Negotiating Large Nonretail Sales: Part 2
ALTERNATIVES IN CASE THINGS GO SOUR
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Brian Jud, the executive director of SPAN and the author of How to Make Real Money Selling Books, offers commission-based sales of books to buyers in special markets. For more information: premiumbookcompany.com.
Maybe you decided you would like to pursue large-quantity, non-returnable sales to non-retail buyers after you read “For More Profitable Publishing, Compare Two Major Marketing Strategies” in the January Independent, and maybe, after reading “Parameters for Profits” last month, you prepared for negotiating with non-retail buyers by defining your Best Negotiating Outcome (BNO) and determining the terms you are (or are not) willing to put on the table.The next task in preparing for negotiations is determining your Best Alternative To a Negotiated Agreement (BATNA), because even with the best preparation, you may find that discussions are approaching a disappointing conclusion. In that case, you need to know whether to accept or decline the unprofitable offer.Knowing that you have alternative deals to pursue makes that decision much easier and can relieve the pressure you may feel to accept a large offer even though it does not meet the criteria set in your BNO.
Know Your Own BATNA
How do you know about alternatives? Before you sit down with any prospect, create a list of all potential customers that could purchase your book in large quantities (see “How to Find Potential Buyers in Special Markets” in the October 2010 Independent). That list will give you a backup plan to use if any negotiation goes sour.
How do you know when you have reached the point that should trigger moving on to your BATNA? Perhaps what is unmistakably the prospect’s final offer will not fulfill the terms of your BNO. Perhaps you know that a prospect on your BATNA list could purchase the same number of books with more favorable terms than your prospect is offering. Perhaps you just get a feeling that something is not right; your intuition may be telling you that implementing a particular deal could have financial and/or emotional downsides.
Inexperienced negotiators become preoccupied with tactics, trying to improve the potential deal while neglecting their own BNO and BATNA. The real negotiation dance is “BNO and BATNA,” not one or the other in isolation. Paying attention to both makes it more likely that negotiations will conclude on favorable terms.
As the negotiation process progresses, both parties begin to understand each other’s upper and lower limits. The zone is established by each party’s BNO on the upper level and each party’s BATNA at the other extreme so you can both work within that framework.
Your BATNA gives you confidence to decline terms in light of your BNO. When you know you have an attractive alternative to pursue, you can smile at prospects who think they have you in a corner. And when a prospect recognizes that you are not going to cave in to all his or her demands, the prospect may be more willing to discuss options.
Know Your Prospect’s BATNA
Each party in a negotiation has a BATNA, and a prospect will not become a customer until what you offer is better than his or her no-deal option. To reach an equitable agreement, both parties must do better than their BATNA.
Your prospects have at least three possible alternatives of their own. Imagine, for example, that a prospect is considering the purchase of 10,000 copies of one of your books, which the prospect plans to use to attract new customers.
One option for the prospect is: Do it later, or don’t do it at all. Citing this alternative as the reason for not accepting your proposal is usually a negotiating or delaying tactic. After all, the prospect invited you to discuss the terms of purchasing your books after seeing the potential revenue opportunity in your initial proposal.
A second option prospects have is implementing with a competitive company. In this connection and others, you need to be familiar enough with your competition so you can describe how your book is uniquely positioned to meet your prospect’s objectives.
Prospects can also consider doing it themselves. Creating the desired content in-house is possible for large corporations in highly specialized fields, including pharmaceutical companies. If this alternative comes up, you should reiterate your author’s exceptional credentials. You might also cite the Harvard Business Review’s article “Finding the Right Path,” which reports that firms contracting with external providers are 12 percent more likely to succeed in a new venture than firms relying on internal development.
Also remind your prospect that any needed additions to staff will increase costs. For example, hiring one person to write the book could cost $100,000 (including benefits), with recurring annual employee expenses and no guarantee that a usable book will in fact be created.
Although knowledge of your BATNA and your prospect’s BATNA is vital, do not jump to alternatives too quickly. If you sense you are sliding away from a mutually profitable solution, look first for ways to check the slide. Retain your composure and search for solutions. Your prospects may be testing you to see how far they can push before you balk. Attempting to back out when there is still hope for a negotiated solution can irreparably damage your negotiating position.
However, if you have tried every tactic you know of to improve the pending agreement, you may finally come to the ultimate decision point: Take the money, or run? Choosing which to do will probably not be easy, but publishers who consider every alternative with BNO and BATNA in mind are equipped to make the best decisions.
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