Transcription
Today, we are literally going to give you everything you could possibly need to win a negotiation in sales. So, if you've ever had an angry CFO ask you for a 50% discount and see your commission check get cut in half, if you've ever had a deal slip past the end of the month even though you offered a discount, or if you've ever felt the temptation to hide things from your prospect, this is going to be the master class for you. And we are here with the best negotiator that I've ever worked with. It is Todd Capone, who is the author of *The Transparency Sale*, *The Transparent Sales Leader*, and his new book, *Four Levers Negotiating*, which is available for pre-order right now, and you can grab it in the description of this episode. Welcome, Todd.
>> Thanks for having me.
>> And so, the way we're going to break down negotiation is we're going to talk through the $7 million deal that changed the way that Todd negotiated forever. And then we are going to go through the four levers that Todd uses to win any negotiation. So, Todd, what is the $7 million deal story?
>> Well, it's funny, Nick. You said I'm the best negotiator you've ever worked with. I would argue that before I got promoted to my SVP of sales role way back when, I was maybe the worst negotiator of all time. It was high anxiety. I had just gotten promoted to be SVP of sales and I had a rep down in Texas who was working on a massive deal with an oil services company, and it's the company's Schlumberger, if you've ever heard of it. Right. Huge. Uh, this deal was a three-year deal, $2 and a half million dollars a year. So, just so you've got it.
>> For anybody who's listening, what I'm going to teach you applies to the smallest of the small to the biggest of the big deals. It's B2B. It doesn't really work very well in B to, uh, B2B, it works fantastically well. This happened to be a monster deal. All right, so ready for the story?
>> Yeah.
>> So, my rep is working on this deal. They say yes. Uh, they call him and they're like, "Hey, we need to talk through the pricing and the negotiation and the terms." And my rep was like, "I gotta call my manager."
>> And this guy immediately got frustrated and was like, "All right, we don't have time for this. Uh, this division wants to get going. Whoever that manager is, can you get him on a plane? Let's get down into an office in Houston and let's just bang this deal out."
>> Sure. So, he calls me. I get on a plane, head down to Houston. It was freaking hot. All right. Like super hot. Uh, I remember it very clearly. It was summer of 2008, of all times.
>> I think it's just me, my rep, and this guy. We're just going to get in a room and bang this thing out. Here's what happened. So, we go check in.
>> Mhm.
>> They say, "Go up to the fifth floor." All right, cool. Go to the fifth floor. Get off the elevators. This guy meets us, brings us into a conference room, doors open. It's not just him. They brought basically their whole procurement team. And I swear there was a woman by the door who was like, I think she was drooling. She was just like, "Yeah, let's go." Like one of those people that was like, "I want, I can't wait for the haymaker throwing. Let's go." They had a whiteboard behind the group of them.
>> Mhm.
>> And so I think I did this just to buy some time. I said, "Hey, can I write something up on the whiteboard just to get us started?" They're like, "Yeah, whatever, dude. Here's a pen. Have fun." Right. Completely indifferent.
>> Yeah. I go up to the board [music] and I wrote down four things on it, and they were the four things that drive our business. FYI, they happen to drive every for-profit business model in the world. Number one is volume, meaning how much stuff you buy, right? That's a driver of your business. You want people to buy more stuff, not less, of course. Number two, timing of cash. So, turns out you probably like money. Most companies are driven to collect money faster versus slower. Number three is the length of commitment. You want your customers to commit longer versus shorter. And then number four is the timing of the deal, which is predictability, right? Every company has investors. They need to resource. They need to be able to predict. There's value in that.
>> Mhm.
>> So I wrote those four things down. They looked at them. They're like, "That's fascinating, right?" Like they could not have given a crap. I think they were maybe most impressed by my penmanship. That was about as far as it got. They looked at me and they're like, "Hey, Todd, listen. The reason that we got you down here is we've got this proposal from you. This division's raring to go. It's a little heavy. Uh, as a matter of fact, from a budgetary perspective, we need to get 35% off of this in order for us to move forward."
