If you decided to click and read more, you might be expecting a humorous and facetious blog post. But the reality is, I am being dead serious. We can learn a lot from the Yukon Gold Miners. Stick with me as I share a this short story. As sales professionals, we often see the defining moment of a deal cycle as the negotiation of terms. Whether you embrace it or fear it, this sales negotiation can have a lasting impact on the success of your “to be determined” partnership.
Last week, I was unwinding after a whirlwind trip in Boston at Inbound16 and catching up on one of my favorite shows, Gold Rush. (Short side bar, what an incredible conference HubSpot put on. Great company, great city and great attendees.) Back to the very timely topic at hand - sales negotiation tips to close in deals Q4 like a Yukon Gold Miner. In this particular episode, young mine boss, Parker, was attempting to renegotiate the terms of his lease agreement with Yukon legend Tony.
This is probably a good opportunity to provide a few important background details:
- Parker has leased two plots of land from Tony but is currently only mining on one of those plots
- Parker has been leasing from Tony for the past three years
- The current lease increases royalties Parker owes Tony from 15 percent to 25 percent when production reached 3,000 ounces of gold.
- Last year, Parker produced 3,000 ounces of gold from one plot of land
- Tony expects Parker to increase production YOY
- Parker slimmed down his crew to be more efficient and equal last year’s production, not increase it.
- The past two seasons, Parker has tried to renegotiate terms with Tony.
Now that you’re up to speed, let's dig into last week’s episode and discuss how it relates to sales. Parker was heading in for his first meeting (think one-on-one) of the new mining season with Tony. The agenda: Discuss this year’s goals and negotiate the lease terms.
He drove his Ford Raptor onto Tony's claim and entered the office, full of hope. After a few pleasantries the two get down to business. As Parker began to outline his season’s plan immediately began to Tony challenge them. Parker expressed willingness to increase his goals in exchange for more favorable lease terms. In typical Tony-fashion -- direct, abrasive but practical, he scoffed, "A deal’s a deal, Parker." The conversation was short and both walked away dissatisfied.
As had happened in each of the last 2 seasons, Parker’s attempt was unsuccessful. Despite the opportunity and the mutual desire to find more gold, the two were unable to find a solution. “Worth a try,” said a dejected Parker as he traipsed back to his truck.
Does this sound familiar to any of your sales cycles? You’ve gained alignment around a common goal or interest yet you're unable to solidify partnership?
How often do you get a deal here and then plummet on sales negotiation?
Everything is buttoned up, except the final price. Inevitably, in a sales negotiation like Parker and Tony’s, there will always be a winner and loser. One side gives up something, and the exchange creates an imbalance in the relationship. This asymmetry opens the door to resentment and leads to a lack of trust. Not exactly where you want to be after you’ve worked weeks or even months to build confidence, earn trust and outline business impact.
So how do you avoid a sales negotiation ending in a winner and a loser?
Develop a framework around interests, options and legitimacy. Use this framework to create an outcome that increases the overall value as opposed to focusing on how you “share” the current value. It’s surprising how often opportunity exists to “grow the pie.”
Let’s spend a bit of time looking at each element in this sales negotiation structure:
- Interests: Take out a piece of paper and draw two columns. In the first, write out what your prospect needs out of the deal to make your product or service a success. Then, in the second column, dissect what’d make the deal a win on your end. What are the common threads?
- Options: Think differently! Explore a solution for each interest on the list. Create the options first, and evaluate them after. List out all the options that could lead to success. Leave out nothing. After all of the possible options have been listed, go over each and figure out if they’re really solving the problem for both of you.
- Legitimacy: Take yourself out of the situation as best as you can, and look at the options at hand. Are they fair to your prospect? How about to you? Can you prove the legitimacy of the option? Figure out acceptable standards of fairness and talk about them to reach an equally beneficial resolution.
Looks simple here, right? But anytime you have high stakes and emotions to manage, things get challenging.
Let’s take a look back to our friends Parker and Tony. As Parker was pulling away, Tony ran out of his make-shift office and did something unexpected - he proposed a solution. He set aside his emotional, ego-driven “need to win,” and instead focused on creating more value. In his proposal, he looked for a way to increase the value of the pair’s relationship without restructuring the lease agreement. He focused on their mutual interests, not finding a "balance.” Let's look at those interests:
- Parker wants to mine more than 3,000 ounces.
- Tony wants Parker to mine more than 3,000 ounces.
Tony did what we should be doing as sales professionals.
He found a solution that was right under his nose that met their mutual interests while maintaining the integrity of the lease agreement. What did he offer? And how did this result in a superior partnership?
- He offered Parker to opportunity start a second operation, using a different crew, different equipment and separate royalty structure on the second plot of land Parker had previously leased but was not currently working.
- In doing so, he allowed Parker to mine gold at 15 percent from the two separate operations instead of aggregating it and forcing the increased royalty.
The result is what we all strive for in our professional relationships. Collaboration that increased the overall value of the partnership. Isn’t that what partnership is all about anyway? Generating additional value than you could alone.
- Tony is now going to get 15 percent on 4,000 ounces, or an incremental $180k
- Parker get's to mine an additional 1,000 ounces worth roughly $1.2million
It’s amazing what two miners, one at age 19 and the other at 56 - living thousands of miles away from a major business hub, can accomplish.
Will every deal work out like Tony and Parker’s? Probably not. It takes a willingness to adjust personal perspective, from both sides. It took Parker and Tony three years to find this working relationship. As sales professionals, most of us don’t have three years to get it right with monthly, quarterly and annual quotas.
But when it does work out, when you experience this rare and beautiful kind of mutual sales negotiation, deals can become truly precious to your organization. Negotiating with a goal of deriving a higher value and then using a framework of joint interests to develop your options will end in better partnerships and bigger deals.
Have a healthy and successful quarter!