Lack of direction, not lack of time, is the problem.
—Author and motivational speaker, Zig Ziglar
This chapter covers some of the fundamentals of deal-closing before we turn to the process detail in later chapters.
Create a Clear and Simple Strategy and Do Not Rush It
Business is unpredictable, not least as macro- and micro-economic factors are always changing. Deal-closing in business is even more unpredictable, as it has its own particular set of obstacles, difficulties, and surprises that invariably arise. Ego, dubious business ethics, corrupt practices, a “head in the sand” mentality, anger, greed, and so on, add extra layers of uncertainty to the business mix. And with ever more onerous governance, compliance, taxation, legal, accounting, environmental, and corporate social responsibility factors also needing to be understood and factored into a successful deal pathway, the deal landscape soon becomes complicated.
Many things can go wrong in a deal-closing journey, such as derailing tactics from the other side, unhelpful egos amongst the stakeholders, internal or external blockages or simply that the business environment changes during the deal-closing process. Following a clear strategy, using in-depth planning, engaging the right people, ensuring stringent and exacting execution, experience, intuition, good communication skills, empathy, persistence, and constantly monitoring are all essential ingredients for ensuring successful deal-closing. You also need to be flexible and to learn from successes and mistakes in prior deals.
I have found that every deal is comprised, to a greater or lesser extent, of the same underlying principles and directions. Good deal-closers engage certain skills and techniques that maximize the chances of deal-closing success. Good deal-closers know how to play the “deal game.”
Certainly, from a corporate perspective, having a clear business strategic intent for the deal in question and communicating it openly to staff is essential for obtaining their “buy-in,” which in turn helps with executing the deal.
When I was a commercial lawyer for a U.S. technology multinational, twice I was tasked with handling two major technology supply deals with separate world-renowned European technology companies. Both deals had been blocked for many months.
It soon became clear to me that there was an effective stand-off between the U.S. legal team and the European based clients on each side. My investigations unravelled various reasons for this ranging from ego clashes, to cultural differences, differences of opinion and an element of deal lethargy had set in.
Have you experienced this?
What did you do?
What did I do?
To counter this, I developed a clear resolution strategy, ensured communication was as open as possible and kept an open-mind as to moving matters on.
Both good selling and negotiating skills are essential components of the successful deal-closer’s armory, and exist alongside other skills and techniques that a good deal-closer can call upon.
Everyone lives by selling something.
—Author, Robert Louis Stevenson
Farlex’s Free Dictionary (www.thefreedictionary.com) defines selling as:
Exchanging or delivering for money or its equivalent.
Sales are the life-blood of business, driving growth, market share, and shareholder support. Selling requires skills of persuasion, which we all have in us to varying degrees from the very earliest of ages. Selling is essentially the act of persuading the other side to provide you with what you want. Remember stamping your feet to get what you wanted as a young child? Persuading, convincing and, therefore, selling are some of the most natural, familiar, and oldest of all human skills.
An accomplished salesperson can navigate the inevitable differences in objectives, drivers, viewpoints, prejudices, and even cultural differences between themselves and their customers. That said, ever-lurking to counter our innate skills of persuasion are the equally powerful human emotions and states of ego, anger, greed, ignorance and self-centeredness, any of which individually or collectively can, at any time, derail a deal. There are, however, as you will see, a number of mechanisms a good deal-closer can use to minimize these very basic, yet powerful, human factors.
Sustainable selling is not a quick fix, scatter-gun exercise. It is about empathy, doing your homework, identifying where you can help and how you can contribute. It is about listening, identifying and tracking the market and your customer needs. It is about being a valuable partner—being useful (rather than being another cost), even if that initially means saying no.
Understand your target audience and the problem it needs solving. Plan and research demographics, sectors, gender, age, location factors, etc., and regularly track the market. You also need to ensure you are reaching out to the right person (usually the one who holds the budget).
Leverage first impressions. You need to show you know what you are talking about. Grab your potential customer’s attention, ideally through a captivating one-liner. Use humor, if appropriate, to get attention.
Show that you believe in your offering. Also show that you are understanding of your customer’s needs through your value proposition—the reason they should buy from you.
