What you’ll learn:
As businessowners and entrepreneurs, we’ve all negotiated with someone—whether that be buyers, clients, or manufacturers. Just two months into COVID-19, and you may also be considering a renegotiation with your landlord of your office lease—if you haven’t done so already. Here to guide us through negotiations of all kinds is negotiation ninja Daniel Duty. Daniel lead the negotiation to get Starbucks into all of Target’s stores. He knows a thing or two on how to build partnerships, leverage power, and craft a solution that meets everyone’s needs. Listen for endless tips on how to approach your next negotiation.
About our guest:
Daniel built the Business Partnerships and Negotiations team for Target where he developed its negotiations and partnership strategy and implemented a variety of tools and frameworks, creating billions of dollars in savings, growth and innovation.
Daniel has led hundreds of negotiations with companies like Nestle, Hasbro, and Unilever. He developed strategic partnerships creating innovative new products and solutions with organizations like P&G, Starbucks and UNICEF.
Prior to joining Target, Daniel negotiated on behalf of US Senator Paul Simon, the US International Trade Commission, General Mills and other organizations.
Key takeaways from this episode:
- The most common mistake companies make when negotiating with buyers and vendors—3:10
- 3 tips for renegotiating your lease in the time of COVID-19—5:52
- How to maintain partnerships during an email or non-verbal negotiation—8:48
- What is the right approach to negotiating a China tariff price increase? —12:28
- How to leverage your differentiation in the marketplace to buyers—16:03
- A guide to more successfully pitching your brand to Target—17:14
- Negation trends: what is working today and what isn’t—21:00
- How to determine if your buyer is using negotiation tactics or tricks to get you to lower prices—24:12
- The importance of being honest and knowing your rank as a supplier—26:06
- The top factors that buyers look for when considering a quote supplier—28:40
- The 3 sources of leveraging power during a negotiation—30:18
- How a negotiation coach will help you grow top line and grow bottom line as an organization or business of any size —36:07
Announcer: Welcome to the Page 1 Podcast, a twice-weekly podcast featuring a variety of guests and thought leaders on topics ranging from channel strategies to tariffs, influencer marketing, best in class product launches and all the details about how to accelerate your eCommerce sales with the big box retailers or what we call rCommerce. Now, here’s your host, Luke Peters.
Luke Peters: Thanks for joining us on the Page 1 Podcast. I’m your host Luke Peters, CEO of NewAir Appliances and Retail Band Digital Strategy Agency. We are now in a Coronavirus world and I know it’s on everyone’s mind. So I’m going to adapt all of the interviews to ensure that you the listeners are getting the most out of this podcast. You can expect us to get right to the point, provide valuable business insights with the focus on COVID-19 impacts. And so before we get to that right now, I am offering free evaluation of your online strategy.
Luke Peters: If you’re interested, find me on LinkedIn or email@example.com right now. If you’re looking to grow your Amazon sales or influencer marketing, or maybe your Home Depot or Wayfair sales online, this is where we can help you out. So this episode, I’m really excited. In this episode, you’re going to learn from Daniel Duty on the art of negotiation. Listen for the next 30 minutes on how you can improve your negotiation skills, secure more deals and become more successful.
Luke Peters: Daniel’s got an amazing resume. So I’m going to run through that quickly to introduce him to you the audience. So he has a bachelor’s degree but then also got a J.D. from George Washington University National Law Center. He’s an internationally known expert in the fields of negotiation, partnership building, and collective impact in the retail and consumer goods sectors. The interesting thing about Daniel, he’s obviously an expert in negotiation, but he worked with Target and obviously for most of our listeners here in the home and hard goods, that’s a key partner.
Luke Peters: So Daniel built business partnerships and negotiation team for Target, where he developed its negotiations and partnership strategy and implemented a variety of tools and frameworks creating billions of dollars in savings, growth and innovation. And I guess if we can’t get our products into Target, Daniel, we can partially blame you. I’m just kidding.
Daniel Duty: Absolutely.
