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1、simon-The Big Deal BlueprintA practical guide to nailing high stake negotiationsContentsExecutive Summary 3Why a negotiation strategy is essential 4 The 10-step framework for successful B2B negotiations 5The path forward to bigger,better deals 133Executive SummaryLanding large,lucrative B2B deals ca

2、lls for fresh negotiation strategiesnew data to work with,defined objectives,plenty of preparation.Our recent Global Commercial Trends Study1 shows that organizations are modernizing their sales processes and commercial operations to address challenges and future-proof business strategies.Yet,when i

3、t comes to big deals,most commercial leaders spend only a few hours preparing their negotiations,despite the significant revenue at stake.In this whitepaper,we will discuss the major pitfalls when preparing for high-value deals and outline a 10-step framework to win big deal negotiations.From our ex

4、perience in over 500 sales effectiveness projects,weve observed substantial outcomes:an average of 10 percent revenue growth in the first year and over 75 basis points in gross profit improvements.Our best-practice framework can ensure that organizations that implement these strategies can confident

5、ly navigate high-stakes deals,secure volume profitably,strengthen client relationships,and ensure sustainable growth.1.Facing a new commercial reality.Commercial trends study 2024(January 2024)https:/www.simon- An average of 10 percent revenue growth in the first year and over 75 basis points in gro

6、ss profit improvements.THE BIG DEAL BLUEPRINT:A PRACTICAL GUIDE TO NAILING HIGH STAKE NEGOTIATIONSWhy a negotiation strategy is essentialToday businesses face increasing pressure to secure favorable agreements that balance profitability with long-term partnership potential.In B2B settings,negotiatio

7、n is not merely a transactional skill.Its a strategic lever that can determine a companys ability to thrive amid competitive tensions tensions,fluctuating commodity prices,and unpredictable regulatory changes,all of which contribute to eco-nomic uncertainty.Despite these challenges,many seasoned pro

8、fes-sionals fall into common pitfalls:relying on outdated data-or worse,assuming there is no data that can be collected scrambling with minimal preparation only days before a negotiation,and lacking confi-dence due to a skewed view of the power balance.Companies that prioritize big deal negotiation

9、ex-cellencegrounded in a current fact base,thorough planning,and a realistic understanding of leverageare better positioned to capture value,differentiate themselves,and build sustainable client relation-ships.By equipping sales teams with robust negotiation frameworks,businesses can move beyond bas

10、ic pricing discussions to emphasize value,tailor solu-tions,and foster trust with clients.Effective negotia-tion strategies enable companies to make informed concessions,leverage competitive advantages,and transform potential risks into opportunities for growth.The best practice B2B sales negotiatio

11、n preparation process follows a 10-step approach divided into three stage gates:1.Develop the fact base2.Set the target3.Prepare the negotiation4Many seasoned professionals fall into common pitfalls:relying on outdated data-or worse,assuming there is no data that can be collected scrambling with min

12、imal preparation only days before a negotiation,and lacking confidence due to a skewed view of the power balance.5Stage gatesSub-questionsDevelop the fact base What is the starting point for the(re)negotiation?1What is the fact base of this case?What do current financials and contract terms look lik

13、e?2What are our competitive advantages and how is the balance of power between us and our counterpart?Set the target What are our ambitions for the(re)negotiation?3What are our strategic beliefs regarding the deal that we will hold on to?4What is our going-in proposal,target outcome,and walk-away sc

14、enario?5What are negotiation chips we can deploy during our negotiation?Prepare the negotiation How will we approach the(re)negotiation?6How can we leverage important benchmarks and best practices in negotiating contracts?7What does the process look like and how should we approach first contact mome

15、nt?8What is the storyline for the first meeting and how do we deliver our going-in proposal?9When do we apply concessions to ensure we progress the negotiation,without giving away too much value?10How do we prepare for different scenarios and objections based on reactions from the counterpart?The 10

16、-step framework for successful B2B negotiationsDevelop the fact baseMany companies enter negotiations without fully understanding the details that drive value in their deals.Often,they underestimate the importance of a comprehensive fact base,which provides essential insights and context.Building th