Personalize your message and ensure the relevance of your unique selling proposition. Engage with your customer on an authentic, empathic level. Once you have established attention through trust you are more likely to get that all-important first meeting.
Provide a tailored solution to a known need or problem of your customer through your offering. You need to have something your customer does not have and wants and/or needs. This helps trust to develop, which in turn makes it easier for customers to return and repurchase. Review and evaluate what is working and change what is not. You can use the SPIN Sales Model:
(a) Situation: ask the buyer to tell you what facts they need addressing;
(b) Problem: ask the buyer to tell you what pain they are suffering;
(c) Implied Needs: ask the buyer to explain the effects of the problem then propose solution(s); and
(d) Explicit Needs Pay-off: ask the buyer to tell you about their explicit needs and then ask them to explain the benefits your solution(s) offer.
Think close, close close. Chase the lead within a week, otherwise you risk losing it. Always ensure meaningful activity in your sales funnel. Don’t let leads dry up. Follow up every meeting. You will lose 100 percent of opportunities if you don’t ask for them.
Do not give up. Brush off rejection. Stay focused on the goal and look after yourself physically and mentally.
In sales, the seller’s unique selling value proposition—the thing (whatever it may be) that differentiates the opportunity in the other side’s mind from an alternative—is the key reason why the other party gives the deal-closer what he or she wants. Value propositions are a very powerful tool of persuasion. A value proposition is a definitive statement that promises, from your proposal, the delivery of value to the other side. The more specific the value proposition is the better, not least as it demonstrates to the other party that you understand what they need and/or want. More importantly, it indicates that you recognize that the deal is not just about you.
The Cambridge Dictionary Online (dictionary.cambridge.org) defines negotiating as:
To have formal discussions with someone in order to reach an agreement with them.
Note that there is no reference to money in this definition.
Negotiating is different from selling, in that negotiating requires the act of giving to receive and, in the process, it accommodates the parties’ differences to facilitate an agreement.
Selling is about you establishing a need or desire in the potential buyer for what you are offering. It is then about overcoming differences through persuading the other party of the value of the service or product that you are offering. Unlike selling, negotiation necessarily requires the deal-closer to make concessions. That said, good deal-closers are able to negotiate the deal with minimal compromise.
The ability to negotiate successfully requires honed interpersonal skills for maximum success. With these skills, an accomplished negotiator can confidently ask for the outcome he or she is looking for, provided of course it is within reasonably achievable parameters. Armed with the skills of an accomplished negotiator, and provided you communicate in an effective, meaningful, and authentic way, you should not be afraid to ask for what you want in a deal. In fact, you’ll be quite surprised at what you can successfully negotiate.
The types of negotiation you can use in a deal depend on the level of trust, complexity, and intention at play. Negotiations can range from:
• Simple hustling/haggling and/or using trade-off tactics, where the main point is to get the best price you can as quickly as possible and where there is little chance of an ongoing relationship of trust. While normally associated with more complex negotiations that involve hustling or haggling, a tactic of using trade-offs to leverage negotiation results is a tactic that can be employed, and can have the appearance of a softer form of haggling. Trade-offs allow deal parties to potentially achieve more than through a simple fixed-pie mentality compromise.
Trade-offs replace simple “Yes” or “No” attitudes by allowing for emerging flexibility through an “I’ll agree to that if you accept this important issue for me” attitude. This tactic can be made easier if multiple issues are open for discussion and an iterative process is in place to determine what is or is not of importance to each side at the same time.
• One-off trading.
• An ongoing working relationship, such as in the case of joint ventures or collaborations, where trust is critically important, as both parties need to work together over a long period of time. Usually, the complexity of the deal increases in line with the level of trust—and vice versa.
In an ongoing working relationship scenario, it is important to maintain a sustainable relationship while also keeping an eye on the challenges that may lie ahead. Rather than simply focusing on the deal itself, it is important to (a) keep one eye on the future as much as the short-medium term; (b) get to know as much as you can about the other side—their culture, direction, and relevant nuances; (c) have regular risk and deal direction check-ins to address any misunderstandings, misalignments, and loss of interest.
