Chapter 3
WIN–win Negotiation

Myth and Reality

The Myth of Win–Win

Negotiation experts (and amateurs) have been preaching win–win for some time. The trouble is, it's unrealistic. The expression win–win has become more of a pop cliché than a negotiating philosophy. It's either a winner's rationalization for lopsided triumph, a loser's excuse for surrender, or both sides' phrase for when everybody is equally unhappy. There's rarely such thing as both parties winning identically, that is, both getting all of what they want. One party is bound to get more and one less, even if both sides are content with the outcome. The latter is possible. Both parties can be satisfied, but both do not usually win to the same degree.

The Reality of WIN–win

If someone is going to come out ahead, it would be great if it's you, but at the very least you maximize your interests.

For example, in the $10 bill game in Chapter 1, rather than quickly retreat to a division of $4 for you and $6 for them, one way to maximize your return is by making change, a split of $5.01 and $4.99. Even if you end up with the $4.99, you have substantially increased your return over the $4 split.

WIN–win is realistic. It isn't easy—it requires focus and discipline but it is achievable. And it doesn't turn negotiation into war. Because it's not WIN–lose, WIN–clobber, or WIN–ransack-pillage-and-obliterate, you don't have to destroy the other side. On the contrary, you want them to survive, even thrive, in order to make sure the deal lasts and leads to future, mutually beneficial deals. That's the Power of Nice and WIN–win is what that power delivers.

In the Super Bowl, There's Only One Winner…Or Is There?

When offered the opportunity to purchase the Baltimore Ravens NFL franchise in 1999, Steve Bisciotti structured a deal that is a model for the WIN–win books. At the time, it was common knowledge that then the Ravens' owner, Art Modell, was struggling financially and had set out to sell the team so that he could leave his family on solid financial footing. When given the chance to pursue the sale, Steve, in contrast to most buyers in such circumstances, set a twofold objective for the transaction: He offered to address the financial needs for the Modell family and he did so in a way that showed respect for Art's legacy in the NFL. And in doing so, he enabled a transition for both himself and Art Modell. Steve had decided early in his life that a key to success in any endeavor was to eliminate distractions and focus on a single area of expertise. He would now be leaving his earlier business ventures and ultimately giving his total focus to the team business. So he proposed to stage the purchase of the team—not taking over on day one but rather in a way that allowed Art Modell to transition out of the majority ownership and allowed Steve to transition into this new field of business.

With the help of some talented attorneys and accountants, Steve and Art staged a four-year transition in ownership in which Steve would first become a minority owner and then over time, the majority owner. The structure was innovative in the business of professional sports. The new owner of a team franchise typically can't wait to take control and revel in the acclaim and excitement of professional sports.

Steve said, “It was important to honor Art in this way and at the same time, I had the objective of learning the business and slowly making a positive impression on the community. So the transition phase was self-serving in a way, but also the best combination for both Art and me.”

In 2001, Art's life-long dream came true; he hoisted his, and the Ravens', first Super Bowl trophy with Steve in the background.

But Steve learned well in the ownership transition, and in 2012, Steve and the Ravens hoisted another Super Bowl trophy. A WIN–win indeed.

Achieving WIN–win

Know What You (Really) Want–Know What They (Really) Want

To achieve WIN–win, the first order of business is to identify your own interests and goals, what you really need to achieve from a potential deal. You may say, “Hey, I do that automatically.” But that's the problem. What you automatically assume to be your goal may not be what you really require to make the deal worthwhile. For example, you may assume you must get a certain price for a piece of real estate. Do you make the assumption because you hear that's the current market value? Or because another seller supposedly got that price? Or because you promised your partners a given return? Is your price really engraved in stone? Will you take less if it's a cash offer but insist on more if paid out over time? How about the emotional aspects of the deal? Are you trying to get out from under a burdensome property? Are you saddled with nervous investors? Perhaps you need peace of mind more than money. Or vice versa.

