A Hacker News Talk by Andrew Fogg
Getting a stranger to agree to something is all about negotiation. Whether you realise it or not, you negotiate every single day. We are all in the business of motivating people to do things for us; whether this be motivating your team to pull together, motivating your customers to buy from you or motivating investors to give you money.
Now, I’m no expert at negotiating. In fact, when I first entered the business world I was pretty bad at it. Luckily for me, negotiation is a skill, and like any other skill it can be learnt and practiced. So, I read lots of books by experts and did some of my own on-the-fly experimenting. Through study and practice, I was able to teach myself to be a better negotiator and now I want to share with you a few tips and tricks that you can use to improve your skills.
In this post I want to run quickly through how to deal with three negotiation scenarios that are specifically relevant to startups, all of which come from my own personal experience.
Getting a Meeting (Networking)
If you want to get a meeting, the first thing you need to do is to articulate – to yourself – who it is you want to meet. I don’t necessarily mean that you need to know their name, although of course that helps, it is more about knowing the profile of the person that you want to meet. What is their job title? What is their role in the organization? How are they going to help you?
If you’re targeting a specific person or organization, the first step is always LinkedIn. Even if you aren’t connected to them directly, you may know someone who knows that person and can introduce you. Introductions are key. A good email introduction lends you credibility, makes people far more likely to agree to meet with you and will make them generally more receptive to what you have to say.
Introductions are karma – give them away and they come back to you. If someone asks you for an introduction to someone that you know give it with generosity!
If you’re targeting lots of people, ask yourself where those people go online and in real life. Then, find those places, go there and join the conversation. When you’re networking in real life, just go up to people, stick your hand out and say hello. Drink, if it’s offered, but don’t get drunk. I’ve seen this go badly for people before!
When you get to the point of actually scheduling a meeting here is a crucial time saving tip: send a calendar invite directly. Then send an email saying that you’ve sent a calendar invite. Nine times out of ten you will have hit an empty spot in their calendar and you just eliminated the back and forth of emails trying to find a time when you are both free.
Getting a Deal (Sales)
Most of my experience is around selling to businesses, so I’m going to focus on that. There are really only two ways to sell to a business: you either help them save money or make money. It is better to be helping a business to make money.
If you’re helping a business make money, there are generally two ways to get them to actually buy from you. Either identify a budget that you are targeting that is being spent elsewhere and claim it as your own. This means that the customer does not have to go and find new budget for your new product or service, they just redirect existing budget. Or the other way is to insert your product into the customer acquisition process. If you can do this, then the value proposition to the customer becomes a matter of a simple formula: more money spent with you = more revenue generated for me.
As a technology startup you may be approached by big consultancies or Systems Integrators who will offer to help you find clients. Don’t do it. In my experience, this nearly always ends up being a waste of time. It is busy work. You will spend lots of time in meetings discussing potential leads and business opportunities and it feels productive but chances are that it will not go anywhere. I think that one of the reasons for this is that consultancies are in the business of building things and in the back of their mind when talking to you they are always thinking “we could build that”.
Be confident when it comes to pricing. Remember that you are selling value to the customer. The cost to you of generating that value is largely irrelevant. Practice value-based pricing. Also, be creative and confident when it comes to payment terms. Ask for payment up front for example, or for long terms even if your service is meant to be sold via a monthly recurring fee.
Getting a Contract (Negotiation)
Paperwork! If you have not got contracts yet then go get some. You can of course pay a lawyer, but there are plenty of contracts online that you can look at and amend to suit your needs. When it comes to signing paperwork, everyone wants to sign on their own paperwork (including you), so get your paperwork issued first and you are more likely to be able to make that happen.
Contract negotiation takes time and I would argue that it generally adds very little value to the deal itself. By the time that you get to the point of issuing contracts the major fundamentals of the deal will have been agreed by all major stakeholders. All that is left are general boilerplate terms, which – while they are important – do not need to be negotiated with every single customer. If you send a contract out as a Word document you are guaranteed to get a redline in return with a bunch of suggested changes that will pull you into a contract negotiation. My advice therefore is to never send out a Word contract again. Instead, issue a simple one-page order form (as a PDF) that references an online master agreement that has all of the general terms. This reduces the likelihood of getting into negotiations with your client’s legal or procurement department.
Of course you won’t always be able to avoid contract negotiation. You will get proposed changes back. Some you are going to be ok with and some you are not going to be ok with. When you get proposed changes back, in the first instance, dispute them all (even the proposed changes that you are ok with). This achieves two things. Firstly, it allows you to discover the changes that the customer really cares about. They will likely easily concede the changes that they don’t really care about. Secondly it gives you some changes that you can easily concede in return for gaining concessions from the customer on the changes that you really care about. Finally if you get stuck on a clause that seems unfair, it is worthwhile suggesting that the clause is made symmetrical so that the provisions apply to both parties.
The most important thing is to keep the momentum of the deal going; so reply quickly to emails and phone calls. Be prepared for the fact that enterprise sales can be a long process.
Getting an Upgrade
I threw one last one in here – which is for everyone – it’s a favourite of mine and something that you can do almost anywhere. I try to get an upgrade whenever I hire a car, take a flight, or check into a hotel. The first thing to do is to smile and be courteous. Service staff often have to deal with people who are in a rush or sometimes even angry, so if you are nice to them, they will notice. Remember to use their first name when addressing them and try to get them to laugh or smile. If you can get them to laugh or smile in the first 60 seconds then you are well on your way to building genuine rapport. Be sincere and enjoy getting to know the other person. Taking a genuine interest in people is the most natural thing in the world, and people can always tell when you are faking it.
Once you’ve built rapport, you can ask them the killer upgrade question that will deliver the goods: “Is it a good room?”, “What kind of cars do you have?”. Ask the question in a way that will prompt the other person to think about it and they will give you a better option if they can.
And that’s all there is to it!