Knowing negotiation boundaries with ODEs
There are many tactics one can use when selling or negotiating with a customer. First though, we need to understand the difference between selling and negotiating.
Selling is establishing a customers need or desire to buy and matching the benefits of your proposal to meet those needs. Negotiating is the act and process of trading variables to reach a mutually acceptable agreement or objective. The better we sell, the less we need to negotiate; which should save us time and resources. If we get into negotiation, it might start costing us more money as the customer may start negotiating on price or margin.
Recognising that customers are trained to be expert negotiators, it is therefore really important that as sellers we understand what the boundaries of the negotiation are. This enables us to negotiate there and then in the meeting, without having to go away and gain sign off from elsewhere in the business for approval of a drop in margin for example.
The way in which we can identify negotiation boundaries is with ‘ODE’s’. It is a simple framework that distinguishes our ‘Optimal’, ‘Desirable’ and ‘Essential’ position in the negotiation. Before we plan these out though, we need to develop and agree the SMARTER objective. (Find out more here
) We should make this part of our muscle memory to do before every negotiation. If we are SMARTER, we are clear on our objective and how we might achieve it and therefore more likely for success. This is our ‘Desirable’ position.
- OPTIMAL: Is what we want to achieve as a best case scenario. This should be ambitious but not unattainable. For example this could be selling in 4 of the new SKU range.
- DESIRABLE: Should tie to your SMARTER objective. It is the explanation of your target. This could be 3 of the SKU range
- ESSENTIAL: Is the worst case scenario – if we get less we walk away. This could be 2 of the SKUs.
Other variables to build into your ODEs could be level of investment, margin, percentage of distribution, number of facings, shelf location etc. etc. Once we have set our ODEs from the business point of view, we need to plot the customer’s ODEs. Consider what their priorities might be and their areas for focus and need to win. The difference between the two, then gives us our range of agreement - the middle ground - or our sweet spot, and becomes the negotiation zone where the focus of the negotiation should be. Knowing this helps us plan better and we can prepare for where the pinch points might lie, and ultimately makes us more effective at negotiating.
If you would like to upskill your team in negotiation, please contact us at email@example.com