17、is foundation allows negotiators to approach discussions with confidence and clarity,increasing the likelihood of reaching favorable outcomes.Developing the fact base involves taking a close look at key elements:current financials,competitive advantages,and the balance of power in the negotiation.St

18、ep 1.Identify the fact base for this negotiationThe first step in any successful negotiation is to build a comprehensive fact base.This involves analyzing all relevant financial metrics,such as contribution margin,net revenue or EBITDA,contract terms,and historical data from past agreements.It is ke

19、y to go a few levels deeper than usual:look into specific product performance to pinpoint where the partner-ship can improve.Moreover,dont be satisfied with just internal data.Benchmark your performance versus market trends and category growth,through research reports or even expert interviews.A sol

20、id Comprehensive and structured timeline is a key when preparing for negotiations THE BIG DEAL BLUEPRINT:A PRACTICAL GUIDE TO NAILING HIGH STAKE NEGOTIATIONSunderstanding of these elements provides a founda-tion for strategic decision-making throughout the negotiation process and allows sales profes

21、sionals to enter discussions well-prepared with data-driven insights.Step 2.Assess competitive advantages and power balance Sales teams should be equipped with insights that showcase the specific value our offerings bring to customers,moving the discussion beyond price alone.Additionally,evaluating

22、the balance of power in the relationship helps sales teams determine where they hold leverage and where flexibility may be needed.Sales professionals often only consider the power balance implicitly,which leads to underestimating their own strengths or overestimating those of their counterpart.Expli

23、citly assessing the balance of power with a broader team allows for an objective view.Negotiators can set realistic expectations,leverage strengths effectively,and identify where to assert influence by scoring each deal on importance,market competition,product differentiation,history of bargaining,a

24、nd relationship strength.Customer perspectiveYour perspectiveMargin/attractiveness current deal Current margins are above the target margin of 25%for the majority of products(profit pool analysis)Margins of the customer are low for both key SKUs;contract is not profitable at the bottom-linePower bal

25、anceNumber of available alternatives Available capacity at competitors believed to be limited May need to source from multiple suppliers due to high volumes/low capacity in the market You believe you could fill the customers lost capacity within 2 years due to a growing market with high demandPower

26、balanceCustomerYouNeutralCustomerYouNeutralAttractiveness of alternatives Alternatives may have lower logistic reliability due to reliance on single factory Alternative suppliers have poorer logistic reliability due to reliance on single factory You have analyzed that you are likely to use freed-up

27、capacity of the customer in a more profitable wayPower balanceCustomerYouNeutral Understand competitive dynamics and the balance of power6THE BIG DEAL BLUEPRINT:A PRACTICAL GUIDE TO NAILING HIGH STAKE NEGOTIATIONS7Key takeaways:A well-developed fact base enables negotiators to make informed decision

28、s,capitalize on unique strengths,and approach discussions with confidence,laying a solid foundation for success in B2B negotiations.Set the targetMany companies also approach negotiations with only a vague idea of what they hope to achieve or measure success across a single metric,e.g.,%gross margin

29、.Without clearly defined objectives,its easy to lose focus or compromise on critical outcomes.Setting a precise target across multiple scenarios provides direction.This phase requires defining strategic goals,determining ideal and acceptable outcomes,and preparing potential concessionsall key steps

30、to staying on course during negotiations.Step 3.Define strategic beliefs for the dealEstablishing clear negotiation objectives upfront is crucial for success.These overarching objectives might include securing specific price levels,contract conditions,or expanding into new portfolios and categories,

31、or forming strategic partnerships on adjacent business areas,for example increased data sharing.Alongside these primary goals,its essential to set strategic boundaries around details,namely pricing moves,products listings,margins,and contract terms.By defining both high-level objectives and specific

32、 boundaries early on,the team can clarify which elements are non-negotiable and where flexibility exists.This alignment streamlines internal decision-making and ensures consistency throughout the negotiation process.Step 4.Set your going-in,target outcome,and walk-away scenarioAn effective negotiati

33、on strategy includes a well-defined proposal,a target outcome,and a clear walk-away point.These elements provide structure,allowing negotiators to manage expectations and stay focused.The target outcome represents the ideal agreement,while the walk-away scenario sets a baseline below which you would