>> And so, what can you do? All right. So, that's the opening grenade that lands on the middle of the table is we need a 35% discount. All right. So, what do you do? Well, I would argue there's really three paths you can take. Two of which I do not recommend. All right. Path number one is to go into the value and ROI argument,
>> right? Like we believe our technology is worth this much. Like that kind of.
>> Yeah.
>> Right.
>> Stop it. Just stop it. If if you're talking about value at the goal line during a negotiation, that ship sailed long ago. Like just stop it. That these people in that room couldn't give a crap about your ROI or, you know, the business value.
>> Sure.
>> Number two, which is really the way that I was brought up, was the ping-pong method,
>> uh, which is to just start throwing crap on the table, right? Which is, hey, listen,
>> I can't do 35%, but I can do 10%. I don't even have to ask my boss,
>> right?
>> And that's where like the starting. I we see that a lot in the companies I work with where they're like, hey, our reps can give 10%. They don't even have to GET LIKE
>> AH STOP it start haggling basically.
>> They start haggling. They basically tell the customer, yeah, that proposal was crap, that's not real.
>> And so we throw a 10% discount. They go, well, we can't, we might be able to get to 25. And you keep going back and forth until you end up in the middle.
>> Mhm.
>> Right. And you greet on 18% off. Yay. High-fiving in the lobby. And what happens? Well, you just gave away 18% of $7.5 million
>> in exchange for what? Nothing. It's charity to their bottom line. Ask them about it. What's driving the 35%? Like, what? Tell me about it. Is that a budget issue? Is that a perceived value issue? Like, let's just talk about that. So, that's just being a human being.
>> What are you looking to communicate with your tonality and body language and your response of being human? Confidence comes from practice and from just knowing that what you're talking about is based on something sound.
>> Yeah.
>> At that point, I was still nervous. Like I still my wheels were still turning like what am I going to do? I don't even know what's coming and it's just my nature to be a collaborative human being. Right? So when I say be a human being, I think I was just kind of naturally doing that. It was not intentional. All right. So they they talked a little bit about it. They said it was a budget issue. Now, we could get deep in this later, but what are procurement teams really incentivized to do? You know, get dollars off, pay as little as possible, commit as short a period as possible, hold on to money as long as possible, and sign whenever the heck they want. Right? Like that's what procurement teams do. But in this case, we talked about the 35%. And then what do you do? Well, I said, "Hey, remember those four things that you were all glazed over when I wrote on the whiteboard? Well, those are the things that actually drive our pricing model in our business. Maybe we can talk through them together and see how close we can get."
>> As soon as I said that, they were like, "What? What are you talking about?"
>> And you could feel their demeanor kind of and go from this to
>> teach me like, "Tell me more."
>> Like, "All right, well, let's go through them."
>> And this is the beginnings of the four levers. Number one was volume. I explained to them that listen, your pricing right now is reflected on the number of licenses that you're committing to. That was our volume component. Every organization listening, your probably volume component is a little different. But I explained to them that, hey, you've got that other division over there that's just starting that's starting to look at us. They seem like they're pretty interested.
>> If you're willing to accelerate them into this deal and make this deal bigger,
>> we're willing to pay you for that in the form of a discount. And as a matter of fact, that would have earned them another 5%. So I wrote 5% next to the volume component. Accelerate that division. They looked at that and they're like, "All right, that's that's good to know. That's interesting. Unfortunately, this division here is raring to go and we don't have time for them to catch up."
>> involved.
>> All right, cool. Number two, timing of cash. In this case, our proposal was they were going to pay upfront annually.
>> Mhm.
>> Net30 each year for 3 years. It's hard to accelerate that. And I wouldn't say that you need to, but I would say that if you don't set that lever, just know that your customers want to pay slower.
>> So, you still have to set it.