You can't satisfy your interests until you know what they are. And they're rarely as obvious—or simplistic—as you might assume. But, if you force yourself to think through your priorities, your interests will clarify. You will learn the true parameters of your needs, what you can sacrifice, and what you can't.

Before you go into a negotiation, ask yourself what you want out of it. Then challenge your own answers. Take apart your demands. Make hypothetical offers to yourself, each with different terms. Rank your needs. Force yourself to give up goals from the bottom of the list up, until you're left with the one most important goal of the deal. Now you know what you want.

But you're only halfway there. You have to do the same for the other side. Try to determine their needs and interests. Just as you can make the mistake of assuming your goals, you could make the mistake of assuming theirs: You want to get as high a price as possible so they must want to pay as low a price as possible. What if you learned that they might pay substantially more if you let them push the deal into their next fiscal year? Or that while you have investors clamoring for a return, they have shareholders who are in an acquisitive mode? Or that while your constituents want land, they want security?

Determining someone else's needs isn't easy to do alone. Get someone to play the Devil's Advocate, thinking on behalf of the other side. By role-playing, the advocate will look out for and reveal to you real interests of the other side, instead of your having to rely on your assumptions. Or, if you have the opportunity, directly probe the other side for its interests.

Chances are, their interests are as complex as yours. The earlier you know what their interests are, the greater your leverage will be. Some of their goals may become apparent as you negotiate. But that may be too late to react or counter.

The chapter that follows this one deals with the 3 Ps, one of which is prepare. It means, among other things, learn all you can about the people with whom you're negotiating, what motivates them, and, importantly, what they must achieve in a given deal. Find out as much of what they need as you can before you sit down at the bargaining table. You will discover even more once you're at the bargaining table, during the probe phase, which follows prepare.

Satisfy Your Interests Well–Satisfy the Other Side's Interests Acceptably

Once you know what the other side needs, you can determine how their interests conflict and/or mesh with yours. You can find areas of mutual benefit: your price and their terms; their divestiture and your expansion; their capital needs and your investment strategy.

You each have strengths and weaknesses. But, if you do your homework, (and if you probe effectively) you have an advantage. You know what you want and you know what they want. You may be tempted to fulfill all of your own needs and to disregard theirs. Believe it or not, that's not in your best interest. No matter now much stronger your position may be, make sure they achieve some of their goals. That's what enables a deal not just to be made, but carried out.

Let's say you're negotiating with three suppliers for a season's worth of embroidered NBA logos for hats—in round numbers say 24 million logos. Your goal is to lower the cost by .017 cents per logo, but to maintain the quality of those little woven Bulls, Heat, Knicks, Spurs, Thunder, Cavaliers, and Magic. (Ideally, you'd like this season's 24 million hats in your warehouse by tip-off of the first game.) You've had multiple logo suppliers in the past but now you're willing to give the entire 24-million-logos order to one company if they can meet your specs.

The first supplier, Econo-Emblems, comes in with the lowest price, but only on the condition that they can sew logos with a slightly lower thread count per centimeter. The second supplier, Logo-Motion, can meet the thread-count quality standards but at a cost of .003 cents more per logo, which really adds up when you multiply it by 24 million. The third supplier, Sew-What Ltd., meets the lowest price and the thread count but they ask for staggered delivery dates. They'll deliver 8 million logos a month, feeding fan demand as the season goes on. You could reject their request for staggered delivery. And they might give in. After all, this is the biggest order in the industry.

But you know their needs, their real interests. By staggering the delivery dates to you, they'll fill factory capacity over several months, eliminating downtime, keeping the best workers employed throughout the year, thereby increasing profits on other, previously unprofitable jobs, all of which enables them to give you both the price and quality you want. If you force them to meet the original schedule, you run the risk of sacrificed quality to make the dates or missed dates to maintain quality. And even if they make the dates and maintain the quality, their overall operation will likely lose money and never be able to meet the same specs again.