34、 actually prefer to exit the negotiation.From these scenarios,you will need to develop a going-in,which should give you enough buffer to negotiate down to the target scenario.The going-in is the most important scenario,as it is guaranteed to reach your counterpart.Optimally,these scenarios contain o

35、utcomes on all elements that will impact your deal:price levels across different product(groups),payment terms,category entry plans,supply guarantees,and so forth.For every element,youll need to simulate the projected financial impact on your business.Customer perspectiveYour perspectiveImpact when

36、contract ends(switching costs)Requires new negotiations,additional quality and spec checks,which typically takes 3-4 months Has a significant impact on plant utilization and therefore have consequences for factory assets and personnel May require writing off remaining material allocated for the cust

37、omerPower balanceCustomerYouNeutralTHE BIG DEAL BLUEPRINT:A PRACTICAL GUIDE TO NAILING HIGH STAKE NEGOTIATIONS78Case study 8THE BIG DEAL BLUEPRINT:A PRACTICAL GUIDE TO NAILING HIGH STAKE NEGOTIATIONSSituation:A large processor of ingredients for food and pet food products,was entering into a negotia

38、tion with its primary buyer of byproducts.Having neglected this area of the business for years,the power balance was skewed in favor of the buyer.The processor had a limited understanding of the market value of its byproducts and had not invested in building relationships with alternative buyers.Giv

39、en the typical contract length of 3-5 years,the COO and CCO needed to maximize the value from this negotiation.Approach:The processor dedicated a full month to understanding the value of its products,mapping out all potential applications,and gathering data on price and volume potential through thir

40、d-party market experts.This data was then triangulated and compared to the current price performance offered by the buyer.Additionally,it hired an expert in byproduct processing to significantly enhance its industry knowledge.Armed with an improved fact base,they reassessed the power balance.To redu

41、ce its dependency on a single buyer,it initiated preliminary conversations with alternative buyers to create a viable walk-away option.We worked with the processor to develop various negotiation scenarios,from the initial offer to a walk-away plan.Anticipating that negotiations would be challenging,

42、we helped establish a comprehensive timeline,beginning negotiations three months before the contracts expiration to allow for multiple rounds of discussion.In this new negotiation process,preliminary discussions focused on sharing insights and setting a vision,ensuring the buyer recognized the shift

43、 in the power dynamic before any demands were made.Only in the second conversation was the initial offer scenario presented.Over several rounds,negotiation chips were exchanged,and scenarios re-evaluated.Result:Ultimately,our client signed a new contract,achieving an initial 10 percent improvement i

44、n contract value,which translated to over$10 million in added value.9Step 5.Determine negotiation chipsNegotiation chips,or valuable“give-and-take”concessions,are often essential to reaching a mutually beneficial agreement.Effective planning and prioritization of these concessions ensure they are ap

45、plied strategically throughout the negotiation.Using a concession matrix helps categorize these chips by importance and timing,considering factors such as product aspects,contract duration,packaging charges,and services.This approach enables negotiators to build goodwill without sacrificing critical

46、 deal points and to maximize the value of each concession.The biggest pitfall?Focusing solely on price,even if you believe that is all your counterpart cares about.To implement this effectively,start with smaller sacrificesconcessions that build goodwill with minimal impact to you,even if they arent

47、 fully accepted by the counterpart.These smaller concessions establish a cooperative tone early on.Next,introduce bargaining chips,which hold limited value for you but are significant to the counterpart,allowing for valuable exchanges.Toward the final stages,offer battlefield concessions that should

48、 be used only when meaningful counter-concessions are provided by the counterpart.These concessions are likely to be accepted,leaving room for further adjustments if needed.Finally,walk-away concessionsreserved as a last resortsignal readiness to exit the negotiation if necessary.Having a well-defin

49、ed concession strategy from the start ensures the sales team remains aligned and prepared to adapt as discussions progress.Key takeaways:Setting clear objectives,defining strategic outcomes,and prioritizing concessions empowers negotiation teams to stay focused on critical goals and navigate discuss

50、ions effectively.Prepare the negotiationEven with clear objectives and a well-defined fact base,many businesses falter by not planning the approach to negotiation thoroughly.Effective preparation is essential for navigating complex discussions and steering them toward favorable outcomes.By preparing