Luke Peters: Let me finish up here. So Daniel has led hundreds of negotiations with companies like Nestle, Hasbro and Unilever. He’s developed strategic partnerships, creating innovative new products and solutions with organizations like PG&E, Starbucks, and UNICEF. Prior to joining Target, Daniel negotiated on behalf of US Senator Paul Simon, the US International Trade Commission, General Mills and other organizations. So, that is an unbelievable resume, Daniel. Really thrilled and honored to have you on the show today, and why don’t we start with a quick question which is, what is the most common negotiating mistake that most people or companies make?
Daniel Duty: There are so many. But the one that I see quite often is that people talk too much and don’t listen enough. So what we know in negotiation is that information is leverage, information is power. The more information we have, the greater the outcome we can drive, and most people just try to convince you of why they’re right versus first understanding where the other side is coming from, and what information they may have that could help you get an even bigger deal. So ask more questions, and listen and speak less.
Luke Peters: Oh, that’s beautiful advice, and I always try to tell myself that. I think I’m getting better, but you’re so right on that. It’s always about balancing that patience, right? A lot of entrepreneurs are not patient, so.
Daniel Duty: Absolutely, and a lot of people especially on the supplier side or the vendor side, right? They’re there to sell to the retailer. So they’re talking, talking, talking, and they ask very few questions about what is it that that buyer and the retailer may actually need? What’s important to them? What’s their strategy? By asking those types of questions first, you learn a lot about how you might make your pitch in a way that really resonates with that retailer. But so many suppliers fail to do that. They come in with their pitch already set in their head, and don’t ask a lot of questions.
Luke Peters: Yeah, and I’ve been at, plenty of meetings where I’ve witnessed that and it’s interesting, you bring that up, because a lot of, will call them buyers, at the retailers, some of them are really thoughtful and really quiet and maybe they are practicing this. They’re listening to us, but at the same time, sometimes we don’t find out exactly what their decision is going to be based on. So I think that’s great advice, and we’ll get into more questions about retailers because I think that’s really unique. You can learn how to negotiate better but also specifically with this audience on consumer products, that’s eventually who we’re selling to.
Daniel Duty: Absolutely.
Luke Peters: Yeah. So before we get there, let’s talk about COVID-19. So we got a lot of business owners listening, a lot of companies are struggling, some are, some are not, some are just having some challenges, but also this opens up a unique opportunity to negotiate down expenses or contracts or even reduce leases, and all kinds of things like that.
Daniel Duty: Absolutely.
Luke Peters: Are you able to kind of walk us through maybe how they can think about that. I don’t know if that’s too broad, but let’s say somebody wanted a restaurant owner has to renegotiate or negotiate down their lease because they’re not even there. What are the basic steps that that individual might take as they kind of prepare to contact the landlord?
Daniel Duty: Yeah, I would, first, being prepared is always probably the most important rule in any negotiation. So I’d want to do a little bit of my homework first and figure out who the lease owner is? How important am I in their portfolio of business? And what are their kind of long term interests and needs, what’s driving them? And if I understand those pieces, I might approach that less or and say, I know you’re interested in having a long term client, if that’s one of the things you find out is important to them, or a long term [inaudible 00:06:25] I should say. And it’s a very difficult time, the likelihood that you’re probably going to fill this space if I go out of business or leave is pretty low.
Daniel Duty: Not to mention, I’m a client or a tenant that’s been really good. What could we work on together? How might we help each other get through this next period of whether it’s six months or eight months or a year that looks different from the agreements that we’ve negotiated in the past? Because the world has changed, and kind of the terms and what was true that is no longer true, and so we’d love to just, the more you can invite them into cooperate with you to kind of build a joint solution versus coming in and saying, I need a 50% reduction in rent is probably going to be taken by the less or in a much more positive way than you making a demand. And so when you make a demand, or you’re aggressive in your negotiation approach, the other side will back away a bit.
Daniel Duty: They may even feel like you’re pushing them into a corner a bit, and so you want to keep it in a very positive tone when you’re trying to renegotiate some of these things and really address why it makes sense for the person who’s leasing the space to come to different terms, not just give them all the reasons why you think it’s better for you, does that make sense?
