More on negotiation and interest

This is a great article from a Venture Capitalist on how to approach negotiations.

If you hire someone to be your agent, it starts with knowing what your agent interested in, and knowing where it conflicts with your interest.

For example, consider a realtor, you need to know where his/her interest is not aligned with yours. Most realtors get 3% of the sale price. If it looks like the deal is going to be $300K but you want $320K, they will think about how much time it's going to take them to get that extra $600. And it might not be worth an extra month to them. So they might want to hurry it up.

That is a good place to intervene. If you can wait, time endurance is powerful.

4 questions to detect your brand

Here's a survey I designed for managers so they can detect what customers think about their brands. It's very short and open-ended, encouraging "top of mind" responses, which I think can be powerful. Don't forget about offering something in return for their doing the survey, like a discount or a small gift.

1. What do you like most about [company]?This establishes the emotion that comes to mind first when thinking about your brand. That is likely to be the emotional benefit they get from interacting with your product. This is an intro to the brand concept, and you should see what patterns arise here.

2. What could [company] do better?This identifies areas where your brand falls short of expectations. Expectations are important because customers expect a certain something from the experience, and it's nice to know what it is so you can satisfy it, within reason.

3. Why do you not switch to a competitor?
I think this is an interesting question because it tells us what the switching costs might be. For every product, the customer suffers some cost to use a different but comparable product. It could be purely financial, but usually there is some emotional cost. Whatever they say here, will tell us what is valuable about your brand... the thing that could be most cherished. Note, think about making switching costs as high as possible.

4. How likely are you to recommend [company] to a friend?This is the "net promoter score" question that is purported to do the best job at predicting customer satisfaction. While this isn't a satisfaction survey, I use this question to guage the seriousness of the other responses. If they have all sorts of interesting ideas for 1-3, but aren't all that likely to recommend you to others, then you know your brand hasn't resonated with them so you probably shouldn't act on some of their thoughts. But if they are a big time promoter, then you know their are talking like a loyal customer.

Sound business models vs. sustainable business models

We had a discussion in a Strategy class about business models. In several cases, fellow students worked for companies who imposed high switching costs on their customers. They made products that took so much investment in implementation and learning, that moving over to a different product (even if it was better) seemed too costly. That locked in revenues for a long time.

A great example was software for government entities. For some reason, government agencies don't just use Microsoft products. They buy really weird, dense software systems from obscure contractors that take forever to learn. Entire job descriptions revolve around the operating of these systems. That government entity is not about to switch. It's "how we do things around here."

I suggest that is a sound business model, but not at all sustainable. Why not sustainable? It is not inspiring, and we are entering a market where more and more people will demand to be inspired, delighted, and made enthusiastic by products and services.

Uh oh, who is interacting with your customers?

Yesterday I had lunch at a Mediterranean restaurant. I wasn't too familiar with the food, but I did recognize "baba ganoush" and asked the cashier what it was. He glanced away and mumbled something about going to "find out." He asked the serious-looking cook behind the counter, who answered him, but the cook looked totally disgusted and disappointed, a la Soup Nazi.

The cashier returned and mumbled something again. I asked him to repeat what he said, then, louder, "eggplant." Ah yes, eggplant.

He didn't say, it's an ancient Moroccan dish made with extra virgin olive oil broiled near an open flame. Or, it's a really popular appetizer tinged with smoky garlic and fresh pomegranate juice.

At least he went and found out that it was eggplant.

And that cashier was the closest I came to any employee in the restaurant for most of my visit. That interaction is a slice of information that makes up the restaurant's brand, for better or for worse. Your brand isn't always carefully planned and presented to the public; it already exists and is being reinforced with every interaction.

How accessible are you?

There seems to be much discussion these days about how customers have taken control. Liam McGee of Hartford Financial Services says in the past, banks called all the shots: we're open 10-3 and if you can't make those hours you're out of luck.

Now the customer is growing in influence. Banks are online, ATMs are everywhere, and most work can be done without even going a bank's location. In ten years of being a customer I've never even been to a USAA branch (I think there are only three, in Texas). PayPal is a bank of sorts, and all you need is an email address to use them.

Going away are opaque, secretive organizations.

Can your customers learn about you? How good is the "about us" page on your site? Who answers your emails? When customers call your company, who do they talk to? A computer? Where does the info (at) yourcompany.com email go?

Don't think you're getting to know your customers if they can't access you.

This shouldn't have to be written: meeting agendas

How often do you get meeting notices without an agenda? I've seen many insulting versions of this, with thoughtful notes like "Agenda TBD," "Agenda forthcoming," "Reserving a block of time," or just [blank] in the message body.

Do not set up a meeting with someone without making the agenda clear. Would you call someone and request their time without giving a reason? Maybe if you are a teenager. Not surprisingly, this happens often with recurring staff meetings which eventually become a throw-away hour (or two or three).

It's lazy not to think through and plan out what needs to happen. It is insulting to ask someone to "accept" a meeting with you without their knowing what it's all about. And of course, if you don't have an agenda going into the meeting, it's optimistic to think anything useful will get done. But running meetings is a different post altogether.

A better way is to set the agenda, ensure people can make it, and THEN send out the meeting request, and honor the agenda. And take your first guess as to how long the meeting will take and divide by half.

My 3 year old negotiator

My 3 year old son knows how to negotiate for what he wants. This isn't a surprise for most parents; kids seem programmed to recognize the rules of games and optimize within those rules. Yes, they break the rules too, but that also is part of growing up as a boy: finding your limits. But William is talented at the basic negotiation process. Here are three techniques I've seen him use, much to my astonishment and pride:

1. Make the first demand. This morning I got back from a run and found him wandering around the living room. He saw me and my drink and immediately said, "I want some Gatorade." Normally I would get him water or milk right off the bat, but he got me thinking about Gatorade. What's the harm in a little Gatorade in the morning, just a couple sips? I mean, it has electrolytes. Lesson: the entire negotiation swirled around the initial demand and eventually he got a half-sippy cup of Gatorade.
2. Use time as a stick, if you have no other hope. OK, it's really called "stalling." However, he can weaken my position if there are delay costs for me but not for him. Going to bed usually means the onset of defeat for a child. But the game's not over until he falls asleep. So he has an ever-widening array of tools to delay this final defeat: I want water, I need to go pee-pee, I want some music, I need my bear, can you tuck me in?, I want the door open, I'm scared (this last one tends to short-circuit negotiations).
3. Have viable alternatives. If you have alternatives to what is being negotiated, you have the ability to walk away, which is a powerful position, especially if you are in negotiation with someone who has fewer or even no viable alternatives. The other day I offered William some strawberries, but while the fridge was open he also saw that we had blueberries and raspberries (he gained information that I didn't want him to have). "No, I want blueberries." Blueberries are really fun to eat, and they are preferable to strawberries. "No, buddy, let's stick with strawberries for now." Some minor back-and-forth about this, but, frankly, strawberries are pretty good too. But to my surprise he just went back to the Gatorade I had poured for him earlier!
4. Be fearless. As far as William knows, a spanking is the absolute worst that can happen. Knowing this (and having experienced it and recovered) he likes to take risks and ask for things he normally wouldn't get.

My own parenting shortcomings aside, I am amazed at how kids seem to pick up on bargaining and other rules of the game. Conversely, it shows that negotiating with people is intuitive and easy enough for a child to figure out. If you find yourself in a negotiation, take a moment to imagine the rules of the game and you will be in a better position.