51、 key benchmarks,structuring initial contact,and planning concessions,negotiators can be ready for various scenarios and maintain control throughout.Make them earn these Key bargaining chips use sparingly and intelligently Emphasize their value Ask for counter-concession Concede reluctantlyBattlegrou

52、nd Dont concede without a fight Always demand something in return Fight hard for a fair exchangeOpening moves Concede here first Unlikely to make a big difference but generates goodwill Message to increase perceived importanceCost/importance to YouCost/importance to YouHighLow1st2ndLast(if)3rdHighYo

53、ur walk-aways Only concede if really forced:There is no reason to concede Be prepared to say“No”The biggest pitfall?Focusing solely on price,even if you believe that is all your counterpart cares about.Concession matrix helps to plan negotiation leversTHE BIG DEAL BLUEPRINT:A PRACTICAL GUIDE TO NAIL

54、ING HIGH STAKE NEGOTIATIONS10Step 6.Leverage benchmarks and best practicesTo equip negotiators with well-supported arguments that align with best practices,enabling more effective positioning during discussions,its best to rely on proven data.Drawing on benchmarks,industry standards,and case studies

55、 builds credibility.Comprehensive industry data provides a solid foundation for informed decision-making,with insights into market trends and competitor actions.Reports add further depth,often uncovering shifts in customer demand and economic factors.Third-party experts offer fresh perspectives and

56、nuanced understanding of emerging challenges.An often-underutilized resource,these third-party experts not only have access to critical information sources but also offer an objective view and actionable insights.They bring an added advantage by creatively leveraging data to reveal hidden patterns a

57、nd unique opportunities,helping negotiators sharpen their positioning and adapt to industry expectations.Together,these resources form a comprehensive toolkit that empowers negotiators to make informed and impactful decisions.Step 7.Structure the initial contact and set expectations When negotiating

58、 a high-value contract,discussions might span over multiple weeks or even months.Setting a detailed timeline for each negotiation stage,with clarity on what actions will occur and how they will unfold,helps keep discussions constructive and focused on value.The first interaction sets the tone for th

59、e entire negotiation,so it should be approached strategicallyfocus on building rapport,establishing mutual goals,and delivering a clear,value-driven initial proposal.A common pitfall is jumping straight into negotiations.Instead,use this first contact moment to request a meeting to discuss market tr

60、ends,company developments,and potential collaborations.Start by raising the topic directly with the counterpart,followed by an email outlining the objective of the meeting and requesting a follow-up call to schedule it.Be sure to clarify which party will be present during each negotiation stage.C-le

61、vel executives often get involved too soon,leaving limited opportunities to play the escalation card.A common mistake is jumping straight into negotiations.Instead,use this first contact moment to request a meeting to discuss market trends,company developments,and potential collaborations.THE BIG DE

62、AL BLUEPRINT:A PRACTICAL GUIDE TO NAILING HIGH STAKE NEGOTIATIONSSepInitial contact to schedule first meetingDeadline to place order at counterpart for next contract periodHard deadline due to contract endNovOctDecJanInitial contact First meeting Negotiation First contact to introduce the topic.Emai

63、l meeting request with objectives and follow-up note.Follow up by call to schedule the meeting.Review collaboration and market trends.Present growth plans with new increased production capacity.Assess counterparts role in plans.Propose revised terms after meeting.Start negotiations with an initial o

64、ffer.Follow pre-defined scenarios and concessions.Notify the contract renewal or terminationInitial contactWays of contactFirst meetingNegotiationStep 8.Craft a value-focused proposalA well-crafted proposal emphasizes the unique value being offered,moving the conversation from pricing alone to focus

65、 on long-term value.By framing competitive advantages effectively,the proposal becomes distinct and speaks directly to the counterparts needs,highlighting factors that set the offering apart and foster a strong case for partnership.Begin the meeting by discussing the current collaboration and releva

66、nt market developments.Then outline your companys plans,including any implications for the counterpart.Emphasize that you need to decide how they fit into these plans,especially if the current contract terms have become less attractive.Conclude by stating that you will share a proposal with revised