Luke Peters: Makes a lot of sense. So come prepared, try to strike a partnership, do your research upfront. What about situations because this can also happen now in the middle of COVID-19 where sometimes there isn’t a way to have a personal back and forth even over a phone. I mean, they’re usually is over phone with sometimes there isn’t. Sometimes you’re writing formal letters. Sometimes attorneys are doing it for you. Sometimes it’s just by email, and I understand you want to seek partnership.
Luke Peters: Let’s think about an example where partnership is difficult. Now this has become a not so good negotiation. How can you put yourself at advantage when it becomes one of those? And I know there’s a lot of ways this could go, it could go from ignoring things to stretching things out to putting in harder offers. Hopefully, that gives you enough to kind of talk about those types of situations.
Daniel Duty: Yeah, I think, the minute you got lawyers involved in the negotiation, you probably are at a more antagonistic state than you are in a cooperative state. So, I think it depends on a lot of things. So, do you have any alternatives? The first thing I think about when I’m preparing for a negotiation is, what are my alternatives? What if I can’t strike a deal with this person? And before going into a negotiation, you want to start to develop and really think through what your alternatives are because if it ends up that your alternative is a better outcome than what you’re trying to negotiate or what you’re able to negotiate, you may want to actually go for one of your alternatives.
Daniel Duty: Nobody ever, quote wins in negotiation because they have a better argument, and lawyers especially like to argue why somebody is right. But there is no right or wrong in this situation. We have a contract probably in place, but that contract is, in some ways, no longer valid because of the changed circumstances. Even if the other side is not willing to meet you cooperatively, I think it’s still important to help them understand why it’s in their best interest to negotiate with you and to educate them on cooperating actually will get us a better outcome than now if we start fighting each other, I go away, I sue you, whatever it is, those alternatives don’t look very good.
Daniel Duty: So always remind them why it’s in their best interest not only to negotiate, but come to a deal that makes sense for them. Like I said earlier, I don’t think any landlord is going to be happy about somebody leaving right now because the ability to replace that tenant is going to be pretty low. And so that’s what gives you some leverage, some power, and we can talk about leverage and power later in the conversation but there are different ways to use both your personal, the way you approach, the voice you use, the tone you use, can go a long way in helping you get where you need to go.
Luke Peters: That’s great, and I’m putting those notes down. So we do get to leverage and power but I think the good takeaways there was, nobody wins by having a better argument. I really like that quote. Hopefully I remember to put that in the show notes. I think that’s a really good one, and I totally agree with it. I sometimes have to tell myself stop trying to convince people of things. People have to kind of come to their own conclusions based on evidence or what other circumstances there are and then you made a good point there is help them understand why your position is a certain way.
Luke Peters: So, it’s definitely really useful and hands on type of information there. But let’s talk to, moving on, and hopefully those tips help the listeners think about COVID-19, and probably a lot of you guys have already jumped on some of these things. But let’s move on to another subject, which is tariffs. Now, what’s really interesting about your bio, Daniel, especially for this audiences that you work with Target. I think they actually stated they wouldn’t take tariffs increases. They ended up taking some for some companies. I mean, tariffs have really put a lot of companies at a disadvantage when they sell to retailers. When they sell direct to consumer, they can raise their price but retailers act like you’re taking their firstborn child, literally and it’s a crazy thing.
Luke Peters: Now, I mean, there’s probably some obvious answers around this but I’m just curious if you think there’s a right approach as far as negotiating a tariff price increase, and I know most of the folks listening here have probably already been through this, right? Because these tariffs came in over a year ago. So we’re kind of looking back in time, but I still think it’s worth learning from maybe, and I’m just curious what your approach might have been, or would be right now?
Daniel Duty: Yeah. I think, I look at all negotiations on a continuum between what I call very collaborative negotiations and what I call very competitive negotiations. And you really only want to use an aggressive competitive approach when two things are true, you have more power, and the relationship is not that important to you. But if those things aren’t true, then we need to take a little bit more of a cooperative or collaborative approach. And I think, first, a supplier has to look at the retailer and say, okay, where do I sit in terms of how they view me? Do they view me as an important relationship? Are my products or services important to them? Do they have alternatives to those things? And if the answer is no, that I am important, then again, I think you can approach the negotiation with a little bit of more kind of oomph behind you and confidence.
