How To Invent Opportunities for Mutual Benefits
S: You say that we should “invent” something. But we are not inventors, we are the sellers!
T: Right. But tell me, what is the mutual benefit of the sale?
S: Everyone receives what is needed and gives less than received.
T: Absolutely! Firstly, the buyer receives the product that allows him to satisfy his needs better than other available products. At the same time, the additional costs associated with acquisition of this product should, in his perception, be paid off by the improvements achieved in performing the job and satisfying the needs (advantages and benefits). In addition, the buyer finds a way to avoid the troubles that may arise if he purchases this product on the seller’s terms.
Secondly, the seller gives the buyer this product and receives payment for it in the amount and on the conditions that suit the seller and provide him with expected benefits. In this case, the seller does not make any significant concessions to the buyer for the fact that he buys his goods. He does not bear losses due to concessions.
These are the basic principles of mutually beneficial win-win sales.
In order to “invent” a solution that will make the sale mutually beneficial, you need to break the link between the buyer’s fear and trouble.
How is trouble related to fear? The buyer can describe such a relationship in the form of a “story.” A story can be represented as a chain of events. To break the connection, you need to prevent these events. So, the process of “inventing” a mutually beneficial solution is simple: ask the buyer what trouble might happen if he buys the goods on the seller’s terms; ask him to describe how his fear can lead to trouble and break this story into separate events; then, find out how to prevent each event individually and combine some ideas into a single solution. It is preferable to work with events that are “closer” to trouble rather than to fear.
The result is a solution that, on the one hand, does not involve any concessions from the seller, and on the other, prevents the trouble that the buyer fears. Obviously, this solution is mutually beneficial.
Why insist on the use of objective criteria
S: And where does the objective criteria fit this situation?
T: “Invented” solution allows the seller to do so without concessions to the buyer. This is an important condition for a solution to be mutually beneficial. But it will be mutually beneficial only when it is not associated with unreasonable benefits to any party.
Suppose the seller initially overstated the price of the goods, as it is customary nowadays. With a traditional approach to sales, this is a reasonable measure. The idea is that during the bidding and mutual concessions it will be possible to get the desired payment for the goods. But with win-win sales the seller does not need to concede. It means that he could receive from the buyer an inflated payment for the goods. This is a new format of sophisticated manipulation that has nothing to do with mutual benefit.
To prevent this from happening, both the seller and the buyer should be clear that the price set by the seller is adequate. What does the “adequate price” mean? In the real world, there is no unequivocal equivalent between heterogeneous values, between goods and money. The concept of price adequacy is non-absolute, relative. This concept is determined by some rules and criteria adopted in society.
Such a criterion may be, for example, the generally accepted price range for a product or service: the so-called “market price,” or the price specified in some document. So, for example, when buying and selling used cars, the price is determined by the model, year of manufacture, mileage and condition. Price ranges, depending on these parameters, are determined by reference (e.g., Blue Book).
Another variant of objective criterion is the portion of benefit that the buyer will gain if he uses this product. Here, “benefit” is defined as the difference between the possible profit from the use of the product and the possible losses from refusal to use it. There are some generally accepted “norms” of the portion of such benefits that should be paid to the seller.
Other criteria are possible, as well. The point is, these criteria should be generally accepted outside the framework of the negotiations between the seller and the buyer, outside the framework of their own wishes and desires.
How to find out your Best Alternative to the Negotiated Agreement (BATNA)
S: All this, of course, is good. And why do we need to know any alternative? Maybe we could do without it?
T: Why do you need to know your Best Alternative to the Negotiated Agreement? If the negotiations go wrong, you need an opportunity to get up and leave without much loss for yourself. Such an alternative should always be known, like the ace up your sleeve. If you know the alternative to the buyer, you can predict whether he can at some point interrupt the negotiations without any regret.
