There are only two kinds of negotiation: the ones that go well and the ones that go badly. From the negotiations where we reached an agreement and came home with the contract, we draw a few lessons about what we did right, which we can proudly pass on to others. From the ones that ended badly, we also draw some positive lessons about what we did wrong, so we can correct it and pass that on too.
But what happens when a negotiation doesn’t go as planned from the very start, spins out of control and we lose our grip on it, yet for some reason it ends in success, even though we behaved in a way you should never behave and aren’t proud of (well, maybe a little proud)?
I was young. For the first time I had a position with some responsibility, and everything was going perfectly. I thought big and had big plans for the company that had placed its trust in me, so for several months I had been chasing a large company to win it as a client.
I won’t name names, but I will say it was a small-cap company listed on Spain’s Mercado Continuo (the main electronic trading platform of the Spanish stock exchanges). After a lot of insisting, I finally got a meeting with the company’s number two. For that I had to go to Madrid.
When the general manager of my company heard about the meeting, he wanted to come along, which was a great idea in case anything delicate came up during the negotiation.
I spent a week preparing for that meeting, because I have always liked to leave nothing to chance. Of course, I couldn’t find anything about the person who was going to receive us, but I did analyse the company thoroughly, as if it were a listed company I was thinking of investing in.
All we wanted from this company, at least to begin with, was for it to drop its suppliers in the provinces of Granada, Jaén and Málaga and let us serve it instead. I had a whole repertoire of arguments about the advantages they would get from switching (above all on price).
The meeting was on a Wednesday at 8:30 in the morning, so my boss and I left on Tuesday to spend the night in Madrid.
He had the brilliant idea of choosing a hotel at the opposite end of Madrid instead of one close to the company we had to visit the next day.
At 7:00 a.m. I was ready to pick out my super-breakfast at the buffet, strawberries included, when my boss showed up and said we had better head over there and have breakfast near the company.
In other words, I left without breakfast, even though I had already eyed everything I was going to put into my empty stomach.
I suggested we take a taxi, to avoid exactly what was unfortunately about to happen. After sitting through 27 of Madrid’s typical traffic jams, we also got lost and went round in more circles than an Andalusian in Madrid (never was the saying more apt). So we arrived at the company’s headquarters at 8:30 on the dot (and without breakfast).
As I walked through the company’s door, it was clear to me: I had none other than Murphy and all his laws for company.
The secretary told us to wait in the waiting room. And wait we did. The first hour went by and we were still there waiting (and without breakfast). The secretary told us that the morning meeting of the person we were supposed to see (Mr X) had run over.
It was 11:00 a.m. when the secretary told us that Mr X had had to leave because of an emergency at the factory and would be a little longer. So I convinced my boss to go out for breakfast (finally).
Just as we were about to get into the car, Mr X appeared with his two associates. The woman with him asked if we were the representatives of company Z, apologised for the delay and invited us inside. She took us to another waiting room on an upper floor and told us to wait five minutes.
Thirty minutes later we were still there waiting (without breakfast). I was wearing two cotton undershirts beneath my shirt, because it was cold in Madrid, but the heating in that room had me sweating buckets, and to top it all, at the end of the corridor several office staff were telling jokes about Andalusians, which I might have found funny on a full stomach.
We finally went into the meeting room at 12:15.
I began by presenting our company, making it clear that we knew who their suppliers were in the provinces I mentioned, what price they were paying and what type of product they were buying.
Mr X’s two associates (who were in the meeting) interrupted me several times with questions that completely broke the order of my carefully studied and prepared presentation. Ten minutes into the meeting, one of them closed the negotiation by saying:
“We have had our own suppliers for more than 10 years. We are very happy with them and we get on well. The product is good and the price is in line with the market. So thank you very much for coming, but we are not going to change suppliers.”
At that moment, as I watched them get up from their chairs, I could feel my tie tightening around my neck, the heat, my empty stomach, a week of preparation for that meeting, two days lost and four hours spent in two waiting rooms, all for a ten-minute chat in which they hadn’t paid me the slightest attention. I didn’t want it to end like that, so out of sheer desperation and anger, the first thing that came out of my mouth was, literally:
“Sit down in your f***ing chairs.”
When I realised what I had said, I couldn’t believe it, but it was said. The room went silent, and my boss stared at me with eyes like saucers. That’s when Mr X’s associate said the classic: “…Excuse me???” And since I was already playing the part, I carried on with the script:
“Don’t worry, you’re excused. Now please, sit down and at least listen to what two people who have travelled more than 400 kilometres and waited four hours in your waiting room have to say, because I’m going to talk to you about three things I’m good at: finance, statistics and probability.”