Daniel Duty: But if you decide that you’re really not that important to this retailer, now I know every supplier believes they’re important to a retailer, but it’s not always the case. And so they’re going to treat you based on how important you are to them, and so do that assessment first. And then I think it’s very much like we talked about with the COVID-19 discussion, it’s about okay, let’s understand what’s motivating this retailer, what’s important to them, how price sensitive is this product, is there an opportunity to raise prices, what’s happening in the marketplace.
Daniel Duty: What I’m really getting at here is that everything comes down to preparation. And as I said, upfront, the more the more information you have, the more power and leverage you have to drive an outcome that makes sense for both of you. But if you just come in and say, man, this is expensive, you got to take on the cost of this tariff, the retailer’s like, well, I can’t raise prices, so they’re going to push back on you. But how do you bring more leverage and power to the table? How do you bring information that shows, hey, the consumer is willing to pay a higher price, your competitors are charging higher prices?
Daniel Duty: There’s lots of different pieces of information you could bring to the table to help bolster your argument. Now, again, depending on your importance, if you go away, how does that affect the retailer? Now you shouldn’t go into any negotiation with that kind of approach well, I could just walk away and he’d be screwed because you got to be prepared to actually do just that, and I don’t know if a lot of people are. So again, do I have an alternative to this retailer? Maybe, maybe not.
Daniel Duty: So when we think through negotiation, we think about all the information that could help not only bolster our arguments, so to speak, but really show the retailer why this makes sense, why it is in their best interest to do these things.
Luke Peters: That’s a great explanation, and without going into the details, a lot of brands had to go through that in the last year, so they can kind of compare to that point. But I totally agree that sometimes it’s hard to see smaller brands, and we’re dealing with one of these massive retailers as being important. But on the flip side, we are because a lot of these categories we’re in aren’t huge either and they want to be competing with Amazon, and so the brand, we have to know our value and our importance and I think that’s the starting point just like you listed there Daniel. So a good way to start.
Daniel Duty: Absolutely, and you know what I think, for many retailers today it’s so tough in the retail environment, the competition is so tough that having the differentiation that a small provider often brings is very important. So a Procter and Gamble or Unilever may be huge at Walmart or Target or any of these places, and it’s not that Target would walk away from them. But just as important are some of the really tiny niche brands that give it the cachet that it has that really differentiates it from the marketplace, and more and more retailers are looking for ways to differentiate themselves, and they’re not turning to the big brands to do that. They’re turning to much smaller brands to help them really differentiate their offering.
Luke Peters: Now with your experience at Target, and I think this was past tense. Are you able to talk about maybe in broad terms, how brands can be more successful pitching to Target? Is that’s something that we can get into?
Daniel Duty: Yeah, absolutely. Target, as you know has also gone through a lot of changes over the last six, seven years. And so things are a little bit different there today than when I was there. But I’m still very closely connected there and can talk about in a broad way a lot of different things.
Luke Peters: Yeah, so that’d be great. So if someone’s doing, let’s just go to the basics they’re pitching their product, or they having a meeting with an important buyer, what are the things the buyer is thinking about that the brand may not know they’re thinking about it? And what are those key things that may influence that buyers decision? What are they looking for?
Daniel Duty: Yep. So there’s two areas that they’ll probably be thinking about. One is, what is their strategy for that next kind of set of the assortment? What are they trying to drive towards? What are they trying to tell the consumer? What’s the positioning kind of that assortment or that category within the store? And then they’ll probably having some financial goals that have been set by their leadership, and so they’re thinking about how do I get the right product? And especially at a Target, which is very concerned about, does this meet the consumers need?