Remember the one goal at the top of your list. Lower the price without sacrificing standards. You WIN, in capital letters. Now let them win on the delivery schedule. Their win assures your WIN. It enables them to carry out the agreement. Instead of what might be, at best, a one-time, one-sided win, or, at worst, a one-time disaster, you now have the makings of a long-term relationship. Remember, the essence of negotiation is not just making a good deal; it's building relationships.

Good Deals Echo, They Lead to More Deals

Often, the best way to get what you want is to help the other side get what they want. There are very few deals in business or life, in general, that are truly one-time, never-again transactions. The world of negotiation is a small one. How often have you:

Done business again with someone with whom you did business what seems like a lifetime ago?
Awarded a job to a supplier who was the runner-up last time you bid them?
Discovered a familiar name as a reference on a resume?
Called on an old acquaintance for an opinion?
Hired a competitor?
Invested in a rival?
Found yourself a seller to the same party to whom you were once a buyer?

Too many people negotiate as if they'll never again see or do business with the person across the table. That was the modus operandi of my ex–law partner, the bridge-burner. In fact, the opposite is true. Chances are, you will associate and do business with the same people again. More leases are renewed than written from scratch. More suppliers are retained than replaced. More contracts are extended than begun. More shipments go to old customers than new ones. There's an old business adage that says it takes five times the time/effort/money to win a new client as it does to keep an existing one. The same, with varied multiples, applies to anyone on the other side of a transaction.

If you treated your last deal as your final deal with that party and left them with a bad taste, or worse, bad business results, next time they'll either come to the table with revenge on their minds or not come at all. But, if you did your best to make sure they got some of what they wanted, if you made sure they achieved a win (lowercase), you have the potential of making mutually beneficial deals ad infinitum.

WIN–win Is Not Wimp–Wimp

We've established that WIN–win is not win–win. It's clearly, unashamedly designed to maximize your return or even tilt the scale in your favor. It's not pretending that both sides go away with separate but equal smiles. But, importantly, it also stands in sharp contrast to win–win's mutated relative, Wimp–Wimp. That's where you want to make a deal so badly, you make a bad deal. You give in, give up, and give away; anything to get the deal done.

We've identified five notorious Wimp–Wimp negotiator types. Here's how each would negotiate the purchase of an automobile:

Wimp–Wimp Negotiators: Buying a Car

Addicted Wimp. The addicted negotiator walks into the dealership, falls in love with the red sports utility vehicle, and decides he or she wants it and wants it now. Addicted negotiators don't really care about the terms of the deal, the financing, the extras, or even the undercoating. They will concede all of it and pay full list price, as long as they can drive it home today. These negotiators want to do a deal, any deal, so badly that they make unnecessary and harmful concessions just to get the deal done.
Anxious Wimp. The anxious negotiator walks into the dealership and thinks, “I hate doing this. All these salespeople know how to play the game, and I always lose. I don't want to look bad. I don't want to look stupid. I just want to get this thing over with as quickly as possible. Next time I'm going to CarMax so I can avoid this whole negotiation thing.” These negotiators will accept the first offer put onto the table just so they can get the process over with.
Apathetic Wimp. Apathetic negotiators think that negotiating is not worth the hassle. They know they could get a better deal, but they also know it means shopping around to different dealerships, reading Consumer Reports, and even going back to the same dealer several times to work the price down. They know they could get a better price using this strategy, but they just don't want to put in the time or the energy to make it happen. This negotiator justifies that the time and energy saved in not negotiating makes up for the higher price they inevitably pay.
Aristocratic Wimp. The aristocratic negotiator walks into the dealership, refuses to speak with any of the salespeople, and demands to see the manager. He or she tells the manager he or she is going to spend top dollar and does not want to get into a haggling scene over the price. “Just give me a price and I will tell you whether or not I will buy the car.” Aristocratic negotiators rationalize that negotiation makes them feel “cheap” and, therefore, they claim to be “above petty haggling.” They do not want to engage in the game of negotiation and often leave plenty of lost money on the table.
Amiable Wimp. The amiable type walks in and immediately gets into a long conversation with the salesperson about their families. Before you know it, the amiable person knows everything about the life history of the salesperson, including the fact that he or she is one car away from getting that bonus that will help to pay for Junior's braces. In the end, the amiable person just takes the deal that is offered because he knows that it will help the salesperson out and really feels that he and the salesperson can become good friends—and he would not want to negotiate with a friend. In the end, it is more important to be liked than to get the best deal. And Amiable Wimpiness isn't just a buyer's trait. It can just as easily be the salesperson who gives in by reducing the price before any negotiation even begins, just to make the sale and to be nice to the customer who is now his or her friend.