>> However, in this case, we had an interesting opportunity. We were kind of a mid-level startup at the time and we were considering going out and getting another round of funding. We were doing big deals with long sales cycles, so sometimes cash flow was a little rough. I took the opportunity to basically do a fund raise, but have our customer do it instead of private equity or a VC. And here's how it sounded. I explained to them, listen, there's value in us being able to be paid faster if you're willing to accelerate year two and year three. Pay for the whole thing upfront net30. We're willing to pay you for that in the form of a discount. Actually, 5% for each year you accelerate. So, we'll give you 10% if you're willing to pay us the entire amount right now. Now, what was funny is at this point they looked at each other and they were like, we we might be able to actually do that. Hey, who do you know in finance? Like, go ping finance. See if that's something that we might be willing to do.
>> Uh-huh.
>> By the way, 2008 oil services, these guys had so much cash on their balance sheet. Like, think the Breaking Bad room where the guy is laying on. I mean, this it I think they had $17 billion of cash on their balance sheet at the time. This investment is like money they find in the couch cushions in their lobby, right? It's nothing. And so, they got really excited about that. They're like, "That's a cool like put a star by that one." Like, "All right, cool." So, we put a star by it. They were going to pay us all of that money year one right up front and we don't have to dilute our shares. We don't have to go get a round of funding. I could avoid going and having private equity beat-ups when you're going those doing the tour. Like this is awesome.
>> Number three, the length of commitment. So this deal the pricing I reminded them the pricing is based on a three-year commitment.
>> And so as it turns out, the longer you commit to our products, technology, services, that volume, better it is for us. The more that's reflected in your pricing. I explained to them that, hey, if you're willing to take this out to four years or even five years, we would pay you in the form of a discount of 5% for each additional year that you commit to. We didn't want to go further than five ourselves.
>> Yeah.
>> Right. And if you do the math, if they want to go out to 20 years, it'll all be free. But that's not the point. The point is take it out to four years, take it out to 5 years, that's valuable to us, and we're willing to reflect that in the pricing. Explain that to them. They looked at it and they're like, "That's good to know. That's cool." Um, even 3 years is hard. 5 years would be really difficult in the oil services. It's You never know what's coming around the corner. Let's put a question mark by that one. Come back to it. We ended up putting an X through it.
>> Mhm.
>> Right. But that's length of commitment. All right. You ready for my favorite of all of them?
>> Yeah.
>> All right. So, listen up. Timing of the deal, the fourth one. So, this one, it sounds obvious, but I want you to hear it. There's a spec specific word I want everybody to hear and [snorts] freaking engrave in your brain. All right. I explained to them that listen, there is tremendous value in our ability to predict our business, right? Like me and my rep here, we got quotas. Who knew, right? Surprising, of course. But >> we've got all that because we've got investors. We've got forecasts. We have to be able to resource this, right? This is a big deal. It requires people to be ready to go.
>> If we are able to predict when that's going to happen, that's tremendously valuable for us. As a matter of fact, it's something we're willing to pay you for in the form of a discount. If you are willing to, here's the word, mutually. If you are willing to mutually align around when you think you can get this done,
>> Mhm.
>> we will pay you in the form of a discount to hold to it. Soak that in for a second. What I'm saying is instead of the fake expiring discount that I bought this Banana Republic sweater on like this Sunday only 75 whatever it is >> this is hey listen I'm actually paying you for something that something is helping me predict.
>> Mhm.
>> It's not some false acceleration technique. It's you're going to help me with my forecast and that's valuable. So I'm going to pay you to do that. And so they looked at me and they're like what do you mean? And so this was July of 2008. Like I said, it was smoking hot. They said they were in a hurry. So I said this, "Listen, if you can help us predict that you can get this done in September."
>> Mhm.
>> That gives us buffer room. We're good.