Daniel Duty: I’d be asking a lot of questions about, do I understand what that strategy is? I may think about the world in one way based on my own experience as a supplier, but the Target people might be thinking about the world very differently based on the strategy or plan that they put together. So if you don’t know in depth, A, what their goals are, what they’re trying to achieve, what their priorities are for a certain category, then you’re automatically going to be at a disadvantage. And just because you’ve done research in the marketplace, that doesn’t always match up exactly with the way Target is going or its strategy.
Daniel Duty: So you’ll want to ask a lot of specific questions. What are your strategies? What is your goal for this year? What’s your priority? What are your plans? Are you thinking of bringing new items in? All of those things that would give you information so that when you return to Target with your pitch, you’d be well prepared to address everything that they’ve told you. And I have watched this happen hundreds and hundreds of times at Target. The vendors that come in and just make a pitch without having done their homework, you’re always putting the buyer to sleep and they don’t really care.
Daniel Duty: But it’s those who talk to their specific needs using many times their specific words that makes the breakthrough, that gets them to the next level because they’re like yes, this is a vendor, this is a supplier that understand me and what I need to achieve.
Luke Peters: Well, that’s great. And you know what’s funny is these, is their like special retailer-buyer training because these guys and girls always seem to not talk. They hide their secrets so well. It’s the funniest thing. I mean, when you ask they’ll obviously tell you what’s important, but it’s amazing how they limit the small talk and are just extremely quiet it seems in there. There must be some class on that. It’s kind of funny.
Daniel Duty: Well, it depends. So now that I’ve been outside of Target working with a number of different retailers across the country, they’re quiet for one of a couple of reasons. One is, they haven’t done their homework, and so they don’t have a whole lot to say or if they’re using it as a negotiation tactic. That’s a tactic that’s kind of old school that was taught, and it’s still being taught by some people to use tricks and tactics in order to get what you want, one of them being silence. But to be honest with you, we have not found that that approach works because at the end of the day, the buyer needs to get their needs satisfied.
Daniel Duty: They’ve got to put product on the shelf that meets their strategic and financial goals, and so if they’re not quiet and they’re not telling their supplier exactly what’s important to them and what they need, they’re not going to get it. In fact, I’ve trained probably thousands of buyers by this point and other business people in negotiation and if you’re not, what I always tell them is they’ll come to me and they’ll say, Daniel, how come the suppliers and the vendors never bring me exactly what I want? And I always ask the first question is, did you tell them what you want?
Luke Peters: That’s funny.
Daniel Duty: And often the answer is, Well, no. This is another of Daniel’s negotiation maxim’s is you don’t get what you don’t ask for. This is why we have to get people talking in negotiation, listening to each other and what’s important to them, and really crafting solutions that meet those needs that both sides have.
Daniel Duty: It’s interesting Target has gotten actually in the opposite direction from the days that I was running the team there, and is using a much more what I would call competitive approach, where they use tricks like silence or things of that nature. But what’s really interesting is I’ve had more CPG companies, retailers, suppliers come to me in the last even just six months and say, the old ways of negotiating aren’t working.
Daniel Duty: We’re not creating the type of value that we want to create, we’re not creating the type of impact of growth. How can we do this differently? And so I’m starting to see more people turn away from most companies out there that are training and more what I would call old ways of doing negotiation and looking for new ways to be more cooperative.
Luke Peters: That is great to hear because there is one digitals online superpower that I think is they really are like that. I mean, silence is like the main strategy, it seems and so yeah, it would be great if, but some companies it seems don’t care enough about partnership. They’re after their own goals and other companies really do care about partnership, and I think it’s going to depend by retailer.
Luke Peters: Let me ask you another question which is related because I know a lot of brands have seen this, a lot of times the buyer will go silent, or the buyer will promise things that don’t come through, I don’t want to give too specific of an example here, but let’s just say someone’s trying to get an in store deal and they haven’t got it yet at a certain retailer, and the buyers telling them it’s a slam dunk, or the PO is going to be coming, but it doesn’t come, right? And they’re still waiting on these things. From your experience is that a buyer playing tricks to try to renegotiate better pricing, or is that often they mean well, it’s just higher ups at the company might be not pushing that PO or not allowing that promise to be fulfilled?