Regardless of variety, the Wimp Negotiator becomes a Wimp in the quest for a deal. This isn't disastrous if the other side is also a Wimp. The real danger is when you become a Wimp and the other side doesn't. Then you become something worse than a Wimp; you become a Loser. The process turns to Lose–Win.

We had a participant in our seminar—a broker with a prominent national investment firm who specialized in retirement plans. He confessed that he knew he suffered from a Wimp–Wimp approach but found it almost impossible to unlearn. His story illustrates the old maxim, “Old habits are hard to break.”

The Man Who Sold Retirement Plans so Cheaply, He Could Never Afford to Retire Himself

The broker stood up at the seminar and told his ironic story. He had all the business he could handle, in fact, maybe more than he could handle. But his problem was a lot of his business wasn't profitable. When asked why he took on unprofitable business, he explained that the industry had become ferociously, even blindly competitive. Winning clients at all costs had become the goal. Scorekeeping and body counts had replaced bottom-line results. He wasn't about to lose a client to another broker. So, he bid lower and lower, cutting his own commission to the point where there was virtually no profit left. He'd do anything to win the client. Even make a bad deal.

He was willing to lose and he did. He lost time and money on more and more clients. (He was living out the old auto dealer sales pitch. “We lose money on every car but we make it up in volume.”)

Naturally, he didn't have time to service his low-commission clients as well as he should have. So, even though they were paying him very little, they weren't very happy. And he resented what service he did give them because he was losing more money with every extra minute he spent. Eventually, many of the client victories he had “bought” left him anyway, thereby turning into losses. Yet, he kept on underbidding, low-balling, and losing money in order to win clients.

Despite his own recognition of his pattern, the broker had difficulty breaking the Wimp–Wimp cycle. It took an ice-cold slap in the face to snap him out of it. He had an opportunity to bid on what could have been a very good piece of business. Out of habit, after he assessed the situation and arrived at a reasonable bid, he then preemptively lowered his bid to rock bottom to assure his winning it. Then he sat back and waited for the call from the client saying, “You win.”

He never got the call. Two weeks later, he got a different call altogether. The potential client called to say, “Sorry, you didn't get my business.”

The broker was stunned, “Wasn't I the lowest bidder?”

The client said, “Yes, by far.”

“But, but, but….”

The client explained, “My policy is to throw out the highest bid and the lowest bid because neither is likely to be the right bidder. One is overcharging, the other is underdelivering.”

That stopped the broker cold. Imagine, it took a buyer's insight to show the seller how self-defeating a Wimp–Wimp or lose-in-order-to-win approach can be.

From that day on, the broker began to assess each prospect differently. He used his own experience and judgment, coupled with a projection of future potential, to arrive at a bid he could live with in the short run and which had promise of long-term return. His track record of client wins has since gone down, but his profits have soared. In fact, his entire definition of winning has changed. He's not counting clients anymore. He's counting results.

Roadblocks, Minefields, and Wisdom

Okay, it's simple, right?

