price wars between competitors.

So what’s the answer? Dietmeyer explains that while each negotiation may be different, all negotiations generally follow similar patterns. When sales managers recognize this fact, he says, it changes all the rules. Dietmeyer suggests companies adopt an organizational negotiation strategy that avoids the problems associated with the other two approaches and allows flexibility within carefully established guidelines to provide consistency.

The key to creating an organizational negotiation strategy is to pull all the internal stakeholders together – legal, sales management, salespeople, revenue management or pricing and product management – to share their individual goals and develop a plan, says Dietmeyer. Once all parties are working in concert everyone will have common goals, even if they aren’t in complete agreement.

Salespeople’s input is particularly important, says Dietmeyer, because it provides a way to track the most common customer demands, as well as the most common rep responses. That information in and of itself enables the sales team to be more proactive, thinking through the negotiation beforehand and coming up with responses to customer demands. “If they start collecting that data, salespeople begin to anticipate that these tactics are coming their way,” Dietmeyer says.

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