The heart of any negotiation usually revolves around a few key points that serve and reinforce the underlying interests of both parties; the rest of the discussion should be kept as simple as possible. A good negotiator will constantly seek to elicit the motives of the other side through questions, will seek to control the discussion, and will do everything possible to submit proposals that are favorable to him or herself.
A deal journey usually begins with selling. What then eventuates depends upon each particular situation: it could be negotiation, it could be argument, but usually it involves a back-and-forth iterative process, honing in on value for value.
Good sales people are not always good negotiators and vice versa. Each activity requires different skill sets and there are subtle timing differences to be aware of. I have seen parties come in with the negotiation part before they have persuaded or sold the other party on the deal—and then they came across as desperate or lacking substance. Conversely, selling or continuing to sell too late—for example, when you are progressed in the negotiations—can look even more desperate.
We recommend the following seven Ps for Powerful Negotiation:
Explore the relevant issues—their relative importance, ascribed value, and what needs to be addressed.
Determine your strategy and tactics—what you need to do, what you want and consider likely negotiable ranges and relative power.
Pros and Cons
Engage in two-way discussion and information exchange. You can use the SPIN Sales Model here to determine what the other side wants through questioning and validating. It is important to build trust and rapport at this stage.
Provide tentative, conditional, suggestion(s) and/or solution(s) about how you may both proceed. If you use the SPIN Sales Model, this is where you leverage the benefits of what you are proposing to trade.
Bargain with the other side so that both parties address their issues, satisfy mutual value, and make and manage any concessions.
Put It to Bed
Conclude the negotiation through a contract or equivalent format, ensuring that mutual value is captured and all agreed interests have been met.
Execute, implement, post-mortem, measure, and improve.
Value Is Key
Everything of value doesn’t come with a price tag.
—Psychiatrist and counselor, Shefali Batra
There is a tendency to think that a deal-closer must “win” and the other side must “lose.” If the only thing being negotiated is money, then yes, in that circumstance, a deal can be that straightforward. But I have very rarely been part of a deal scenario where money is the only factor at play. However, the goal of creating a good deal for both parties through mutual value satisfaction is not only possible, but also the only really sustainable way to do business.
While it is really important to view negotiation as deal-closing increasing the overall win-win pie for both parties, it is unfortunately human nature to default back to win-lose when issues such as time constraints, ego, conflict arise. So it is important to periodically refresh the win-win ethos throughout the deal journey by ensuring open, trusting communication and being explicit about the need for mutual win-win.
Be careful not to confuse value with fairness. Because we all have our own barometer of what is fair at any particular time, there is every chance that appealing to a higher concept of fairness when trying to conclude a deal will actually just serve to antagonize the other side.
To assist with the exchange of value, I have found it very useful to think through the deal landscape from the point of view of the other person before beginning discussions and, indeed, right the way through the deal discussion process. By doing this, you give yourself the best chance to potentially foresee the other side’s “must haves” and conversely their objections, thus enabling you to better assess their value drivers.
This begs the question “How do you know what the other person will value?” The short answer is to ask them. But then don’t just hear them; actually listen to the answers. A good example is recent discussions I was involved in with a motor sports team in Australia to co-produce a joint motor sports watch offering. On the watch company’s side, bringing out an additional watch line was a key driver for the deal and this arrangement provided a valuable opportunity to do so. Conversely, it became clear quite early on in the negotiations with the driver’s team that what was of value to them was not just a sponsorship partner but also another potential commercial avenue for their driver to pursue as he developed his options while rising through the ranks of the motor sport. Gaining an early awareness, and understanding, of each party’s value drivers was very valuable in building the requisite trust for the collaboration to eventually successfully transpire. A successful deal is where both sides achieve or receive what they need.
You could use a number of value persuaders to get the other side over the deal line, particularly where it becomes clear that the other side holds something at an elevated emotional value. Taking this approach may ensure the discussion at least proceeds or, better still, that in closing the deal you achieve the needs of the other side and, in the process, create a long-term, high-value relationship.