67、conditions,providing a clear path forward.Step 9.Strategically apply concessionsEffective application of concessions goes beyond timing;it requires adjusting to the negotiation pace and carefully evaluating the impact of each move.Throughout the negotiation,using financial simulations and continuous

68、 analysis of the discussions allows negotiators to understand the potential outcomes of specific concessions.After each meeting,sales teams should take the time to assess insights gained from the counterpart,analyzing how proposed concessions could impact their business.This approach enables them to

69、 return to the table with a refined strategy,adapting concessions based on new insights.Taking time for structured post-meeting analysis ensures that each concession strengthens negotiation goals and maintains control over the progression of discussions.Comprehensive and structured timeline is a key

70、 when preparing for negotiations11THE BIG DEAL BLUEPRINT:A PRACTICAL GUIDE TO NAILING HIGH STAKE NEGOTIATIONS12Step 10.Anticipate objections and alternative scenariosEffective preparation includes identifying potential objections and mapping out alternative scenarios.Having counterarguments ready al

71、lows negotiators to respond swiftly to objections,while planning for alternative scenarios ensures adaptability.It is equally important to ensure the ability to quickly simulate the financial impact of alternative scenarios and counteroffers,allowing for informed and agile responses.This level of pr

72、eparation is crucial for high-stakes negotiations,where unexpected turns may require a quick strategic shift.Clearly communicating your products value drivers is crucial for effective argumentation,as it reinforces the unique benefits of your offering.Tools like battle cards,which outline typical ob

73、jections and structured counterarguments,can further strengthen preparation.These cards help sales teams maintain control by providing ready responses to customer concerns,increasing the likelihood of cards,which outline typical objections and structured counterarguments,can further strengthen prepa

74、ration.These cards help sales teams maintain control by providing ready responses to customer concerns,increasing the likelihood of reaching a successful agreement.Key takeaways:Thorough preparation is crucial for successful,complex negotiations.By leveraging industry benchmarks and best practices,s

75、tructuring initial interactions strategically,crafting value-focused proposals,and applying concessions thoughtfully,negotiators can keep discussions focused on mutual value.Preparing for potential objections and mapping out alternative scenarios further improves adaptability and readiness.Together,

76、these steps equip negotiation teams with the tools needed to approach high-stakes discussions confidently,maximizing the likelihood of success.Thorough preparation is crucial to approach high-stakes discussions confidently,maximizing the likelihood of success.THE BIG DEAL BLUEPRINT:A PRACTICAL GUIDE

77、 TO NAILING HIGH STAKE NEGOTIATIONS13By following this structured 10-step frameworkbuilding a solid fact base,setting clear objectives,and preparing meticulouslycompanies can enhance their outcomes.As mentioned earlier,this approach has demonstrated an average 10 percent revenue growth and 75 basis

78、points in gross profit improvements.Besides financial success,companies also benefit from stronger partnerships and long-term growth.While preparation and strategy lay the groundwork,effective execution is where long-term value is realized.Post-negotiation efforts,such as tracking performance,managi

79、ng client relationships,and addressing evolving needs,are essential to sustain and maximize the benefits of a well-conducted negotiation,solidifying both immediate and future success.The path forward to bigger,better dealsPrepared to win?Or are you risking your next big deal with outdated data?Use f

80、resh insights to lead and succeed.14AuthorsChristoph PetzoldtP PopiolekM BoerD Simon-KucherSimon-Kucher is a global consultancy with more than 2,000 employees in 30 countries.Our sole focus is on unlocking better growth that drives measurable revenue and profit for our clients.We achieve this by opt

81、imizing every lever of their commercial strategy product,price,innovation,marketing,and sales based on deep insights into what customers want and value.With 37 years of experience in mon-etization topics of all kinds,we are regarded as the worlds leading pricing and growth specialist.simon-AUTHORSSimon-Kucher&Partners Strategy&Marketing Consultants Pty LtdLevel 23,207 Kent streetSydney NSW 2000AustraliaTel.+61 2 9112 1301 simon-ImprintPublisher Simon Kucher Sydney office Authors Christoph Petzoldt,David Boer,Patryk Popiolek Design Nicola Rezel Photos istockNov 2024