Know what you want. Assess your needs and wants before negotiating.
Find out what they want—probe, dig, ask, learn.
Satisfy your interests well.
Satisfy their interests acceptably.

What could go wrong? Nothing: If the path to a WIN–win deal was a straight shot. But it isn't. It's almost always littered with barriers, hurdles, detours, potholes, hazards, and all manner of obstacles to keep you from getting to where you want to go. Here's what they look like.

Insufficient Planning

When we harp on the need to prepare, it applies to both sides, yours and the other party. Unfortunately, we can only influence your side. The more prepared you are—the more you know about your goals and their goals, your absolutes and theirs, flexibilities, time limits, creative alternatives, pressures—the greater the opportunity to make a good deal.

As for the other side, the less prepared they are, the more difficult it may be for you to make a deal. The process will surely go slower. They're likely to be skeptical of even the most reasonable offer. Unlike you, they have not thought through various scenarios in advance. They're worried about what they don't know, even paranoid, and therefore less willing to compromise. They may obsess on issues of contention (whether they're meaningful or not) instead of focusing on the bigger issues (on which you could be in agreement).

Why would people not prepare? It's natural. Planning is not fun. Doing is fun. Planning is tedious. (Even if it makes the doing better.) Vacations are fun. Packing isn't. Arriving without socks is not fun. Eating is fun. Flossing isn't fun. Root canals are as unfun as it gets. Spending is fun. Saving isn't. Bankruptcy is only fun if you're a bankruptcy lawyer.

Ineffective Communication

Many negotiators think they're outstanding communicators because they're good talkers. They have big vocabularies, are never at a loss for words, always have a snappy comeback. The problem is, most negotiators aren't good listeners.

When they talk, they're saying what they want to say, instead of answering the concerns and needs of the other party. They're not communicating their ideas clearly; they're uttering words they want to hear themselves say. Or worse yet, the communication takes place through legal representatives and documents, rather than face to face, human to human.

Often, if the other side doesn't communicate effectively, they don't listen well either. They may listen through a negative filter. They suspect what is being said; they're skeptical of motives. It can't be good; it's someone trying to get the better of them. In the end, both parties end up in disagreement, not necessarily over issues, but over the manner in which the issues and positions were expressed.

In the chapter on probing we'll talk about Listening. We'll show you that listening is more than waiting to speak. It's an art and a science. You can practice it and get better. Listening may be the single most powerful tool in achieving WIN–win because it can inform you what the other side really wants and needs to make the deal.

Inexperience

It seems like too many negotiators' jobs are filled by the following help wanted ad: “No experience necessary,” because too many perfectly good deals go bad simply as a result of inexperienced negotiators.

Novice negotiators just haven't made enough deals to know what matters and what doesn't. In their quest to avoid a bad deal, they often avoid making a deal at all. They sometimes take a hard line when it isn't necessary. They offend the other party either accidentally or because someone told them that negotiators are supposed to be tough guys. They believe, out of naiveté, in win–lose negotiation. If they can't win, they'd rather walk away. They react emotionally instead of rationally: all of which can be the undoing of an otherwise promising deal.

The experienced negotiator should know how to handle an inexperienced counterpart. Don't take it personally (no matter how offensive). Don't get hung up on tactics (no matter how crude). Do exercise patience. Let the novices make mistakes, say the wrong thing, back themselves into corners, rant, rave, and demand. While they're ranting, you're thinking. When they're demanding; you're strategizing. They are actually giving you time to calmly assess (or reassess) your position, your method, and your priorities.

Putting It Together

When you can put all the elements together, get past positions, when you can identify what you really want, what the other party really wants, when you can satisfy your interests well and the other side's interests acceptably, that's when you can make a WIN–win deal. Here's a case in point:

Cal Ripken's Five-Year Contract (That Took Almost a Year to Negotiate)

When we began to negotiate Cal Ripken, Jr.'s 1992 contract, we and the Orioles were a mere $30 million apart. The team wanted a four-year deal and they cited as their precedent the salaries of the top shortstops in the game. They proposed almost $20 million over the four years. We wanted a five-year contract and we cited, as our precedent and benchmark, the top players in the game, regardless of position. Our proposal approached $50 million (not so much by today's standards but very aggressive at the time).

