professional development Tag

No more price concessions! Tradeables are your secret weapon!

So what are tradeables?

Let’s take an airline as an example. In years gone by you bought a ticket and that was that. Today, we have to consider how much hold luggage, hand baggage, meals, how flexible the ticket is, penalties for changes, speedy boarding, allocated seats, airmiles payment and redemption, loyalty points and the list goes on.  Airlines were forced to change their pricing strategy because of market pressures introduced by the low-cost flyers.  Yet many businesses I talk to today stick to inflexible pricing strategies and then moan that their customers think they are too expensive.

Relationships matter

In the case of a one-off purchase, for example buying a car, the relationship element is less important than when we are dealing with a customer, supplier or third party over time.   In this case the relationship is just as important as the negotiation outcome itself. What’s at stake is future business, reputation and of course the ease of working together after the negotiation. The key error that most of us make is not spending enough time identifying our tradeables. As a result the relationship can suffer.

What neuroscience says…

Imagine you’re selling website design services, your tradeables might be licence fee, training, maintenance, guarantees, hosting, periodic upgrades, support etc.

Being clear about exactly what you’re selling puts you in a much stronger position if the customer demands a discount. Without tradeables you will either have to agree to a discount which will directly impact your bottom line, or you will have to say no, which risks spoiling the relationship and could even blow the deal.

Tradeables allow you to provide options for the other party. And neuroscience demonstrates that options create a sense of control which triggers the brain’s reward system. Whereas being told sorry, that’s our bottom line triggers our threat system and impacts the relationship negatively. In essence what you’re trying to achieve in any negotiation is to find something that will cost you little but is of significant value to them, and vice versa. Thus win-win!

All too often people believe they have no option other than to yield to price concessions - with a certain amount of resentment or resignation. However, careful consideration of your tradeables and pricing options provides a route to better outcomes and better relationships.

Give them options

We were recently negotiating with a large corporate to roll-out a global training programme. Their procurement department was trying to squeeze us on price. We knew if we started yielding, that would be the thin end of the wedge! So instead, we offered them a series of pre-prepared tradeables – online follow-up, certification, refresher webinars. So rather than saying no to a discount (which would have triggered a threat response), tradeables enabled us to demonstrate flexibility and a willingness to work with them to arrive at a mutually beneficial agreement.

All too often people believe they have no option other than to yield to price concessions – with a certain amount of resentment or resignation.  However, careful consideration of your tradeables and pricing options provides a route to better outcomes and better relationships.

MASTER THE ART OF NEGOTIATION

Cognitive biases that prevent delegation and growth

I don’t have time to delegate!

When my children were young, as well as running a demanding business, I was a single parent.

One of the things that really got to me was that my kids couldn’t even load the dishwasher properly.  Surely that was the least they could do after I’d cooked the dinner!

They’d put the plates in the wrong section, the cutlery the wrong way round and the glasses upside down.  I’d get increasingly irritated as I re-stacked everything.   Why bother trying to get them to do it.  It was quicker for me to do it myself – at least it would get done properly!  Sounds familiar?

After several months of frustration it dawned on me that if I wanted them to stack the dishwasher properly, I’d needed to invest some time training them.

The problem was that I felt I didn’t have any spare time to carry out the training.  It was a leap of faith for me to realise that the future reward would compensate for the time invested in training today.

The cost of failing to delegate

We see this type of thinking in the workplace – the time and effort to develop staff is an investment, and the payoff will only occur in the dim and distant future. Too often staff are set up to fail – for example when a high performing technician is promoted to a manager without any training for the new role.

What’s at play here is a cognitive bias called temporal discounting, where we attach a disproportionate value on the here-and-now compared with the future. The future seems vague and distant, whereas now is vivid and Technicolor!

In financial terms, our brain views £70 today as more appealing than £118 in 3 months time. We also see this type of thinking in the board-room where short-term dividends often trump longer-term investment.

So next time you catch yourself thinking “it’s quicker to do the job myself than get someone else to do it –then correct their mistakes”, STOP.  Think.  What is the cost of failing to delegate?

  • Depriving your staff of learning and development opportunities
  • Chaining yourself to operational detail rather than strategic initiatives
  • Keeping yourself and your staff in their comfort zone
  • In short – preventing organisational growth

Harvard Business Review cites that most leadership teams spend just three hours per month making strategic decisions – in fact they dedicate more time choosing the company Christmas card!

Don't fall victim to temporal discounting. Doing everything yourself is not a strategy for growth.

Effective delegation

  • Don’t fall victim to temporal discounting.  Doing everything yourself is not a strategy for growth
  • Spend your precious time on issues that exert the greatest impact on your company’s long-term value
  • Seek every possible opportunity to delegate, develop others and grow!
Do you have the necessary skills to delegate effectively?