Daniel Duty: Yeah, I would not. In my experience 98% of the time, that would be not be an intentional negotiations to get something different. It would be because, A, they’re just not a good buyer and they’ve made promises and things that they just couldn’t keep or more often they’ve gotten a directive from above them that says we’re changing direction or we now need five more points of margin or whatever the case may be. Shame on the buyer though, that doesn’t at least build a relationship with that potential supplier to say, here’s what’s going on. I said, we were a slam dunk, but some things are changing.
Daniel Duty: Keeping them informed along the way, because you may need that supplier vendor to do something for you in the future, and so burning bridges by not staying in communication and bringing people along, I think is just a failure. And retail’s big, but it’s not so big that people don’t remember who treat them well, who are fair, and who are not. I was pleasantly surprised, gosh, about eight months ago, a guy that sat on the other side of the table from me and one of the biggest negotiations that Target ever did, called me and said, I know you’re no longer with Target, would you be willing to come in and train my team on how to negotiate the way you negotiate?
Daniel Duty: Because he said, it’s so more effective, and it builds a longer term relationship, that I trust the deal more, I’m willing to make compromises where I need to because they know I’m going to get it back as well. And so I think you can do a really short term deal or you can kind of do deal making for the long term, and your reputation will precede you and you come back to the table seeing many of the same people over and over again.
Luke Peters: Yeah, well, let’s hope there’s more of that. Let’s hope there’s more of that in the industry.
Daniel Duty: I think, though that on the other side of the table, you have to realize that a lot of suppliers are just not that important to either that retailer or that buyer, and everybody thinks their business is very important. And especially when you have entrepreneurs, right? Or small family businesses, right? There’s a lot of emotion tied up in that business as well, and so it’s hard when a retailer says, whatever, I don’t care about you. You’re not that important to me. A part of me says, that’s just life. It is what it is.
Daniel Duty: I don’t see foresee a state where every single supplier is treated like a quote partner because to be a true partner takes a lot of time and effort and resources that they’re just not going to spend with every single company.
Luke Peters: And that does totally make sense. I mean, you can imagine some of these buyers are probably being hammered by emails all day long, and so they got to kind of pick and choose.
Daniel Duty: Absolutely.
Luke Peters: Yeah. So I can definitely see that side of it. So, yeah, we have to be honest with ourselves, you’re right, brands have to be honest with themselves and kind of know where their strength is, and that often is the challenge. So this is a tough one. I mean, there’s companies like a Costco, unbelievable company doing unbelievable right now, even with COVID-19.
Daniel Duty: Sure.
Luke Peters: They’ve got really strict buyers in a good way. All their products are amazing, because they have rigid standards. They often need to show an advantage on the product that they decide to bring in, over what is being offered elsewhere in the marketplace, like some sort of price advantage or feature advantage. So a lot of the listeners would want to get into Costco, but it’s difficult, especially if they have a product that’s not super differentiated and they’re selling their products to other retailers, and then they’re going to Costco, but at the same time when they look and I’ve seen this firsthand, their competitors somehow got their products into Costco and they weren’t that differentiated on that product and it doesn’t necessarily show that 20% value.
Luke Peters: So I’m sure product differentiation in quality, I’m speaking for you, I’m guessing, though, but it’s probably the number one thing that the buyer is making their determination on. They need a great product. But there must be some other factors on how more commoditized products are still able to get in to these big membership big box stores, which it’s a little different segment say than other retailers, and curious your thoughts around that?
Daniel Duty: Yeah, I would say at the end of the day, relationships still matter, and where you are able to build a relationship with people, it’s easier for a buyer to do business with somebody that they either already know or have dealt with before, who they trust, who is not going to screw them over by not fulfilling an order or whatever it might be. And so for people that don’t have a relationship with a particular buyer or buyership at a retailer, I’d be thinking a lot about how do I start to build that relationship? Because just kind of send me an email or give me a call and saying, hey, I’m the lead sales guy for X company, I think you should go see our products.