>> That's valuable to us. We can forecast September. We'll pay you in the form of a 5% discount to get it done in September. And they're like, "If we're still talking about this end of September, something's gone wrong. Sign us up. Big star by that one." Like sweet. Pretty much the end of the negotiation at that point, right? They asked for 35%. We gave them a path to 30. The 35% never even came up again. They not only had the cards to finish the negotiation of that deal, but they had the cards to negotiate all the future deals consistently. Every single one of those divisions paid the same price with flexibility within the levers. They walked away with a 15% discount. We walked away with faster payment and a predictable deal. We were all happy and we left as friends and there was no more fighting. There was no drooling. And I think if I called them right now, they would still consider us friends.
>> When someone hits you with the first ask or that first grenade of 35%. Sometimes even with the four levers, you're going to be out of range. They might ask you for a 50% discount. And you know, even with all four levers, volume, timing of cash, length of commitment, timing of the deal, even if you used all four of them,
>> there's no way you could have possibly gotten to 50%,
>> right?
>> How do you handle those situations?
>> I've got two answers for you. One answer is the term sticker shock has never been associated with anything good in the history of humankind,
>> right? Never.
>> And this idea, there's a quote from 1927 where the writer says, "Never share the price until the customer thinks it's more."
>> I think that's garbage. Like that's that's some old school like you know don't talk about the price till the end. That's stupid.
>> I'm a believer and the thing that I taught these big companies are hey listen from the first conversation we should be setting a transparent expectation that hey listen you're going to find that the price is going to be at the higher end of the market. There are cheaper alternatives. I've got a couple of customers who the big companies like SAP and them they actually have the technology for free to set that expectation that listen price is going to be at the higher end here. It's probably based on my understanding of your environment going to be between X and Y. If that's way off of your expectations, can we talk about that now versus 3 months from now?
>> The bottom line there is if you're talking about a six or a seven figure solution to a four or a five figure buyer, one of you is in the wrong conversation. Do you want to know that now or after you just burned your most valuable asset which is your time yapping about a deal that they could never buy anyway? Or vice versa, right? If you're talking about a four or five figure solution to a six or seven figure buyer, you got the there's an elephant running around the room you don't see. Get it out of there before it destroys all the furniture. I shared a quote with you last night.
>> Yeah.
>> Arthur Dunn 1921 from his book *Scientific Selling and Advertising*. And the quote is simply this. If the truth won't sell it, don't sell it. If your price is your price, we got to stop hiding stuff. So much of it has to do with empathy for that individual. For you to be able to say, "Hey, listen. My understanding of your environment, your investment is probably going to be between X and Y based on your comprehension of where you're going to be able to get budget and that kind of stuff. Is that way out of the realm of conversation? And if it's not, let's work together and strategize on how we get to that point."
>> That's the key. A lot of it has to do in that case with your delivery. Um, but again, if you're going to lose, lose fast.
>> Yeah.
>> Right. Your most valuable asset is your time. Get out of that conversation as quickly as you possibly can. You would asked what happens at the goal line when they're like, "Hey, we've got an alternative. We can uh we need a 50%, 60%." And that's beyond the reach of what the levers can do.
>> If you've laid that foundation early, like we just talked about, a lot of times that never happens. It never comes up again. and you can point back to it like, "Hey, remember at the beginning we talked about this? I I've clearly not shown you the value, right? Like maybe we that that's a selling issue." But number two is they say, "Hey, listen. Uh, we need 50% off, 60% off. Step one, be a human being, right? Like, hey, that's awesome. Congratulations, right? Like fantastic. You were able to find an alter like tell me about it. Is that like what pieces is it going to give you?" And like that's awesome.
>> Mhm.
>> Step two is always to go through all four levers. Remind them of the four levers over and over again so that they wake up at 2 in the morning like volume timing. Like they've got it. It's stuck in their head. The way you this conversation sounds is this. As you probably remember, our pricing is driven by four things.
>> The volume,
>> timing of cash, length of commitment, the timing of the deal. We can go through those together and see if we can get you a little closer, but unfortunately, we're not going to be able to get you all the way down. If that's not going to work, then I wish you the greatest of luck and let's part as friends and we're here if you need us and leave leave the room, leave the call. That's it.
