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5 Ingredients for Profitable Deal Negotiations
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LINDA MONROE
5 Ingredients for Profitable Deal Negotiations
The New Reality of B2B Negotiations
Data is more available than ever before
B2B buyers are more informed and sophisticated
B2B sellers have access to more information
Spreadsheets can’t satisfy deal velocity and collaboration needs
At Analog Devices
We manufacture and market high- performance digital signal processing integrated circuits
At Analog Devices
We serve tens of thousands of customers across industries with thousands of applications
We were spreadsheet junkies for all deal negotiations
• Data Analysis• Price Approvals• Sharepoint sites• Con-calls • e-mails
5 Ingredients for Profitable Deal Negotiations
1. Team2. Profit Advocate3. Strategy4. Data5. Metrics
Successful Sales Conversation Require ALL The Ingredients
►A well prepared negotiation team With the right people
►A profit advocate Collaborates across groups and makes the final decision
►A clear strategy for discounts Maximum discount % for the whole deal Pre-negotiated deal with a range of prices
►Data that shows a 360 degree view Let’s stop fooling ourselves by looking at one data point and
thinking everything is good.
►Metrics To measure the success of the deal
Ingredient #1 - The Empowered Negotiation Team
Sales Rep
Deal Desk
Inside Sales
Profit Advocate
Ingredient #2 - The Profit Advocate
Represents the multiple business units interests for deals with many components
Has final pricing authority and is accountable to overall profit/revenue goals
Works with sales to consider the big picture of price decisions
Ingredient # 3 – The Negotiation Strategy
What’s on the table?
How much is that worth to us?
What is the most we will offer for that?
Does the profit advocate agree?
A Specific Max Discount is Set
No conditions
met
Some conditions
met
All conditions
met
X% Y% Z%
Ingredient #4 – Data
We take our deal through a pre-approval process. The deal gets approved through workflow but stays in a limbo status until agreed to with the
customer.
Line item workflow enables those with expertise on individual products to speak into the price decision.
All team members see the data.
We get our data by loading a DRAFT Contract Document
Vendavo Analytics
Data Analytics
Line Item Scorecard
The Analysis is Handled through a Robust Process
Stage 2 : Get Pre-Approvals
Stage 3 : Finalize the deal
Seller engaged Deal Desk Deal Desk created “in process” deal Evaluate deal with Vendavo analytics
Call to review pricing strategy First pass and walkaway prices for approval
Deal draws workflows for approvals
Seller anticipate price discount conversation
Deal becomes approved but not exported to ent. system
Negotiation team goes into sales conversation to close
Customer doesn’t agree
Customer agree
Pricing Desk
receives deal with existing prices
Agreed prices
received and
entered into sys
Stage 1 : Evaluate the RFQ
Ingredient #5 - Deal Metrics
Discount – Revenue Break Even Analysis
Total Potential Revenue
Total Potential Profit Dollars
Pocket Margin
Discount % from previous
Historic Compliance
Conclusion
►Preparing for sales conversations on pricing is critical.
►Spreadsheet processes are better than nothing, but are not optimal.
►Having a defined process enables you to maximize profit.
►A framework for an optimized process includes:
The right team A profit advocate A negotiation strategy Data Metrics
Does it work?
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