Over the next 250 to 300 days, most of the negotiation was about the money/time ratio. The Orioles slowly edged toward five years (fully justified by the trends in the game) and the dollars worked their way north of $25 million over the life of the contract. Our position moved down to the $35 million range. The key to coming together was recognizing each other's interests.

Throughout the talks, the Orioles negotiator was Larry Lucchino, former tough trial lawyer turned baseball executive under then team owner, Edward Bennett Williams, and subsequent owner, Eli Jacobs. Larry was one of the prime movers behind the creation of Camden Yards, was later CEO of the San Diego Padres, and today is President/CEO and part owner of the Boston Red Sox. He's a good friend but (unfortunately) he never let that stand in the way of saying “no” to me and the ballplayers represented. Similarly, I didn't let our friendship get in the way of asking for an aggressive, market-value contract for my client.

We were in the position phase—that is, I said, “This is why it's right for Cal Ripken to get at least $35 million,” and he said, “This is why it's right that the Orioles only pay $25 million”—wherein both parties repeat high-minded statements of belief and make very little practical movement. Our pronouncements were impassioned and sincere. Our verbal exchanges were heated and not always what you'd expect from friends. We each had clients and/or employers to represent.

How did we move from this phase to discovering each other's real interests? We changed locations from our offices, usually my conference room—jackets on, jackets off, sleeves rolled up, ties pulled down, crumpled yellow papers, cold coffee dregs in Styrofoam cups and a lineup of Diet Coke cans, and still little or no progress. We moved to my farm—outside, breeze blowing, overlooking a quiet pond, birds chirping in place of car horns. (Not everyone has a farm or a retreat, but a change of location can do wonders when you're stuck. From a cold, serious office to a hotel lobby, someone's den, or a comfortable restaurant.) On the day in early summer when we sat at the farm, I thought another change might help: A deadline, not a threat, just a date we could all aim for. It was Cal's birthday later in the summer, in August. It was far enough in the future that we both thought it was a good idea.

It was then that we started to hear each other, began to understand the other side's issues and interests. Cal wanted a contract that acknowledged the totality of his accomplishments to date and took into account his contributions to community projects, his outside business ventures, and his future security. The team wanted a figure that acknowledged his recent decline in offensive statistics (though it was short-lived) and met the team's interests—fiscal responsibility, setting future contract precedents, yet still retaining one of the game's all-time greats. Larry was finally beginning to hear us. We were finally beginning to hear Larry and the Orioles.

We started to talk about ways to recognize Cal's contribution to the team in ways other than standard salary. For example, the Orioles eventually agreed to give Cal post-career compensation guarantees, which added dollars to the overall contract but did not raise his pay for active years. (Interestingly, these very dollars were later traded for during-career compensation in his next contract.) They gave him merchandising rights in the stadium, another way to provide additional revenue for what Cal had come to represent, but not pay for performance, per se. This helped Cal provide funding for his recently created foundation. The team offered special hotel accommodations on the road, designated parking, seats and a skybox for his family (which he paid for), all in an effort to provide added security as his increased visibility brought increased vulnerability.

Each of these creative solutions answered Cal's “interests.” They provided the compensation he felt he had earned for his unflagging performance for the team and the town. At the same time, this form of reward allowed the club to maintain what it wanted, fiscal responsibility. They could hold his annual pay to a level they could live with.