>> So, that's where we are in terms of like what we should be doing. Now, you were telling us for burgers last night. Things got a little bit hairy on this deal and you had to do a little bit of saving. So, what happened once you walked out of that conference room?
>> We walked out of that room as friends with a 15% discount that we were getting in exchange for us paying them 15% faster cash and a predictable deal.
>> We leave, we send them over the agreements. Uh, they added a paragraph to that agreement and it's something that many of your listeners are probably very familiar with. It's called termination for convenience.
>> All right. So they added this phrase, this language that gives them the right to get out of a contract at any time for any reason.
>> Yep.
>> All right. So what do you do? Well, our lawyers redlined it out, sent it back, they put it back in, sent it back, we red, you know, that whole game.
>> Yep.
>> And then finally, we get to the last points on the contract. We all get on a call together. And so it's our lawyers, their lawyers, we're going through, we get to that paragraph. And so termination for convenience, what do you do? Step one, be a human being.
>> Mhm.
>> Right. Like, hey, listen. We noticed that you keep putting this paragraph in here. We keep redlining out. Tell us about it. Like, why do you what's driving the need for that?
>> Yeah.
>> And they said two things. Uh, number one was we have termination for convenience in all our vendor contracts. I'm sure you do, right? But that's what they always say.
>> And then number two is Todd, as we talked about, oil services is very unpredictable. And as a result, we need the ultimate flexibility to be able to get out when we need to get out.
>> All right, cool. Step two, like I said, go through all four levers. I explained to them that, hey, remember as we've been talking through this process that our pricing is primarily driven by four things. How much you buy volume, how fast you pay, timing of cash, how long you commit, length of commitment, and the timing of the deal or that predictability. Termination for convenience represents no commitment.
>> So, you can have it if you want it, but you're probably not going to like it because it drives the price up dramatically. So instead of your price being based on 3 years, it's essentially month to month.
>> And as a result, the discount is going to go like the price probably going to go up 30 to 35%. I can have the rep draw up that pricing for you if you'd like. And so the phone goes dead quiet, right? Just like and I'm DMing my rep like, "Put your phone on mute." Like they've got to be the next one to talk. What I then added was this, that listen, before you freak out, just remember that if the technology that we're selling you does what we say it's going to do, you've got protections in the contract, too. You've got termination for cause. You've got warranty. There's service level agreements in there. If that's your concern that this isn't going to work while we've got the lawyers on the phone, why don't we go through that and if you truly need termination for convenience, you're going to have to pay for it and we'll draw out what that pricing looks like. And immediately they were like, "Yeah, let's take a look at that language and make sure it covers because hey, if we're delivering, why would they want to get out?"
>> And so termination for convenience, poof, went away.
>> Yeah. So you you've finished the red lines now. You've gone through that rocky stressful process that like that always made me feel sick when I'm on the phone as the rep and the lawyers are just duking it out and they're sort of posturing and I'm like, "Here goes my deal."
>> Right. Well, I will add too that when you think about the hairy hairy terms that lawyers deal with like indemnification, limitation of liability, propri like all of that kind of stuff,
>> one of the things in the more complex deals that I advocate for is
>> kind of ad adding a a half a lever. And so this is something that I even do today when I'm speaking and teaching. Like that's what I do. So why would we need that? But one of my giant a giant insurance company client,
>> they added paragraphs to my contract that required me to take on a ton of insurance. There was all this liability stuff in there. So what did I do? I called them up. I was like, "Hey, what's driving the need for that? Be a human being." And then step two was, "Hey, listen. My pricing is based on these four things, but it's also based on accepting a reasonable amount of risk, collaborative risk. um what you're asking me to do here is adding a significant cost and causing my business to take on risk. If you want me to do that, the pricing model will have to change."
>> And so they immediately like it was it was hilarious. The the woman that had sent me over the contract, she was just like, "All right, we'll just get rid of that."
>> Wow.
