Give someone enough rope to hang themselves.
That’s kind of morbid but as you shall see highly relevant.
Long drawn out pauses are awkward, they make people uncomfortable and they get nervous. The natural response to them is to fill them. They start to speak without thinking first.
In doing so they’re more likely to make a mistake, to give away more than they intended to because they’re nervous, and they want to end the silence. It applies to negotiations as much as it does in any conversation between two people who don’t really know each other. Even the most experienced founders in the moment can be caught out.
On the other side if you’re not talking you’re not giving anything away, you’re not making a mistake that they can take advantage of.
By being quiet you’re showing confidence and you reduce the chance of negotiating with yourself.
What does that mean in practise? Take price for example – a common mistake we see is people talk about price and they keep talking and then they make the mistake of saying “Yeah, obviously we’re willing to discuss that, we can make a special deal”.
Because the other side was quiet and you felt the need to keep talking you made an offhand remark about discussing price which basically means lowering the price. That means eating into your margin.
They didn’t ask about lowering the price but in your nervousness and your need to fill the pause you gave it away.
Look it’s difficult to resist. A lot of founders in the early days they don’t yet know their worth and its easy to chew down what you’re offering just so you can get those first few sales. We know this from our own experiences but we learned, we adapted and got better results.
Way back in the very early days we produced bespoke software to help fund the development of our CRM product, RealtimeCRM.
We went to a meeting with this client who we were not happy with, it was the old story of scope creep. They were asking for more and more and it was costing us an arm and a leg.
We built a system that was critical to their business.
We went into that meeting knowing this and it helped that we were pissed off because in the past we would have just gone on and on about how much pain we were in and thus showing how weak our hand was.
Instead, we went into the meeting and we said “Look this isn’t working for us, the scope on this project has ballooned way beyond the original spec doc and we’re not being compensated properly to make it worthwhile. We’re considering leaving this arrangement”.
And then we shut our mouths.
They started talking about the fact there had been delays, and all these things had to be done.
We were silent.
They moaned more and more about the money they spent.
We were silent.
After a while they stopped moaning but kept talking.
The Director on the other side was getting nervous and he admitted maybe some of the delays were due to them expanding the scope.
He then talked about wanting to improve the relationship, that the system was critical to them that he wanted to maintain the relationship.
By the end of this we walked out of that meeting with a renegotiated deal, no more fixed price but instead we were paid on hours worked and we turned a project that was a black hole into a giant money spinner.
They got what they wanted, the increased feature set they desired and most importantly our commitment. We got more than we had hoped – a six figure project that completely checked the scope creep that had eaten away our bottom line.
Sometimes the best tactic in any negotiation of to shut your mouth and let the other guy do the talking. It helps move the information assymetry to a more favourable place for you i.e. you learn more about the person you’re negotiating with without giving away too much about yourself for them to exploit.
You can then decide what to do and what to say off the back of the new information you’ve received. That’s smart negotiation. Being foolhardy and winging it is both dumb and reckless.
On one of our projects we were in the red by $50k. We were quickly burning through our reserves and we had to renegotiate several projects that were heading south due to scope creep.
We were young, stupid and desperate to get money in so made bad deals.
This meant we had to grind it out in later renegotiations to make sure we were in the black and stayed that way. That’s why RealtimeCRM exists today because we did it.
But boy did we do it the hard way. Don’t make the bad deals in the first place like we did. Make sure you know what your red lines are and where to say no and walk away from a sales negotiation.
Take the walls down
Everyone has their walls up.
It’s a protection thing. When you and the prospect go into that sales meeting neither one of you wants to get burned. You don’t know each other and so don’t really trust each other. At least not yet.
Silence is a great tool to make someone uncomfortable but if you make the prospect uncomfortable all the time they’re not going to want to be around you at all.
The best way to get the prospect to take their guard down is by being honest and authentic.
There’s no magic formula here. If you come across as shifty and untrustworthy you’ll lose out big time.
How to be authentic?
A better way to answer this is to look at the opposite, how to avoid being inauthentic.
Let’s say the prospect is asking you a bunch of questions and you don’t know the answer to one of them.
Do not make up an answer that you cannot confirm is true. What is worse than not knowing something? Lying about it.
You will get caught out and then any credibility you had will be shot and you will be marked as someone not to trust.
There is absolutely nothing wrong with saying “Look I don’t know the answer to that but I will make a note of it and get back to you when I’ve spoken to one of our experts”.
No one expects the Spanish inquisition and no one expects you to know everything. As long as you demonstrate a willingness to find out the answer in most cases you’ll be OK.
Own up to your mistakes
Leave your ego at the door.
If you misspoke and said something incorrect then own up to it as quickly as possible.
Don’t say anything to get the deal across the finish line because it will bite you in the ass soon enough.
Let’s take a simple example, if one of our sales reps promised some feature was going to be in RealtimeCRM imminently and the prospect signed up expecting it soon.
They then start asking our product development team when this feature will go live but they’ll get the response it isn’t in our product roadmap for some time.
That prospect is going to be really annoyed. They’re going to feel like they were lied to and they can obviously share that feeling with anyone they want.
If you make a mistake tell them as soon as possible because they will eventually find out and it’s better they get it from you than from someone else.
Even if they’re disappointed that’s a lot better than marking you as untrustworthy.
Be disarmingly honest
What do I mean by this?
Sometimes you’re going to get prospects who are cagey. They just won’t give you the answers you need.
“How many people are in your team?”
“Do you use a lot of cold email or cold calls to drive sales?”
“It’s a mix”
Painful, just painful.
The way to deal with these kinds of prospects is to just be honest that you’re struggling.
“Hey, I really want to get the right solution for you but these answers aren’t quite giving me enough. Is there something I can do better, can you help me out here?”
In most cases they are going to feel really bad. It’s a gut reaction to not be rude. They’re going to want to placate you by saying it’s them not you.
They might even admit why they’re so sullen. They could be having a bad day but whatever it is you’ve pointed to the elephant in the room and really broke the ice.
You’re then going to be able to get better answers from a more agreeable prospect.
At the end of the day we’re all human and most of us don’t want to be jackasses.
It isn’t all business.
Which is good because that would be incredibly boring.
Actually, we know a guy who is like that. We call him the most exciting man in the world – that won’t mean anything to you, that’s more for the team at RealtimeCRM, they know.
But back to the point there’s going to be a lot of back and forth. There will be many meetings and therefore lots of downtime before and after those sales meetings and sales calls.
If your prospect hates the Patriots and you hate the Patriots then hate the Patriots together. It’ll be a bonding experience.
It’s not a frivolous exercise, if somebody likes you then they’re more willing to be agreeable.
If there’s two great deals on the table. If they like working with you more than the other guy then guess who’s getting the deal?
Not the guy who loves the Patriots that’s for sure.