Daniel Duty: Like you said, they get those emails all day long, and so how do you start to build a relationship with a company? I have a company that came to me a couple of months ago wanting to get into Target, and there was no relationship. They tried on their own and just we’re facing a wall. And so sometimes it takes an introduction. Sometimes it takes whatever it is to really start to build that relationship because then we just know humans like doing business better with people they like.
Luke Peters: Makes 100%. We’ve seen it before, obviously. So yeah, that’s a key point. And that’s, I guess why rep groups are going to be valuable maybe in those situations if, yeah, the brand doesn’t have that connection. So we talked about how to use leverage and power a little bit earlier. Do you want to go kind of deeper into that and tell us your thoughts and philosophy on that?
Daniel Duty: Sure. So there’s three sources, three main sources of power. And when I use the term power, I don’t mean that in a bad way, in that I’m going to use it to knock somebody out on the other side, but it just gives you by recognizing your own power, and by others recognizing that power in you, it builds a level of confidence. And what we know is that confident negotiators almost always get what they need, and so I’m always thinking about with the people I’m coaching is, how do I build their confidence? Or how do I portray to the other side that I’m confident not in a cocky way, but that I know what I’m talking about and I exude some trust like this is the guy I want to do business with?
Daniel Duty: And so the first source of power is what we call personal power. This is simply the way you carry yourself in a room. How do you look? How are you dressed? It also means how are you talking? Are you using that positive engagement type of voice? Are you also manipulating your voice when things aren’t going very well? I get very quiet. I slow down when I’m not on the same page as the other side, and they see that and they recognize that. And so you can give people clues by the way, you use your voice, by painting a picture and the storytelling that you do with the words that you do.
Daniel Duty: So personal power is one way to gain both competence and leverage in negotiation. One thing I’ll say about power is that it’s purely perceptual. There’s nobody that truly has more power than somebody else, or are you perceived to have power? The second is what we call referential power. This is because you’re associated with someone or somebody. So a lot of times what we would do with the buyers is they may be new, and they’re dealing with a salesperson who’s been representing a company for 20 years, who knows all the background and the detail, it will bring that buyers boss, senior buyer or divisional or vice president in at the beginning of the negotiation to say, I putting all my trust into this buyer, they have all the authority to make decisions, and I will be happy with whatever the outcome may be. And so with that kind of does is that it transfer the power of the vice president down to the buyer and the other side sees that directly happening, and psychologically, all of a sudden that buyer has a lot more power than they may have had before.
Daniel Duty: The other form of power is what we call jumping power, which is really having alternatives. There’s nothing that gives you more power and leverage than having alternatives. But we don’t always want to use our own alternatives or we’ve been negotiating with them. But at a minimum understanding what they are really gives you a lot of power and leverage. So I was negotiating on behalf of Target to get Starbucks in all of the stores. And Starbucks like Target believes it’s the greatest brand on earth, and so getting those two egos to negotiate with each other was tough. But we did a lot of homework to take a look at who could the alternatives being. And quite frankly, there wasn’t a great alternative because all the other players are more regional, but we could do it.
Daniel Duty: We’d actually probably get a better deal if we did it, but we thought Starbucks was the important deal. But the confidence level and the ability to push an agreement that really worked for Target and the buyers that were negotiating that deal worked because they really understood what their alternatives are if they were not able to get a deal with Starbucks. So again, power is perceptual but you can enhance it through your own personal power, by who surrounds you, who you’re associated with, maybe that’s a person or a brand, or a company, and then what are your alternatives? That would be your third source of power in any negotiation.
Luke Peters: Well, thanks for that, Daniel. I mean, the quote I got out of that one was that confident negotiators get what they need, and it’s just amazing how in life literally, confidence is that valuable and people can be so smart but then that kind of goes back to your other quote, which is something along the lines of, nobody wins by having a better argument and those two kind of go together because having confidence don’t necessarily need to have the best argument but that confidence just does something special, it works the magic. So I thought that was really interesting talking about personal, the referential and the jumping power. [inaudible 00:34:55], so-
Daniel Duty: And the reason that arguments don’t work in negotiation is because while you’re giving me everything reason why I should buy your service or your product, and I’m giving you every reason why I should do something different. We’re both sitting there not even listening to the other side because nobody cares about your arguments. Nobody cares about reasons, and negotiation, what people care about is, are their needs and priorities getting met? And so that’s how we have to address things in negotiation, and you’re going to get into that retailer not by arguing that your product is the best, but by showing how it meets Target’s or Costco’s needs and priorities.