>> Right. That happens all the time. They try to hit you with the shroud of confusion and posturing and you go right back to cut through the fog with the four levers. Here's what I care about. And when you do that, they're like, I got to drop it because like
>> I'm not going to bother. It's not worth us going and getting another like, hey, I'm not going to just give in on that.
>> Yeah. Okay. So, let's go back to finish the story. You overcome the term for convenience piece. One more thing went wrong.
>> Yes. So, remember we had aligned around September.
>> Mhm.
>> And we were paying them in the form of a discount to help us forecast. So they were putting skin in the game. This was not just some fake expiring coupon that you got at Kohl's. This was a end of quarter. I'm paying you for something. I don't remember what day. It was like September 23rd, something like that. My rep gets a call. Hey man, I we had no way of knowing this, but this has gone through all the approvals and the CFO is the signer. Turns out he's on vacation through the end of the month. Can you hold the price until October 1st? Like I swear the minute he walks in, I will get to his desk. I will make sure he signs this. Can you just confirm that you can hold the price? What do you do? There's three words I want all of you to just impart and think about. It's I don't know.
>> All right. And I'm going to explain what I mean here. So CFO is going on vacation. Step one, be a human being. Like oh, he's on vacation. Oh, he's on Elon Musk spaceship to Mars and can't get to DocuSign. Oh, all right. That makes All right, cool. All right. There's nobody else that is available that's I know. All right, cool. Cool. Go through all four levers again. I know that sounds like madness, but you're trying to get them to the point, and you're going to hear this for anybody that's in client success and account management. Your customers will start to remember the four levers at renewal time, at upsell time, at cross-sell time. But in this case, remember we had talked about your pricing was based on these four things. One of which was that mutual alignment around the timing of the deal. there was value in our ability to predict our business and we're paying you in the form of a 5% discount to get this done in September. The answer is I don't know. Let's talk about October and October. So, if you can't get it done this, call me October 1st. We'll we'll talk about it. All right. Here's why that's so powerful.
>> Mhm.
>> Uncertainty is a crazy maker in our brains, right? If anybody needs a reminder, go back to March of 2020 when we were all hoarding toilet paper, right? Like we didn't know what are we going to do? We didn't have enough. I got to go hoard it, right? That uncertainty makes us do crazy things to run to certain ground. I would argue that the minute you say yes, will you hold the price the next month? Yeah, as long as it's Monday morning, we're good. Your deal just slipped.
>> Mhm.
>> The minute you say no, the minute you go, hey, no, we had an agreement. That price goes away forever, they're going to be like, you're a jackass, right? Like that doesn't make sense. You're a privately held or whatever it happens to be and like you're that dependent on this deal. like maybe you're not in as good a shape as I thought you were. The uncertainty of just like, hey, listen, do all you can to try to get it done and let's talk about October and October. That uncertainty, the guy was telling him, hey, like I got to know, right? Cuz that 5% on what is now a $6.5 million deal after the discounts, that means we'd have to go get new approvals, new POs issued. There's a whole process. And so if you can't hold the price, like I kind of got to know that now. Otherwise, we're going to be in really tough. Hey, I don't know. We have to see how the quarter ends up. What I do know is that I'm paying you for something.
>> Mhm.
>> And if I get it, then like that's what September's about. I'm not going to pay you for something that I'm not getting. We'll have to see whether it's still worth it in October. They hang up. Guess whose phone rings next? This guy, right? So the guy calls me. He's like, "Hey, I just got off the phone with Chris. I listen. This guy's on vacation. We can't get to them. Uh, can you just confirm that you can hold the price for me? What are my three words?
>> I don't know.
>> I don't know. I don't know. Like, let's talk about next month. Next month.
>> Somehow they found somebody else to sign it on September 26th. All right. That happens all the stinking time.
>> And again, it just goes back to the four levers. And remember, we're paying them for something. We're not just making up a Banana Republic coupon. This is our payment for you helping us to forecast.