Just as value differs from price, do not be tempted to confuse value with cost. Because something is inexpensive does not mean that it has a low value. It is important to demonstrate the value of the service or product you are offering to the other side. You should cultivate the skill of determining what a concession from you is worth to the other party. If it is of high value to the other party, a good deal-closer would usually seek to achieve something that is of high value to him or her in return. In other words, the goal is to give what is less important/less valuable to you, but more important/valuable to the other side, and to receive what is less important/valuable to the other side, but is more important/valuable to you.
Consider Alternative Pathways to Deal-Closing Success
Negotiation can be expensive and selling can be time-consuming, so it is usually wise to also consider alternative tools for making a deal.
The best alternative to a negotiated agreement (BATNA) (Roger Fisher, William Ury, and Bruce Patton introduced in their seminal book, Getting to Yes: Negotiating Agreement Without Giving In (Penguin 1991, second edition) can come into play here. It determines what each party has to give up or exchange to make the deal happen.
An essential element of accomplished deal-closing is to know, understand, and deal with both the best-case scenario and the worst-case scenario as the deal proceeds. In fact, it is optimal to try and determine your BATNA before deal discussions commence so that you can calibrate throughout the deal process, whether you are staying true to your positioning or getting carried away with the emotions of the deal discussions.
Knowing your BATNA, particularly if it is very much in your own interests, can then provide you with the confidence to walk away from a deal that you really should not be entering into. It is also important, in trying to get as complete a picture as possible of the other side’s walkaway positions, to try and determine what the other side’s BATNA is and also any gap between what they are saying and what the BATNA of the organization that they represent is.
To determine your BATNA, the question to ask yourself is “If this deal doesn’t happen, what are my alternatives?” Then you should evaluate the relative value of each of the alternatives. The better the alternative(s), the less concerned you need to feel about losing the deal and so naturally the more risk you can take in the negotiation. Once you have done this, you are ready to establish your BATNA by choosing the route with the highest value to you should the current deal discussions fail. I would also suggest you create your absolute bottom line BATNA trigger value—what is the very lowest value you are prepared to run with on the current deal discussions before your BATNA is triggered?
Examples of other alternative deal pathways include:
• Compromise: Good deal-closers are flexible where they need to be, with a view to compromise if necessary. However, this is not the same as just agreeing to less than what you really want in order to conclude matters, which is more like capitulation.
• Postpone and/or walk-away: Particularly where there is deadlock, walking away can be useful in that it can provide more time to think, or to reframe the discussion so as to help bring the balance of power back to you. But it obviously is not helpful if you have strict deadlines to meet.
• Argue: From a positive perspective, when subtlety appears not to be working, argument can give you the opportunity to present your case, your supporting evidence and, therefore, make your substantiated point. From a negative perspective, however, argument can quickly slip into emotion and then anger, and often results in what might have been a likely deal now derailing. If the other side gets angry, just let them vent. Overall, argument, very occasionally, can be a useful tool provided time is on your side and you are patient. But use this tactic very carefully.
• Break down a discussion into multiple components, particularly where things are not moving forward as expected or required: By doing this, you could give yourself the chance to unclog the discussions through the making of simultaneous alternative offers with differing commercial terms, such as quality, quantity, price, contract term, and so on, and/or through trading off issues.
• Create a clear and simple strategy and do not rush it.
• Deal-closing is broader than negotiating or selling.
• Value is key.
• Consider alternative pathways to deal-closing success.
(Executive Coach and Mentor, Former CEO Aer Lingus and former President of Group Support Services at Emirates Airlines.)
My background is in the aviation industry, having worked in three continents, as President of Group Services of Emirates, CEO of Aer Lingus, and then more recently the Deputy Chairman on the board of directors of Royal Brunei Airlines. Also I spent four recent years on the board of one of the largest IT companies in Singapore. So as you can imagine, I have seen, come and go, quite a few deals over the years.
What are the most relevant principles you follow when creating a deal-closing strategy?
The first thing to be said is, you need to be very meticulous in your preparations, down to every level of detail. For instance, even choosing the venue for the negotiations is very important. If you’re leading the negotiations, making a statement to your team and the other side that you’re going to take everybody off site for three days, let’s go somewhere, let’s get this deal done. That sends a very powerful statement. It also has the benefit of getting your team away from day-to-day distractions in the office, and sends a very strong message to the other side that you mean business and you mean to get the deal done.
