Top Story:  Negotiating secrets for smaller companies - click here

Expert Insight:  Is Your Brand Worth Buying? - click here

Book Review:  Ten Business Books to Take on Vacation - click here

Events -  TEC Events and My TEC Groups - click here

TOP STORY

Negotiation Secrets for Small Companies: Five Steps
to Get Past a Large Corporation's Poker Face
By Vistage speaker Jeanette Nyden

• The Deck Is Stacked Against You
• Two Most Underestimated Impediments
• You Have Powerful Cards – So Play Them!
• Becoming A Master Negotiator

The Deck Is Stacked Against You

As a small company (meaning your company has proportionally fewer resources, less revenue and less power than your negotiating partner), it often feels as if the deck is stacked against you. In many ways, it is.

I recently conducted a survey of 35 companies ranging in size from a few employees to several hundred. Ninety percent of them reported similar challenges when negotiating with larger companies, including these three:

1.       Time is on a multinational's side. The number one complaint reported by respondents was the amount of time involved in negotiating deals with large corporations. There seem to be never-ending, inexplicable delays, complicated by the fact that almost everyone in a large corporation has the ability to say "no" while hardly anyone has the authority to say "yes."

2.       Pressure to reduce prices. Another common complaint was the ongoing demand to provide an ever cheaper product or service. Despite the substantial evidence that superior products and services are being offered at the best value, the role of the purchasing department is to always grind down the price just a bit more.

3.       Constantly changing players. The third most common problem involved the difficulty in developing lasting relationships with purchasers at large companies. Corporations are constantly reorganizing their departments. As a result, building and keeping relationships is frequently not possible.

Two Most Underestimated Impediments

In addition to being the most consistently mentioned by the surveyed companies, these above-listed challenges are also the most obvious. The next two impediments only revealed themselves only after further probing on my part.

• The poker faces. To dig deeper, I asked the survey respondents, "If you had a magic wand, what one thing would give you more confidence in your next negotiation?" The majority stated they would appreciate the ability to see past the poker faces. Most respondents felt that despite any traditional efforts of asking the right questions, unearthing the motivation of a large corporation for initiating the contract was nearly impossible.

• Non-negotiable terms. Although the previously described issues of corporate bureaucracy are frustrating, they only mask the deeper issue at hand. The most overlooked and most serious mistake small companies make in dealing with a big corporation is believing that the terms and conditions put on the table are non-negotiable. The most successful deals always involve the negotiation of terms and conditions. Unless you are a subcontractor coming in under the auspices of a contract with the federal government, terms and conditions are always negotiable.

You Have Powerful Cards -  So Play Them!

You may not think of yourself as a negotiator, but when you enter into a deal with a large organization, you are viewed as just that.

Not only do you, as one of the "little guys," need to address the five problems outlined above, you must also improve your bargaining power by stepping into and owning your role as negotiator. In my 12+ years as a negotiator and mediator, I have identified five simple yet effective tactics for improving your position as a negotiator:

1.       Ask clarifying questions. The most powerful tactic you can immediately implement is to ask a lot of clarifying questions. Pose questions that seek to clarify facts or figures in an open-ended and non-judgmental manner.

2.       Actively listen. Masterful negotiators listen between the lines for what is being conveyed by word choice, tone and inflection. Actively listening also involves listening for what is not being said.

3.       Address the customer's bottom line. Another simple, but imperative tactic is knowing exactly how your products and services will improve the customer's bottom line. Rather than defending a price with references to your profit margin, be prepared to demonstrate with facts and figures the ways in which your products or services will increase the customer's profitability.

4.       Initiate the bidding. Whenever possible, make the opening offer. There is a strong psychological tendency that comes into play when someone makes the opening offer. In effect, the person who throws out the first number anchors the negotiations. The person who waits to counter-offer faces an uphill battle of negotiating to a higher price.

