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Tuesday 16 August 2011

Post-Haste - Speed in Sales Negotiation and the Walkaway Option


Post-Haste - Speed in Sales Negotiation and the Walkaway Option


We can all learn a lot from both the Multi-millionaire investor Dragons in their  series - Hilary Devey, Duncan Bannatyne, Deborah Meadon, Peter Jones, Theo Paphitis and the entrepreneurs on BBC 2 TV "Dragons' Den" http://www.bbc.co.uk/programmes/b006vq92/episodes/2011.
The shows are entertaining but also educational for those in selling and negotiation.
Most of the contenders on  last Sunday evening's show faltered either through poor presentation, not listening and not answering the questions from the dragons, or left the den with good advice about Commercial viability.

Seldom do we witness the pans of the negotiating balance swinging from deadlock to near deal back and forth.

Sunday night was an exception.

You can still catch it on i player if you are quick- although I think it will be an episode repeated - possibly even used to make a training film on negotiation.
http://www.bbc.co.uk/iplayer/episode/b013r32j/Dragons_Den_Series_9_Episode_3/

After a nerve-wracking opening pitch, the brothers Jim and Richard George who were looking for an investment of  £160,000 for a 25% share of the business were made offers by four of the Dragons, indeed 6 offers were suggested but a final agreement on a deal could not be reached.

“Under the glare and pressure of being in front of the Dragons, I think we may have made the wrong decision by not accepting an offer, but only time will tell,” said Jim George.
Although appearing on Dragons’ Den was a gruelling experience and not something to be undertaken lightly, the brothers felt it was a fantastic opportunity to pit our wits against a formidable team of the dragons.
PostSaver sleeves comprise a tough polythene outer layer lined with a meltable sealant and are designed to keep preservatives in and decay out. They are applied using a low-cost gas blow torch.

The brothers Invented , developed and manufactured a Post saver http://www.postsaver.co.uk/  dual layer preservation sleeve.

Here is a time-line log of the negotiation that took place:-

  • They were asking for £160,000 injection for a 25% stake in their business. They gave a short presentation of their offer and demonstrated the product.

  • “Premature fencing failure has never kept me awake at nights.” quipped Theo at the post sales pitch questioning stage of their presentation.

  • Soon the brothers showed they had researched the market potential .e.g. 40-80 million posts are put into the ground each year

  • Patents in various countries mentioned

  • Their projections were a turnover of £240,000 in the first year, next year £ 510,00

  • Profit 1st year  projections were given after Deborah stated she was interested in profit rather than turnover. 

  • Sales Pipeline referred to negotiations with fencing contractors , Network Rail etc.

  • Deborah made the first offer “ I ‘ll Offer all money for 35% of business “ this was politely refused .

  • Duncan signalled interest by asking where were they on their negotiability range.

  • He then offered half the money and to be matched with another Dragon. "Two for the price of one."

  • Theo stepped in to enquire what the brothers were looking for out of this project.

  • “Give me a timeline” They answered “5 years”

  • All the money 30% "Would you be happier with two dragons?"


  • "If Duncan I’m happy 80k each" said Hilary


  • 4 offers on the table. Maybe a record for even dragons’ den.


  • Then it was Peter Jones   turn."I’m out I don’t think IT WILL GIVE THE RETURNS."


  • Deborah offered an imaginative additional option. She said she would struggle below 30% but "if you hit your targets then I would hand you back 5% OF SHARES so you have your 25%.

  • The brothers had a quick ( maybe too quick chat about Deborah's offer)


  • "WE'RE STICK TO 25%" !!!!


  • "THAT’S ILLOGICAL" said Deborah

  • Hilary " I agree with Debra your actions one step too far I have lost confidence in you. I’m out"


  • Duncan  "Do want to ask me how I feel now now?"     " I’m out"

  • Theo  offered a last chance  by offering to share  with Deborah's last offer " and you get two dragons."

  • Deborah   "There a moment in a deal when things change- I don’t want it now.   I’m sorry My offer doesn’t stand"

  • Theo "I’m out"


  • Six different offers from the dragons were turned down.


BBC host Evan concluded "If you don't like a deal you can always walk away"

While they couldn’t agree a deal on PostSaver, the brothers are already contemplating a second shot at the show with another invention.They have developed a special fuel-saving spout for use with fuel cans, which works just like a petrol nozzle at the garage and prevents overfilling by stopping the flow when the tank is full
The show reminded me of a presentation on negotiation at last month's TMI World Congress in Vilnius.
Where does Selling end and Negotiation begin?

This has been a debate of interest to Salespeople for many years.
Traditional approaches would tend to see negotiation as appearing when both buyer and seller see an agreement in principle and the negotiation of  sorting out the terms and the nitty gritty detail.

Certainly the case of the Postsaver in the dragon's den was more about the negotiation phase rather than the selling phase.

Christine Morlay in her presentation “ The makings of a great Negotiator” at the TMI World Congress 2011 structured he talk by illustrating ‘negotiations’ that take place in the home and their counterparts encountered in selling.

She offered 7 options

Christine then took her audience through her seven tactical options to help negotiate with such dilemma:-
(CHRISTINE PRESENTING AT TMI WORLD CONGRESS 2011)

1. Persuasion – cost neutral , but takes some time
2. Problem solving - control cost- trying to ‘buy’ their Yes
3. Unilateral Action – take it or leave it.
4. Capitulation - Surrender
5. Postponing - Delaying
6. Arbitration – calling in an influencer
7. Haggling - bargaining

These points were illustrated first in a domestic context. As each full screen picture slide was projected the key option word was displayed in a slow revolving into different languages e.g. Italian, French, German, Spanish and English .

  
For an international audience I thought this was a nice touch. English was the business language of the conference which makes it hard going for those for whom English can be their third or fourth language. It also reminded the American and British delegates that there ARE other languages!

(The balance between deadlock and negotiation)


Christine summarised her talk with a picture of weighing scales.

One pan represented DEADLOCK with weights of Finances, social Political pressure and time whilst the other NEGOTIATION had weights of concession, creating a Precedent and Credibility. All that was illustrated in action at Sunday's Dragon Den show.

Other related links on this blog

Negotiation Skills 12 Steps

http://fruitsofsuccesswithhugh.blogspot.com/2011/12/buy-sheep-sell-deer-12-steps-to.html
Looking for a good negotiation skills course? Click on http://www.tack.co.uk/course_details.php?cat_id=72&co_id=28&col=F6082E


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