Sales directors moan to me a lot about negotiations being escalated to them: “Why can’t my guys just do it themselves?” Then, they grin because they partly know why but don’t want to admit it.
I’ve spent 35 years negotiating and training on the subject using the PEPSI system: prepare, explore, propose, summarise, implement. Here are four reasons why negotiations get escalated.
First, the buyer knows that, having negotiated with the supplier many times, if the ‘boss’ gets involved, they’ll offer more than the account manager did (this is where SDs grin because they feel important and powerful).
Second, a stalemate happens when two negotiators start at the third stage of the negotiation with price. Butt heads, then fight.
Third, sometimes each party has a very different idea of what was agreed.
And finally, sometimes escalations just have to happen, like when it is ‘above my paygrade’.
For each reason, there is a solution. Let’s focus on the first three, as the last one is just life.
The solution to the first reason is about the account manager and the sales director deciding what can be agreed before the negotiations begin. The reason they don’t agree on a scope of “you can go down to £8.20 per case” is because the SD doesn’t trust the account manager not to go to that figure straight away. The cost of not doing this is the account manager loses credibility. Next time, the buyer just goes straight to the organ grinder.
The reason stalemates happen is because both parties skipped stages one and two of the negotiation process in favour of speed. And yet, here they are four months later, still negotiating. By asking questions, we can find out what the other party wants. Yes, they’re interested in the price, but what else do they want that could be used as a variable to negotiate?
When each party walks away from the ‘deal’ with a different idea of what was agreed, it is because they did two things wrong: they missed the fourth, summary stage of the negotiation, where one party verbalises what they think was agreed, giving the other party an opportunity to disagree. And, when they captured the deal during the negotiation, they tried to record everything that was said, rather than just an updated version of the deal as it unfolded.
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