5.       Develop relationships in unusual places. Many small companies find tremendous benefit from developing internal champions within multinational corporations. Someone not directly involved in the negotiations is more likely to give you important insider information that will help you make decisions and counter-offers.

Becoming A Master Negotiator

Working with large corporations can be rewarding and profitable once you master the negotiating process. However, like a tough game of poker, you can't just hope to get dealt a good hand; you must practice playing the game.

The primary difference between savvy negotiators and the folks who leave the meeting scratching their heads in exasperation is that the successful players have fully embraced and mastered the negotiation process.

Are you ready to up the ante?

Jeanette Nyden is president of J. Nyden & Co., a Seattle consulting firm that helps to level the negotiations playing field for small- to midsized companies.

Created for Vistage View. Copyright 2006, Vistage, Inc. All rights reserved.

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EXPERT  INSIGHT

Is Your Brand Worth Buying?
By Vistage speaker Sandra Sellani

• What Makes You So Special?
• The VRIO Model
• How Did You Do?

What Makes You So Special?

There are two golden rules of branding.

One, anyone who sells commodities will perish without a strong brand. Two, everyone sells commodities.

We all think we’re different from our competitors. But in the mind of the consumer, we’re all alike until proven otherwise. Good branding will prove your unique qualities, but how do you identify what’s so special about your brand?

A preferred brand will not only cause someone to purchase a product or service, it will justify a higher purchase price.

For example, people willingly pay more for Clorox brand bleach -- even though all bleach is chemically identical -- because they perceive it as different in some way. Morton’s Salt, which consists of sodium and chloride like all other salt, has been the number-one brand of salt since the late 1800s. The Morton brand not only keeps consumers loyal to a commodity, it convinces them to pay an additional 69 cents per unit over lesser-known brands.

Good branding creates differentiation in the mind of the consumer, even if there truly is no difference. Bad branding creates no differentiation in the mind of the consumer, even when there is a difference. To benefit from your differentiators, you must first identify them.

The VRIO Model: Four Steps to Identifying Your Differentiators

Adapted from the work of Jay Barney, Ph.D., of Kent State University, the VRIO model can help you identify your company’s differentiators. Originally a strategic planning model, I have modified it for use in working with executives to identify their brand differentiators. This powerful tool will forever change your thinking on branding.

First make a list of five to 10 qualities of your product or service that you believe sets you apart from the competition. For example, are your deliveries 50 percent faster? Do you have a patented design? Are your customer satisfaction ratings consistently 100 percent?

Be specific. Do not use cliché terms like "quality" or "we put the client first."

Next, put your list to the VRIO test. Each item must pass all four of the following criteria to be identified as a true differentiator. Keep in mind that differentiators can be real or perceived. If someone perceives that driving a Jaguar will make them look richer, sexier, smarter, or taller, then it’s a real differentiator.

1.       Valuable. Is each item valuable to the consumer? You know your customers’ wants and needs, but don’t forget to ask their opinions. Sometimes they will find differentiators you haven’t considered. If a quality isn’t valuable, cross it off the list. Your list may still be intact at this point. But with each letter, the process becomes more challenging.

2.       Rare. Each item must be rare in your market. If you offer a money-back guarantee, that’s valuable. If your competitors offer it, it’s valuable but not rare. You can still make it available to your clients; just understand that value without rarity is not a differentiator. Rather, it is the minimum requirement to get in the game. For example, airline mileage plans are valuable but no longer rare. They have become an expectation of every traveler. If an item is not rare, cross it off your list.

3.       Costly to Imitate. Suppose you have a proprietary software program that expedites orders. It’s valuable because it reduces shipping time compared to your competition. It’s rare because you developed it. But can it be easily imitated? Could your competitors easily design a program that achieves the same results? If imitation would be costly in terms of time, money or other resources, you can leave the item on your list. You now have a temporary competitive advantage that will yield above-average returns. If imitation is easy, cross it off the list.

As you look at the items remaining on your list, your true differentiators will start to emerge. But there’s one final test.