On his birthday, August 24, 1992, Cal signed the biggest contract of his career, 333 days after negotiations began. It was classic WIN–win. Both sides won. We felt Cal won a little more. The Orioles wanted only a four-year deal. Cal wanted five years. Cal got his five. The Orioles didn't want to pay the highest salary of the day. They didn't. Cal would have been eligible for free agency a month and a half after the contract was signed. The bidding would have easily passed the $35 million mark, heading for $40 million. Instead, Cal got $32.5 million; he netted a top contract (albeit briefly) by getting a combination of revenue streams; and he got something else he truly wanted—to stay in the city he called home.

It doesn't usually take 11 months to get past the impasses. In this case, it was definitely worth it. The dollars and the length of the deal made that clear. However, in most deals that's not necessarily the case. Determining how much time is warranted is important…but not easy to assess. Many people, particularly salespeople, don't look closely enough at the time they spend on a deal, sale, or challenge to see if they are spending it wisely.

WIN–win and maximizing your interests means not just the size of the deal, the profits, or other benefits, but also the time you invest to make the deal—literally the ROI on your efforts. You must ask yourself, “Does what I'm doing make sense?”

To help you answer that question objectively, we've created the Value/Pay Grid.

First, let's define Value. This is the regard your customers hold for your product or service compared to other options in the marketplace—average, good, better, best. And how they regard you as their representative. As for Pay, that's just what it says, how much your product or service is worth compared to other alternatives—the same, less, or even a premium. And “pay” is not only dollars; it can be in the form of other gain, need, or benefit.

Let me give you some examples for each of the boxes in the grid. In the upper right quadrant, Value/Pay, people or customers who fall in this quadrant might say, “I love what your product offers us. I'm confident it's the right product for us. I love you as our sales rep and that you make sure we are always taken care of. Keep doing what you're doing and we'll have a long and productive relationship.”

Those in the lower left quadrant, No Value/No Pay are the exact opposite and will say so, “I don't care about your product or what it has to offer us. I don't particularly care for you as a sales rep and have no interest in working with you or your company.”

Those two quadrants are easy to identify. The other two are where the challenges come.

In the lower right quadrant, No Value/Pay, customers may say, “I don't care about your product or what it offers us, nor do I particularly care for you as a sales rep. However, my boss says we need the product, or thinks highly of you, so I'm required to work with you. Just understand, the moment it's up to me, I will stop buying.”

In the last quadrant, Value/No Pay, customers sound like this, “I love what your product offers us. And I love you as our sales rep and that you always make sure we're taken care of. But…I just don't have the budget to give you any business. So, keep doing what you're doing and one day I'm sure we'll do business together.”

Now, before you decide how to deal with each customer or quadrant, first go back to that ROI question, “Does what I'm doing make sense?”

Value/Pay—They love you and/or your company. Keep doing what you're doing. The key is to not forget about them and their loyalty. Sometimes we take good customers for granted. As time goes by, these customers can start to resent the lack of attention. They value you. You must value them.
No Value/No Pay—Even though they don't value your product or your personal service, it's good to know where they stand. After some effort, if you can't accomplish the goal of demonstrating value of your product, you may decide to spend less time and resources on them.
No Value/Pay—Some people will look at this quadrant and think it's terrible, or certainly tenuous business. But while you prefer customers who appreciate your product and dedication, this is not entirely bad business to have…if it's priced and serviced correctly. You may wish to move them into the Value/Pay quadrant, but if you can't, and if you realize they may leave at the first opportunity, in the meantime, you can have a profitable, realistic relationship.
Value/No Pay—This is the worst quadrant of all. That may surprise some but when you think about it critically, these are the time- and resource-suckers. They tell us how much they value what we do, but they can't work with us right now, or can't pay enough. They ask for research, proposals, ideas, free consulting, and we keep giving it all to them in hopes that someday we might get some business. But in the meantime, they're chewing up valuable time. You have to either move them into the Value/Pay quadrant…or into the No Value/No Pay quadrant, and then move on to spend your time more wisely.