>> Now, I've had it happen multiple times where they still couldn't get it done and you have to make a judgment call on October 1st, right? Like, hey, is this still worth it to us? Going back to the levers like, "Hey, remember we were paying you for something we didn't get."
>> However, we're a privately held company. I got a board meeting in two weeks. It would be really cool to get this off. So, I'll pay you for it if you sign it now. So that when I go into my board meeting, I can go, "Hey, we were $120,000 off there, but Monday morning at 9:00 a.m. got the $120,000." And my board would still be happy with that. That's still valuable to us.
>> If it's a customer that screwed with you multiple multiple multiple times, maybe you want to go, "No, dude. Listen, we were paying you for something we didn't get. We're going to have to go back to the drawing board." But that mutual alignment is magic. and creating uncertainty around the ask will drive more people to that certain ground than you can even imagine.
>> So Todd, in a negotiation, information is usually your greatest advantage. And your ability to predict the future is also something that's really, really powerful. And so something you shared with me is that there are only eight things, pretty much only eight things that you are going to get asked for in a negotiation. One of those was termination for convenience. Can you give me the other seven in a quick rattle and then let's talk through how to overcome each in like pretty rapid fire form?
>> Absolutely. Let's go. So, I've actually gone through three. So, one of them is we need a discount.
>> Yep.
>> Right. One of them is termination for convenience. One of them is will you hold the price the next month.
>> Mh.
>> Two of them have to do with pricing terms. One of which is they want to pay slower.
>> Mhm.
>> Which is hey net30 our standards net 60. Y
>> and the other number five is we want to pay monthly instead of annual. We want to pay quarterly instead of annual. Whatever. A lot of times you're going to be asked, hey, we want to do a proof of concept or we want to do a pilot. Our job as sales people is to help the buyer predict. And when they're asking for a pilot, it should be a signal that we have not done a good job of helping them predict. There should be no free pilots. If you are an established organization, if you're a startup, I get it. If you're rolling out a new technology, a new piece of product, I get it. But if you're an established company, what concepts do you still need to prove?
>> I would argue this too, and this was always my speech as a CRO. When we do pilots and proof of concepts, and most organizations, what do you what resources do you use for it? Well, most organizations put their best resource. Like, we got to get that deal. Our best resources are going to be on this pilot to make sure it's a super success.
>> I would always tell the customers that, listen, I want my best resources on my most committed customers, not my least. And as a result, if we're going to do this, you're probably not going to get my best. Let's take a step back and let's go through what are the pieces you're still having a hard time predicting. Let's go through those together. And if you really want to do a short-term deal, we'll work with you on the pricing, but you're probably not going to love it.
>> I love the probably not going to love it. That's really [laughter] good. What are the last two?
>> Well, the the one we actually talked about already, uh, was the what I call the ridiculous discount ask,
>> uh, which is the one that we need 60% off. We need 70% off. But I think we've tackled that one already.
>> So, we've got the reasonable discount is one and then the ridiculous discount separate.
>> Right. And I And it's amazing how often I hear companies that are faced with the ridiculous discount ask. It's almost more often than we need a 10% discount.
>> He does it every single time. Yeah. [laughter] It starts at half.
>> All right. So number eight is again this is specific to companies where there's an implementation timeline but often times I hear that their customers are saying hey we don't want to start paying for this until the software is up and running and live
>> and so most companies go all right well we'll just reallocate the dollars of all of that I would argue
>> four levers again and here's how that sounds number one is you've already started the conversation of being a human being with them this is why we are asking to pay slower
>> Mhm.
>> Cool. Got it.
>> Then for you to go back through the four levers and go, "All right, cool." Um, your pricing is based on these four things. How much you buy, how fast you pay, how long you commit, when you sign. That number two is your pricing is based on upfront annual net30. If you want to pay more slowly, you can, but our pricing model is based on that. All of our customers have this implementation issue. If you want to pay slower, you can, but we'll have to adjust something to make up for it.
>> That's it.
>> Yeah. Right? And you're having the conversation with them that you've established a sound basis. I will go to this book for a second.