4.       Optimal Leverage. It’s amazing how many companies have offerings that are valuable, rare and costly to imitate, yet unknown to the market! Often a company’s greatest differentiators are not leveraged or communicated to their target market.

A salesman once asked me to assist him on a presentation for a $20 million deal. I asked if he had prepared the presentation using the company’s proprietary marketing system, an impressive customized multimedia presentation and something that none of his competitors had. He said he didn’t think it was necessary.

After giving my standard lecture on the value of differentiation, I helped him prepare the presentation with the proprietary system. Not only did we get the deal, we managed to negotiate a commission one point higher than the client originally wanted to pay. The moral of the story? Differentiators only work if you use them!

How Did You Do?

How many items are left on your list?

Don’t feel bad if you crossed all the items off your list. Many executives are left with nothing the first time they go through this exercise.

The value comes in trying again and using the process as a basis for discussion and debate with your management team, sales people, and even key clients. You’ll be amazed at how the process will change your thinking about your value in the marketplace.

Once you’ve identified one or more key differentiators, communicate them with a passion. Incorporate key messages in all your advertising, public relations, website, and sales presentations. Leverage them at every point of client contact.

Revisit your list regularly. New technologies, market shifts and unplanned events can change everything. By making VRIO a regular part of your planning process, your entire branding strategy will come into focus.

Vistage speaker Sandra Sellani is vice president of marketing for Sperry Van Ness Commercial Real Estate Advisors, a national brokerage firm.

Created for Vistage View. Copyright 2006, Vistage, Inc. All rights reserved.

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BOOK REVIEW

Ten Business Books to Take on Vacation

When you pack your bags for vacation this year, why not add one of these recent releases? They're sure to get you thinking while you're away from the office.

The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations -- Because we lead groups, because we are part of groups, we know their power. Author James Suroweicki explains their wisdom.

Fun Works: Creating Places Where People Love to Work -- If you could use a major infusion of fun in your workplace, this book by Leslie Yerke provides dozens of ideas about where to start.

Whether you're a retailer or a shopper, you can learn valuable lessons by reading Call of the Mall: The Author of 'Why We Buy' on the Geography of Shopping by Paco Underhill.

Seven essential principles guide compassionate leaders. The authors explain what those principles are, and 150 ways to implement them in: Encouraging the Heart: A Leaders' Guide to Rewarding and Recognizing Others by James M. Kouzes and Barry Z. Posner.

Who is the first person to start "word-of-mouth?" In The Tipping Point: How Little Things Can Make a Big Difference, Malcolm Gladwell helps find the point of origin for important changes -- information that can help leaders as they try to make things happen.

The CEO and the Monk: One Company's Journey to Profit and Purpose by Robert Catell is the story of Keyspan, an energy provider that took a route quite different from Enron's, with the help of a monk-turned-corporate ombudsman.

You'll find the insights from the CEOs of Domino's Pizza, Staples, Xerox, Radio Shack, Nabisco and 95 more major corporations in Leadership Secrets of the World's Most Successful CEOs: 100 Top Executives Reveal the Management Strategies That Made Their Companies Great by Eric Yaverbaum.

Leaders' strengths sometimes over reach into behavior that derails their mission. Check out the dangerous behaviors in this thought-provoking book: Why CEOs Fail: The 11 Behaviors That Can Derail Your Climb to the Top and How to Manage Them by David L. Dotlich and Peter C. Cairo.

For a look at why the CEO's reputation is paramount in today's business world, and how to keep it pristine, read CEO Capital: A Guide to Building CEO Reputation and Company Success by Leslie Gaines-Ross.

The lessons of Sam Walton and Bill Gates, Herb Kelleher and Andy Grove are woven in this primer on how to be the best you can be.What the Best CEOs Know : 7 Exceptional Leaders and Their Lessons for Transforming Any Business by Jeffrey A. Krames.

Created for Vistage View. Copyright 2004, Vistage Worldwide, Inc. All rights reserved.

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