Negotiation: Don't Get Stung
You may remember in 2001-2002 that the TV networks were cutting upfront rates in response to a very soft advertising environment. The exception was CBS. It held firm because, according to The Wall Street Journal, it had a strong 2000-2001 performance and has a solid fall program schedule. CBS was betting that it would more than make up the short-term loss in the future with what is called scatter-market ad dollars, which is the week-to-week sale of advertising time. Bottom line, it was going for price, not volume.
You had to admire CBS’s stance. Soft markets generate buyer negotiating ploys and pressures as sure as swamps in muggy weather produce annoying, biting mosquitoes. It ain’t easy to stand and hold your ground.
Here are 10 tips to help you be stronger in the negotiating process:
1. Believe. You, yourself, must believe in the value of what you are selling to advertisers. If you think your rates are expensive, you will never be able to negotiate from strength. If you see your site or service as a cost rather than as a valuable market to be reached, or a solution to a problem with rewards worth many times over the dollar charge, then you will be at a psychological disadvantage and a good candidate for caving in. Sit down, and list all the reasons your site or service is of value to your advertiser.
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2. List your strengths. If No. 1 gets you to list your general values, this exercise zeroes in on the advantages your site or service offers specific to this advertiser. For example, creative assistance, knowledge of the buyer’s business, previous track record, prior relationships, flexibility in timing, and so on.
3. Have a plan. You wouldn’t take a trip without doing some research and knowing where you are going, so why would you enter into a negotiation without some idea of where you want it to go and how you intend to get there? List your interests; your buyer’s interests, personality and pressures; the business facts; different plans you can offer; “chips” you can trade to make the deal work; your bottom line; your back-up plan. Determine the tone you want for the meeting. Plan your opening remarks. Anticipate pressure tactics.
4. Bring the other side into the process. Negotiating involves two sides. Don’t put the entire burden for a solution on yourself. Set the tone of collaboration right away: “Let’s review the issues, what we both want, and work this out together. OK?”
5. Separate interests from demands. A demand is not an interest. You can often satisfy interests when you cannot satisfy a demand. So many negotiations fail because the salesperson doesn’t ask, “Why?” For example, your buyer might demand: “I want reports weekly.” You should ask, “Why is that important to you?” The interest might be, “I’m afraid I’ll lose control of my ad effectiveness.” Although specific demands often cannot be satisfied, the other side’s interests – once they are known – usually can, in other ways.
6. Give a clear message about early price demands. If you followed tips 1 and 2, then you know your bottom line, so it becomes much easier to give a clear response to price pressures. There are many ways to respond. Here is one: “If you expect us to be the low-price bidder, then we must shake hands and part company as friends right now. However, if you want value for your money, then let’s talk, because, as you know, our clients have seen as much as a 25 percent increase in response rate with our services. What else is important to you?”
7. Always trade. If you’re going to give something, get something. The other side: “I want customized specs X.” You: “If you can give us flexibility on delivery, I can guarantee you the customized specs you want.” Or, “If we can get you specs X, what will you do for us?”
8. Move slowly. Think. Pause. Take time to calculate. Make a phone call. Ask a question about something said earlier. If necessary, suggest a break to check things out, and return another day. Rushing leads to bad decisions.
9. Be clear. There has got to be a consistency between what you are saying and the way that you say it. Just think of a little child fiercely denying he broke the toy (or vase, or whatever), looking down at the floor and turning his body away from you. You know he’s lying through his (cute little) teeth! The same is true in negotiating. If your buyer says, “Is that the best you can do?” and you respond (weakly), “I think so. This is very good value that you’re getting. And we don’t usually do better than the terms you have. I mean, I’d like to help, but, uh, that would be difficult,” you’re toast. One much better response is simply to say (with total strength), “Yes.”
10. Turn coal into diamonds. Pressure tactics don’t have to kill your negotiation or cause you to give away the store. You can explain the value of your offer and hold your ground. You can trade. You can deflect with sarcasm or humor. You can create your own pressure by playing up an advantage of yours (e.g., limited supply). All four responses let the other side know that you see through their tactics and that you intend to see this negotiation through with them. Again, this is easier to do when you’ve anticipated what pressures you might get in your discussion. (See No. 3.)
We should be used to negotiating. We do it all the time. We do it as children: “Mommy, I’ll clean up my room right now if you let me watch television tonight.” We do it with significant others: “Let’s go to the beach this weekend, and next weekend we can go hiking.” But we freeze when we have to negotiate in business. Admittedly, times are tough, but with a little planning, an understanding of the negotiating process, and practice, you, too, can become a strong negotiator for your company.