How to find your own and someone else’s BATNA? To do this, you should be clear why you need to sell, and why he needs to buy. We take as a basis the following hypothesis: both parties need to exchange the values; the received values allow both parties to perform some kind of “impossible” tasks.
What does this mean for the buyer? Without your product, he cannot successfully satisfy some need, either personal or company one. With other similar products, he can satisfy this need, but not so successfully. This difference between “successful” and “not so successful” is his motive to buy your product.
What does this mean for you as a seller? Without the money received from the buyer for your product, you or your company will not be able to successfully satisfy some of your needs. By selling this product to another buyer, you will satisfy this need less successfully, for example, it will take more time and effort to work with another buyer. For you the difference between “successful” and “less successful” becomes the motive to sell your product to this particular buyer.
As a result, in course of exchange, both parties successfully fulfill their tasks that would have been unfulfilled without this exchange, and with a different exchange (buying another product or selling to another buyer) would be performed worse.
What is the essence of BATNA? For the seller, this is a solution that will allow you to either sell your product to another buyer on no less favorable conditions, or to satisfy the need without selling the product to this buyer. And for the buyer, this is a solution that allows him either to purchase better product from another seller on more favorable terms, or to satisfy the need without this product no worse than with it.
How to search for BATNA? By analogy with the way we are looking for a solution to avoid the troubles that the buyer fears.
Let’s take, for example, BATNA “sell the goods to another buyer.” What trouble does the seller face if he decides to stop working with this buyer and go to another? It is clear that he will lose time and energy to work with a new buyer. But this is a direct consequence, and not a “trouble as such.” What real troubles might happen to the seller and to the company? Say, a company without the funds that the seller expected to receive from this sale cannot timely pay the bills for electricity, telephone and Internet, and its office might be disconnected from these services. Then, employees cannot fulfill existing orders and receive new ones. If you manage to sell the goods to another buyer, then the funds might come later, and you can’t avoid getting disconnected.
Now you need to describe this story in more detail, break it into separate events and think how to prevent each of them.
S: What happens if you find this BATNA of yours?
T: Compare your mental states in two different situations. The first one: you need to sell the goods to this buyer “by all means” because the office is about to be disconnected from everything. The buyer senses your desperate state, and thus “wobbles” and twists your arm. It’s already clear that with such a buyer it’s better to lose than to find, but there’s nowhere to go. Either you sell the goods to him or you cannot avoid the major troubles including the loss of business. You need to get up and leave, but you cannot. The buyer who realizes that you are desperate continues to push. What, it could never happen like that? Tell this to someone else.
Now, the second situation: you need to sell the goods, but you know that if needed you can get up and leave and seek another buyer. If it became clear that this is “not your customer,” it’s better to do just that, and you have such an opportunity.
In which of these situations do you feel and behave more calmly and confidently? Feel the difference.
OK, but why do you need to know the buyer’s BATNA? This is an extra waste of intellectual effort and time! Well, let’s see and decide if this is so.
Buyer’s benefit is the difference between “successfully” satisfying a need using your product and “not so successfully” with another, similar product. This benefit is achieved through skillful use of the unique features of your product. This is what you should tell the buyer during the presentation: what benefits, in comparison with the use of similar products, he will gain by using your product, how he will gain them, and what he needs for this. These benefits should be so valuable to the buyer that he really wants to buy your product and does not even think to get up and leave.
The buyer’s BATNA is to buy almost the same product from your competitor, but on better terms. Knowing this BATNA, you can tell the buyer about it and explain why he would not gain anything by contacting a competitor. Be truthful because today any information can be checked quickly. By knowing exactly what the buyer can find with a competitor you can very well prepare for such a conversation. You can convince the buyer not to.
Another BATNA is to satisfy a need without buying anything. You need to seriously analyze this opportunity, find all possible “substitutes” for your product, and find out how dangerous this BATNA is for you. You can make appropriate changes to your products to reduce the risk of this BATNA coming true.