Luke Peters: … Well said, and for entrepreneurs out there right now who a lot of them are probably decent negotiators, somehow they got there are heads of sales, they’re probably decent negotiators but they don’t always have a platform. We like to wing things, how can they improve? I’m sure, this sounds like this is what you do as a business and I’m I right about that? Are you helping entrepreneurs? Are you helping retailers grow their teams of the buyers? Or where do you plug in? But then separately, how can entrepreneurs become better negotiators themselves?
Daniel Duty: Yeah, so our firm is about helping organizations, businesses, large and small, create more value and impact. In other words, what we try to do is to help them grow in the top line and grow the bottom line. And so at the bottom line, obviously, you’ve got negotiations, or quite frankly, that could drive your top line sales as well if you’re trying to get in somewhere. But how do we use the negotiation approach that actually works for that particular situation?
Daniel Duty: There is no one size fits all. So what works with Target versus so and so, and our business is centered around helping people understand and make choices about the way they negotiate with somebody. The second piece, which is more top line oriented is strategic partnerships, because strategic partnerships done right create way outsized value from just a transactional relationship. And so we’ve been collecting data for years, and what it shows is that if I engage you in a transactional negotiation, we may walk away with an okay deal and both sides are happy. But where I engage you as a partner or where I cooperate with you, where I share more information, the results in sales and profitability, almost always double, triple or quadruple. And so we spend a lot of time with people thinking about how could a partnership work, when it’s a partnership, not with everybody, but we have very specific company. And so as entrepreneurs, I think if you really want to learn how to negotiate, I mean, there’s lots of people out there teaching negotiation.
Daniel Duty: What I would be concerned about is the ones that are probably the most popular that you see a lot are the ones that are teaching kind of an old school style of negotiation, and the other thing is, they won’t necessarily be negotiators themselves or be trainers. And so I would look for people that can really kind of be behind you or next to you or whispering in your ear, who are thoughtful in negotiation that can continue to help you see the bigger picture to remind you that this isn’t about arguments, that it is about meeting each other’s needs.
Daniel Duty: I often refer to ourselves as negotiation coaches, just like every good athlete, who’s a great athlete on their own on still uses a coach to help them kind of go through the negotiations, to be their eyes and their ears, to see and hear things they may or may not see, and I would encourage entrepreneurs to find that coach, who is the coach that’s going to help them get to the next level? I don’t know if that answers your question.
Luke Peters: It definitely did. It definitely did. We’ll have to do a second episode down the road on partnerships. I think there’s a lot in there and I couldn’t agree more.
Daniel Duty: Absolutely.
Luke Peters: And it’s something that I’m actively working on right now but, yeah.
Daniel Duty: Very good.
Luke Peters: We could talk about that offline. That’s great. So listen, I want to thank you, Daniel, for taking the time out today, and I think it’s been a great episode. I’ll definitely replay this one and add to my notes here, and I hope the listeners got a lot of value. How can listeners get a hold of you? How can they find more about you?
Daniel Duty: Two ways. They can simply email me, firstname.lastname@example.org, or just go to the website, which is going to be completely redone soon, but you can still contact us through that website as well at www.conlego.com.
Luke Peters: Great and we’ll have this in the show notes for listeners, Conlego is C-O-N-L-E-G-O. Again, we’ll have that in the show notes for everybody to see. Listen, thanks again. Daniel. Also want to thank you the listeners for joining us on this episode of the Page 1 Podcast sponsored by Retail Band. Hope you’ve enjoyed this interview today. Truly, truly appreciate your reviews on iTunes and hope you join us for the next interview. Take care.
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Episode References: Conlego