World expert advises how meeting customer needs is the engine of strong negotiation
Image: Negotiation skills were the topic of this week's Growth Faculty book club with Dr Victoria Medvec, author of Negotiate without Fear
When New Zealand shut its borders to keep out COVID-19 last year, family business Wilderness Motorhome Rentals had millions of dollars’ worth of rentals it couldn’t deliver on. Hundreds of customers demanded refunds as 260 motorhomes sat idle.
So unforeseen were the pandemic and border closures, Wilderness didn’t even have a facility in their software to cancel a booking or issue credit!
“Pre-Covid there was no negotiation in rentals," explains Wilderness co-owner Mary Hamilton, who wears two hats as Head of Marketing and Head of Rentals. "You just went online, searched for a motorhome, set the dates and paid the money. We just waited for the money to hit the bank account and got on with the job,”
The pandemic threw the 16-year-old business into a desperate fight for survival.
At first, they negotiated with customers by promising lots of things which they regretted afterwards, like bonus credits (with pleas not to cancel).
“That was just delaying the pain," says Mary. "In the second instance, we went back and said ‘We are in a tough situation and we need your help to get through. You’re due a refund and we are willing to stand by that but we need your help with the timing. Would you consider if we repaid you over 18 months?” Having most of their needs met, 90% of customers took up the offer.
Pressing needs of other party is critical
Negotiate without Fear author Dr Victoria Medvec, leading world negotiation expert and CEO of Medvec & Associates, told our book club that meeting the needs of the other party was the most important consideration.
To negotiate well, aim for these objectives:
• Address the other side’s pressing needs.
• Differentiate yourself, your product, or your service.
• Build the relationship with the other side.
• Maximise your own outcome.
Whether you are negotiating with a supplier, a business partner, a potential acquirer, or negotiating for yourself in an employment situation, you want to keep these four objectives in mind, she says.
Think of needs as the engine
Dr Medvec asks us to imagine a train, with the engine being the other party’s pressing needs. The next car back is how you will address the pressing needs. The third car back is how you or your company’s differentiators address the pressing needs. The fourth is how your unique capabilities address the needs. At the very back, “the caboose” is price/salary.
Most people lead with the caboose, she says.
Put the right issues on the table
With clients like Google, CISCO, IBM, Goldman Sachs, and McDonald’s, Dr Medvec trains executive teams on eliminating the fear of having an emotionally charged, contentious, single-issue discussion.
“I always advise my clients that it is nice if your customers like you but essential that they need you,” she says.
The biggest mistake, she says, is not putting the right issues on the table.
She lists Five “Fs” to become a fearless negotiator.
1. Go FIRST. Research shows the person who offers first does best.
2. FOCUS on them. Craft a rationale that shows how uniquely you meet their pressing needs.
3. FRAME your offer correctly: Highlight loss words (eg. risk, cost, exposure) to move them off the status quo to try something new, and gain words (benefit, improve, value) to maintain the status quo.
4. Be FLEXIBLE: leave yourself room to concede and use multiple option offers to reframe the discussion to “how” (not “if”) we will work together.
5. No FEEBLE offers. Don’t say Can you give us a better price? Make a clear, specific ask.
Two great strategies when preparing to negotiate
Dr Medvec lists two great strategies that increase your power in a negotiation.
- BATNA – Best Alternative To Negotiated Agreement
This is thinking deeply about your Plan B (and C and D). It’s also how you assess the strength of the other side’s negotiating power. How strong is their Plan B? Who else would they sell to? Lease to? Buy from? If their BATNA is low, you have better negotiating power.
- MESO – Multiple Equivalent Simultaneous Offer.
Research has demonstrated that people who deliver multiple offers secure better outcomes for themselves than people who make a single offer (Leonardelli, Gu, McRuer, Medve, & Galinsky, 2019). People love choice. Three offers put forward together makes you look more sincere, and is more strategic, says Dr Medvec.
You are also perceived to be more flexible and cooperative, she says.
Mary Hamilton (pictured), her brother Wilderness Motorhomes CEO John Managh and sister in law and Head of Sales Pip Managh are dusting themselves off after a tough two years.
They were on the back foot when COVID hit but stayed solvent, saving their business of 16 years.
“It was asking our customers to rely on faith. We were really honest with people, we are a small family business, and we needed our customers help to get through the pandemic,” she remembers.
Looking back on that time the Growth Faculty member has this advice for others:
· Put yourself in their shoes. Stop and think what someone is saying when they are demanding something, what is their motivation that has brought them to this point. What they’re saying is not really what’s going on. What got them to this point?
· Be genuine and transparent. If you’re on the back foot, without being long-winded and pleading, give them the right information so they understand, and deal with the ones who don’t go along with it; deal with those separately. Part-way progress is getting somewhere. Let it go and move on.
Wilderness Motorhome Rentals has reduced its fleet size by half to 130. With borders still closed it’s running at 30% occupancy rate from the domestic market. The rental agreements have changed to cover unforeseen events. Nevertheless, it remains a very tough time for the travel industry, and threats of poor reviews on social media are used as a negotiation weapon.
“Travel – the power is in the hands of the customer,” says Mary.
On the negotiating front at least, wresting back some power using strategies in Negotiate without Fear helps to take an apsect of that fear away. Dr Victoria Medvec will present a live, virtual, Global Headliner event in 2022.
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