BATNA and when to delay a sales negotiation
When delaying is better than walking away
The nuclear option is to walk away. It’s what your credibility is based upon but sometimes it’s better to be patient. To let time be your ally.
The question then naturally follows how to decide whether you should postpone negotiations or not?
We’re going way back to a time before RealtimeCRM. When we were getting off the ground by producing bespoke software to bring in the funds that would eventually lead to RealtimeCRM being born.
We created this desktop based CRM application for a client. It wasn’t on the cloud and it did a few other things but we consider it to be the grandfather of RealtimeCRM.
It was theirs and they could request whatever changes they wanted for it. They obviously paid a premium for this but as time went by they wanted to take advantage of the cloud and we were stoked.
You see we’d been developing RealtimeCRM and we thought it would be a perfect fit for them.
Everything seems golden right?
They wanted RealtimeCRM to be like the old application. That they could make any request and it would be changed but we could never agree to that. RealtimeCRM has its own product roadmap and if their requests didn’t fit we weren’t going to change.
This was reflected in the price as RealtimeCRM was much less expensive than their previous custom application.
They didn’t like this but they still wanted to leave the legacy application we built and informed us that they were talking to another major CRM player who shall remain nameless.
Best alternative to a negotiated agreement
Now, a small but relevant digression.
The best alternative to a negotiated agreement or BATNA (no deal option) refers to the most advantageous alternative course of action a party can take if negotiations fail and an agreement cannot be reached. Basically, what is the next best option on the table for each party and that helps determine each side's negotiation power and therefore their strategy.
So their next best option was this other nameless CRM who promised them many things. They clearly thought their BATNA was stronger than ours as they didn’t need us as much as we thought.
We had information on the things that were promised by the nameless CRM and we were skeptical. We decided our next best option was not to walk away but to delay.
We wanted to keep in touch and keep RealtimeCRM as an option on the table so we heavily discounted our legacy desktop CRM app as a fail safe.
During the transition period to the nameless CRM the legacy system we built would be a backup keeping up to date in tandem with the new system and then they would leave us after a certain pre-agreed period.
The agreed upon time passes and things are not going so well with the nameless CRM. The promises made are not being kept, they’re struggling with using the system and worse they’re having trouble with their data in the system.
The support is really expensive and there are a lot of angry people.
Things have changed, our negotiating power has changed because if we leave they’re in real trouble and if they don’t come to terms with us they’re left with the nameless CRM that is an expensive mess.
By delaying our BATNA improved. We had a stronger negotiating position and we didn’t compromise on giving up control of our product map to this prospect who was a large potential customer.
If we had walked we would have gotten zero but by delaying we still got income for the legacy application and then we won them over to RealtimeCRM.
They’re still with us today. We knew we could meet their core needs but at the time we weren’t in a strong enough position. By having the right information and then deciding to delay we won the day.
So whenever you’re negotiating you always have the option to postpone.
You should also figure out what your BATNA is and what the prospects BATNA is and in that way you can figure out your relative negotiating power which will help you decide how to approach the negotiation.
If you have more power to be more aggressive and if you have less power to be more amenable and conciliatory.
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