Last week we completed our final session in our webinar series “Negotiating with Stakeholders: Turning a potential ‘no’ into a definite ‘yes’”. As with the last two sessions Jeannette Nyden has taken the time to answer/respond to questions that came up during the webinar. They are all listed below. In case you missed the webinar, a replay is available.
Q: Does value have to be either or – either decreasing costs or increasing benefits? I can see doing both.
Jeanette: Great question. Not. It does not have to be either or. And, in many circumstances, there can be multiple forms of value, especially in more complex customer/supplier relationships. I suggest that to start, look at one form of value, put some dollars to it and make a solid case. If you are completely comfortable with that form of value, look to other forms. I just don’t want the proof (dollar formula) to become so complicated that people can still say “no” to your deal. I’d like it to be simple and clean for an easy yes.
Q: You said something about total cost of ownership. What is that and how is that relevant to what you were talking about?
Jeanette: Total cost of ownership is a way that businesses establish the total cost of something—not the price of the product or service quoted from the provider, but the cost to the company as a whole. Historically, it was first used to understand the total cost of a capital purchase, such as a big machine.
The concept is important in discussing value because there are often hidden costs with any purchase and delivery of a product or service. To the best of your ability, you want transparency into all costs associated with a purchase, not just the price of the product or service that you are buying. That means digging into the numbers on the buy side of the deal, not just the sell side. If you can identify an internal (buy side) cost that the supplier can help reduce or eliminate with its product or service, then you’ve reduced the total cost of ownership for the buying company for that product or service.
Q: I am new to my contracting role. Where do I start talking about value? My boss or the supplier?
Jeanette: This is great question and I’ll have to go lawyer on you – It depends. I know. Not what you want to hear. If you’ve not done your stakeholder analysis, then do that first. Look at the tools from session #1 and listen to the recording. Once you’ve done the stakeholder analysis, ask yourself, “Who would be the most open to this conversation?” Don’t worry about the role or title, just look for openness. Then do the same for the supplier. Who is best able to support you to get you information so make the case? Then build your case and test it out on the people who are most open to having the discussion. Then you are ready to go to the primary decision maker with a value conversation. Make sense?
Thank you so much for attending the webinar series. Best of luck negotiating value!