>> All right. So for anybody watching, this book is a 1910 book. It is called *Salesmanship Theory and Practice*. It is written by a guy named Thomas Herbert Russell. Uh, there's a section here called Buyers No More Nowadays, which is hilarious. He says something that I literally start the new book with this quote because I think it's the issue that we've created in the sales world. And the quote is this. The knowledge of buyers has increased and they are no longer disposed to pay what is asked of them unless persuaded in their minds that the sellers regulate their prices on some sound basis.
>> Some sound basis. This is 1910. But it's the brains of your buyers are exactly the same as they were. They have not changed at all in 115, 120, however long it is years. We've got to establish a sound basis for the way that we deliver pricing and the way we negotiate it. This is not some hardline, your price is your price and there's no negotiating. This is, hey, your price is your price, but it's based on these things and you've got the flexibility to get what you want out of it. And if these aren't going to work, then maybe we're not the right partner for you. That confidence becomes contagious
>> and as a result your customers will take it with them and like I've said it's been used in renewals in upsells in cross sales had companies and individuals go to new companies and they're like hey remind me what those levers are again right it suddenly gets etched in their brains and they know that what you're delivering is not a lie you're not playing word art with them you're not playing games your price is your price
>> so let's recap everything that Todd just covered in all of the levers of negotiation and how you roll them out. So, step number one is you want to give pricing early and flag bad deals early on. Sometimes that just means you're giving a range. Other times that means you're explicitly giving the price and the four levers that someone can use to get that price closer to where they want it to be. Step number two is when you get the first reaction to price, you need to lay down the four levers and tell them that you're willing to pay them in form of a discount for these four levers that matter to our business. Number three is you're going to test the walk if they're out of range. So if they ask for a ridiculous discount, that's when you basically need to say like, look, these are how far the four levers are going to get us on that basis. Does it even make sense to negotiate? From there, once the negotiation begins, we went through eight potential concessions that someone could ask for. And basically, what you're doing is you're just creating a cost to each of those concessions using the levers. So, there are a couple things you could do. One, if someone asks for termination for convenience, well, technically that's just asking for a shorter commitment. And so, there's a cost to that using the four levers. Another thing you can do is there are certain ones where they almost fit into like the half lever bucket of risk and so you might say this increases the risk in the deal and there's a cost to that.
>> The third one is you might just say I don't know in the case of someone just trying to take one of the levers off the table and not commit to it at all. Um, and then the last one, number four, is you might be able to find other ways to solve for that concession. In other words, if they're asking you for a pilot, maybe that's actually just a concern they have around risk. Or if they're looking for an opt out, maybe they're just looking for an opt out in case you can't meet your SLAs's. So, you might find ways to solve that concession without touching price or the contract at all.
>> All righty, Nick. How can people help Todd out here? Well, folks, we everyone sitting at this table, we are willing to pay you for predictability around our businesses and the timing of our cash in a couple ways. One, Todd's new book, *Four Levers Negotiating*, is on pre-order, and there is a link in the description to go grab that. And then also, your jolly jolly friends at 30MPC who are wearing elf and Santa outfits are doing a Christmas special on our 30MPC courses. And so, if you want to learn how to master cold calling or master discovery or become a phenomenal sales leader or send sales emails that actually cut through the noise, we've got a ton of great offerings that are on discount through the holiday season. Check out all of that in the description below. and Todd, thank you for joining us. This was a freaking amazing episode.
>> I had a blast. Thanks for having me.
>> Yeah. Awesome. That's a wrap, folks. If you like this video, the number one way to tell us to do more stuff like this is to like this video, subscribe, and hit the bell. It's the number one free way that you can support the channel and make sure that we can keep doing content like this. If you like this too, there are some videos that are down here or here or down below. I don't even know where they put them anymore. Go click on some of these other videos that will help you get better at selling or get to President's Club or whatever you're trying to do. Maybe maybe it'll entertain you on your couch. All righty.