When I saw them sit back down and listen attentively, I couldn’t believe it. Clearly this was not the talk I had been preparing. At least not all of it.
I talked to them about their results as a listed company and quoted several passages from Warren Buffett himself, assuring them that the small details, like the small expenses, matter a great deal to large companies.
I stressed that they were an important listed company, but their profit growth had been flat for the last few years, with a slight downward trend, even though their shares had risen over those years. Financially speaking, that was a divergence from the company’s fundamentals that sooner or later would take its toll on the share price.
With the savings on our product, plus the cost reductions from having us as their supplier and handling transport in each province, without cutting corners on product or service quality, their company could become much more competitive. Later on, we could apply that business and partnership model in many other Spanish provinces.
And once I had everyone’s full attention…
I put the icing on the cake with something that could be considered intimidating bravado, but which at that moment I meant in all seriousness, believed and felt.
I talked to them about probability and statistics, telling them that, statistically, I had met my targets 100% of the time, and that my target this time was to take over the market in Granada, Jaén and Málaga, with them or without them. Going by my track record of professional success, I would most probably get my way again. (It wasn’t entirely true, but it sounded convincing.)
I went on:
“It will take me three months, six months or maybe a year, but sooner or later we will end up supplying every distributor in the area, as I have already done in other areas competing with other distributors, convincing them, as you already know if you look at our value for money, that our product is far more competitive than the one they have now, and sooner or later they will become our customers. We are a growing company, while you have been stuck for years doing the same old thing with the same old people in a market that is no longer the same old market.
We can compete with each other and waste time and money, or we can work together. With the second option we both win. With the first, we both lose in the short term. Don’t see it as changing suppliers. See it as a way of avoiding competing with each other, with everything that would involve.”
After that heated speech, I set about easing the tension and showing my friendlier side, insisting on the advantages of working together and selling them a picture of commercial prosperity for both companies.
Mr X started to show interest and went into detail on many aspects of the product, the service, payment terms and so on. Apparently the elephant had been bagged, although they told us they would study our offer carefully, and they began to admit to some problems with their current distributors.
They invited us to lunch with them (finally), and in a calmer, more relaxed atmosphere I apologised for my behaviour and told them about the morning I had had.
We went back to Granada, and exactly three days later the phone rang. It was Mr X’s associate, calling to arrange a visit to our company. That day we signed the partnership contract.
That’s where the happy story ends.
Unfortunately, three months later my company had failed to deliver so many times that we lost the client, the biggest client our company had ever had. It was a heavy blow for me, as if a large part of my work had been ruined, one of the biggest sales achievements of my career up to that point.
But perhaps what made me feel worst was the loss of credibility with the executives of a fairly important Spanish company. I never imagined that losing a client could make me feel so low. Not to mention the money my own pocket would lose along with that client.
What lessons can I draw from this tough negotiation?
To be honest, I’m not entirely sure. What I do know is that if I had had breakfast that morning, if they had seen us on time and I had been in my normal state, I would probably have shaken their hands when they stood up from the table, and we would have said a polite goodbye and left with our tails between our legs.
Although everything was already lost, and so anything was worth trying to get the negotiation back on track, I broke a basic principle of negotiation: “whatever the outcome of a negotiation, always take your leave with courtesy and respect, because you never know when you’ll be negotiating with those people again.”
I think it was, in a way, a lot of luck. Luck that Mr X didn’t decide to tell me to go to hell and instead waited out of curiosity to see how my pitch ended. And luck too that Mr X’s associate decided not to take the bait, which would have heated things up even more.
The lesson I did learn is the answer to that classic sales question: how do you get a customer who has had the same suppliers for years to switch? Basically, you first sell yourself as a strong competitor, and then you sell them a partnership so as to avoid a commercial war. On that point I wasn’t lying to them: one way or another we would have found a way to take over the market in those three provinces, even if we had had to work out a strategy to sell directly to the end customer through the different distribution channels.
When people asked me how I landed that client, I told them I did it purely through probability and statistics 🙂
Although the title of this article says “toughest negotiation”, I have actually had other tough negotiations involving a lot of gamesmanship and strategy. But this was pretty much the only one where, necessarily or not, things had to get “tough”, and it wasn’t planned: it came from a momentary loss of control, which as a rule doesn’t end well.
Further reading
Featured image: Maxim Romanchuk, CC BY 3.0, via Wikimedia Commons.
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