Over the years I’ve sat in hundreds of negotiations with clients. It is after all one of those things I do, a lot. There’s always the talk about the specification of the project and what the client needs. Once that is hammered out we get to the bit of the deal that salespeople get paid for. The bit about the money.
How much is this going to cost me? Asks the client.
The sales person depending on their experience and proclivities will either start to go through what the client is getting, and then squeak out a number, often with a question mark at the end, or if more experienced and more self assured state the number.
The client’s role is to then roll back in their chair, suck in a lungful of air and exclaim that that’s a preposterous amount and the supplier needs to do the deal for less. The salesperson almost always gives away something, often far more than they can really afford to, a deal is struck and everyone goes about their day.
The supplier is often forced to cut corners because of the deal struck, the client is often shielded from this, but it typically comes out in the end, either in outrageous moves and change costs, or in shoddy service down the line.
It might be a negotiated deal, but it’s not an honest one. Both sides feel the other has “won”. Business shouldn’t be about one side winning and the other losing. It should be about both sides being happy. Commerce should not be a zero sum game.
So I have new formula to help balance the needs of both sides.
It’s called the project triangle.
I’ve talked before about the Good Fast Cheap triangle before and this is a major extension to that.
What I would recommend now is that at the VERY beginning of a project and throughout the process the sales team and project managers sit down with the clients and review the Good-Fast-Cheap Triangle.
At each stage ask the client where to put the cross indicating the compromise point for all concerned for the project. Is the price the most important thing, or the speed, or the quality. Assuming it’s somewhere in between then have the client cross and initial where that compromise point is. Have your project manager do the same. It should then be part of the project documentation. It gives a guiding principle for the project's success criteria.
This approach might seem odd at first, but it’s a much more honest way of doing business. The client and the supplier are then working collaboratively rather than as combatants. It’s a joint project, not all smiles until the price comes up type arrangement.
Some business people seem to believe business should be unarmed combat, and that it’s all about “winning” at any cost.
Many of us who've been around a while knows you can only “win” by that definition. Once.
But very few of us do one deal and never speak to that client again, or anyone they know. As a result most sensible business people know life is a compromise. That working with clients is compromise, for everyone involved. To codify that with systems like the Good-Fast-Cheap triangle let’s everyone understand we’re in this together.
It also enables suppliers and client to have different terms for different projects. Few suppliers want to set the bar super low, because they feel the client will then always expect that deal. Even when time or quality might be a more vital consideration for a different project. The triangle helps here, because at different times and different projects, different success criteria are in play.
Many businesses struggle with how to price their solutions. The field sales team, particularly new and inexperienced ones are often so focused on closing the deal, that they’ll do anything to bring it in. Even if that proves to be bad business further down the line.
The project triangle, enables senior management at the supplier also have a better understanding of their pipeline. Giving them a much better understanding of the opportunity. This must be better than simply asking the sales team, often a group of folks, who are typically too afraid to ask the client anything.
I would love to get some feedback on this, and how you get along if you implement this idea. I would also welcome suggestions publicly or privately on how to improve the process. If there is sufficient interest I may well flesh this concept out in detail for a long form article, even a book.
Looking forward to feedback.