(Founder and CEO of Diaspora Matters, Former Enterprise Ireland and IDA Ireland representative in Australia, Former President and CEO of Worldwide Ireland Funds and Former Chairman of LinkedFinance.)
My name is Kingsley and I’ve lived and worked in about six countries around the world. My background is born, educated here in Dublin, in Ireland, spent a bit of time playing rugby in France, and then got going on a proper career.
I worked for the Irish Trade Board, which now is Enterprise Ireland, and International Development Ireland (IDA); was posted to Sydney, Australia, spent eight years there. While there, I was then involved in a number of business initiatives, met a guy called Tony O’Reilly, who’s a well known Irish business-person, he wanted me to run his foundation called the Ireland Funds and I ended up doing that for over 20 years. I’m now in my third act, if you know what I mean, which means I’m running a training company here in Dublin and trying to pass on some of the things that I learned over the years.
Tell me about a time where your clarity in the underlying principles surrounding a deal made achieving agreement much easier?
I found, particularly when I was working with this philanthropic organization, raising money from individuals, particularly in the United States, that there were some key principles, I used to call it a Key Process, and if you follow this process you would have a greater chance of success than if you didn’t. And that was about research, cultivation, solicitation, and stewardship.
I remember spending some time with a well known head of a film studio in the United States, actually he had a home in Ireland, and I got a chance to meet with him, and I had a terrific meeting with him, really enjoyed him. And then one day, I asked him for $5 million, which is a significant amount of money, for a breakfast. That meeting was 2.5 years after I first met him, was my 29th meeting with him, and was the first time I actually asked him to make a serious contribution. So I spent a long period of time building a relationship, which was all about building a sense of trust between us, and then we were at a right moment, a right time. If I’d gone much earlier, I certainly wouldn’t have got $5 million.
(Consultant and co-founder of Caselden Consulting, Former GM for one of Amazon’s largest global development centres—Amazon Data Services Ireland Limited.)
My name is Jeff Caselden, my background has primarily been focused around about 18 years I spent with Amazon.com. I spent the majority of my time within that organization working on product search for Amazon’s retail business and was the head of search for the EMEA region and was also the General Manager for their development center in Dublin, Ireland.
Tell me about a time when you failed to achieve clarity on the value that the other party was seeking and how that impacted your ability to strike a deal?
We were developing this new product to replace an older version of a similar, less powerful product. And this product was used internally so it wasn’t outwardly customer facing, so we had a little bit more leeway in terms of which to operate with in terms of product readiness. Now, I came into this situation a bit later, but from the customer’s side I can definitely say that, in hindsight, while we knew what the functionality the client needed was, we didn’t really have a clear sense of the value that they were trying to achieve out of using our product. So, from our own side, the primary motivator or value was in getting this product into a production use case for us, it was an important goal. Almost more as a proof of concept on the road to something greater than really understanding and meeting the needs of this individual customer. So, in the end, this resulted in a number of technical and operational issues for us as an organization, and also contributed to some severe trust issues between the two organizations as the ongoing situation transpired over the next several months.
1. What are the types of things that can go wrong in the deal-closing process?
Derailing tactics from the other side, unhelpful egos amongst the stakeholders, internal or external blockages, or simply the business environment changing during the deal-closing process.
2. What are the essential ingredients for ensuring successful deal-closing for corporate growth?
Following a clear strategy, using in-depth planning, ensuring stringent and exacting execution, constantly monitoring, the need to be flexible, and to learn from successes and mistakes in prior deals.
3. What is selling?
Selling is essentially the act of persuading the other side to provide you with what you want. Selling is about you establishing a need or desire in the potential buyer for what you are offering. It is then about overcoming differences through persuading the other party of the value of the service or product that you are offering.
4. What is negotiating?
To have formal discussions with someone in order to reach an agreement with them. Unlike selling, negotiation necessarily requires the deal-closer to make concessions.
5. What is a BATNA?
It determines what each party has to give up or exchange to make the deal happen. The question to ask yourself is “If this deal doesn’t happen, what is my alternative?” The better the alternative, the less concerned you need to feel about losing the deal and so naturally the more risk you can take in the negotiation.