Renegotiation skills?

I very often have the pleasure to go deeply on the specific challenges my customers may have regarding their negotiations. Sometimes, the goal is rather to renegotiate. To put it simply, it's a bit like you deciding to renegotiate your mortgage with your banker. You negotiated an agreement, it’s signed, but for one reason or another the agreement needs to be renegotiated.

A lot of questions and concerns when it comes to renegotiate are raised: "I'm going to lose my client, I'm going to damage the relationship, after all it's a bit our fault, it’s risky ...". I am told: "Francisco, the usual techniques of sales negotiation do not apply! ".

Let’s take a few examples. A renowned service provider company. Over the years of successful partnership with its client, a number of non-contractual services have been added over time, in addition to the initial list of requirements, thus altering the overall profitability of the operation. There is plenty of legitimacy in provoking a meeting with customer to explain the situation and the need to take decisions leading toward updating initial contract and conditions or to come back to initial scope. But that doesn’t mean customers will accept right away…

Very often customer reaction will end-up in an almost an automatic power struggle: "We have been working like this for 10 years! Why changing?! ", "We have no extra budget, you are forcing us to launch a call for tenders! "," After all, it's your fault! "...

Second example. An international consulting firm with many specialties including legal advice. An engagement letter is signed, an investment is validated. Customer is confident and rely on the promised expertise. The mission starts but it turns out that the challenge is more complex than expected. It is not easy to position ourselves in front of the client by saying: "we have underestimated the complexity, there is a need to validate an additional budget ...". Typical answer to that could be: "Your initial pitch was about results and here you are coming back to a logic of means, in addition, you are the experts! We trusted you! ".

Third example. Global dermo-cosmetic group. Rates with a strategic customer were strongly negotiated for the following year with their purchasing department. Along the way, the price of raw materials explodes. There is no way to keep current prices. This can be easily explained but ... You have to step up to the plate! With a client waiting out the clock and challenging collaboration on other ranges of high-stakes products.

These situations are typically situations of renegotiation and not of negotiation. Main difference: in the first, the client did not ask for anything (and often does not want to know anything ...). You are the one asking for it. In a traditional negotiation situation, it is normal to talk about conditions, client expects it, asks for it.

If you find yourself in situations like this, be aware that the method needs to be adjusted. You can apply a number of reflexes from traditional business negotiation, but there are important differences. This gave me the idea of creating a fully-fledged method for my clients, here is an overview of some key success factors:

The first: preparation. It is critical to build a record of evidence of what you say. A concrete file you could share with your client. For the lawyer or the consultant, it will be for example the precise detail of the time spent on every task, track records, initial hypothesis, charts, facts, proofs ... There are plenty of reasons for this but if I had to quote one: do not forget that your interlocutor will have to refer back to his organization, ask for an extra budget, validate anything with his Management, so it is in your interest to bring him "ammunition".

The second: the structure of the interview. We are not here in a traditional sales interview. It's not about convincing your client of the validity of what you are telling them. It's about anchoring your positions and resisting. Be factual.

The third: we cannot raise Mr. Problem without mentioning its little brothers: solutions. Be creative. Binary approaches, presented in this way, could impact customer relationship. Use alternatives or BATNAS. Be creative.

The fourth: don't forget to announce a deadline. It is easy for your client not to validate anything, to avoid the issue. But beware, you will have to put in some communication techniques. On the perception side, this must not be perceived as an ultimatum.

Finally, all other negotiation reflexes will apply balance of power management while protecting relationship, concessions and concessions in return, assertiveness, resistance…

I wish you a happy new year full of business!

Francisco.