Many people won't fall unquestionably into the middle of a particular box. They may be a little bit of one, leaning toward another, or straddling a line. But eventually it should become clear where they fall. Your job is to analyze each of those relationships as objectively as possible. Ask yourself, “Does what I'm doing with them make sense?”

Sometimes Maximizing Your Win even means walking away. It may be the best use of your time, the highest ROI on your time investment. (See Chapter 10: No Deal.) You and your company's time, resources, information, and people have value. If you don't believe that, no one else will either.

Here's a real-life story of how the Value/Pay grid can work.

Finding a New Cure for the Common Pharma Rep

My partner, Todd Lenhart, and the SNI team worked with a global pharmaceutical company on introducing a new commercial sales model that would redefine the way the sales force operated. Our client decided to move away from a traditional “reach and frequency” sales model—sending as many reps to see as many doctors as often as possible—to a more focused sales mode, concentrating on more sales per rep and per doctor. This meant a reduction in the client's sales force from 2,000 to 1,200 reps and simultaneously giving the existing sales team more autonomy over the allocation of their time and resources. Physicians that used to have three or more representatives calling on them would now have one. But the sales reps were given more freedom to call on those physicians that helped them achieve their sales goals, and could call less often or not at all on those doctors that did not account for substantial prescriptions.

SNI utilized the Value/Pay Grid to help the sales team face the challenge. The first objective was to shift the traditional mindset from the old model and help them prioritize limited time and resources. The client's analytics team provided us with the previous 12 months of sales activity and helped the sales team plot every physician in their territory on the grid. This analysis was based on time and resources invested positioning the product (VALUE) and the actual prescriptions written by physicians (PAY).

The result of this exercise was that a larger portion of the physicians landed in the “Value/No Pay” category than most wanted to initially believe. Sales reps had been spending a large portion of their time pitching products to physicians who claimed to believe in the efficacy of a drug, but did not actually write prescriptions for patients. We invested the next six months in working with the sales team on their habits and strategies to move physicians in their territory toward the Value/Pay quadrant or off the grid all together. The result was that the sales team no longer spent precious time and money just hoping physicians would write prescriptions at some unknown point in the future (Pay). The new, more focused sales model resulted in increased sales growth over the next 18 months. Not surprisingly, the Value/Pay Grid is an important component of every sales representative's quarterly business review as they analyze how to allocate time and resources effectively.

Refresher

Chapter 3: WIN–win Negotiation

Myth of win–win: Both parties may benefit, but there's rarely such a thing as truly equal deals or wins.
Reality of WIN–win: If someone is going to come out ahead, it would be great if it's you, but at the very least, you maximize your interests.

Achieving WIN–win

Know what you want. Assess your needs and wants before negotiating.
Know what they want. Find out—probe, dig, ask, learn.
Satisfy your interests well.
Satisfy theirs acceptably.

Good deals echo—they lead to more deals.

WIN–win Is Not Wimp–Wimp

Don't turn into a negotiating wimp.
Don't lose in order to win.
Don't give in just to get the order.

Five Wimp–Wimp Types

Addicted—anything to make the deal.
Anxious—accepts the deal to get it over with.
Apathetic—time saved is worth overpaying.
Aristocratic—negotiating is beneath them.
Amiable—more important to be liked than to get a good deal.

Roadblocks to WIN–win

Insufficient planning: Someone isn't ready or prepared to negotiate.
Ineffective communication: Someone isn't listening.
Inexperience: The novice is negotiating the way they do it in war or in the movies. That makes the process hard for both sides.

Maximize your Time and Resources Using the Value/Pay Grid

Don't waste your time in the Value/No Pay quadrant.
Analyze your relationships as objectively as possible. Ask yourself, “Does what I'm doing with them make sense?”
Sometimes maximizing your Win requires you to “walk away” or reallocate your time.

*“I do have a fallback position, but it involves firearms.”*

Leo Cullum © 1993 from *The New Yorker Collection*. All Rights Reserved.