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Negotiating the “Indirect” Sale: Part I

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We are often asked to work with companies and organizations that do not negotiate in the traditional sense of bartering over price (or terms). Some sales representatives do not have any control over pricing or terms due to organizational norms or the commoditization of their products or services. Other companies, such as pharmaceutical firms, are even more limited in their ability to negotiate due to regulations. For example, pharmaceutical sales representatives cannot “trade” services, samples or “extras” for prescriptions.

We struggled at first to apply the usual negotiating lessons and techniques to the “indirect sale” until we realized that a tactical approach to sales would be less effective than a strategic influencing approach.

Let’s use the pharmaceutical sale as the example. A pharmaceutical sales representative spends their day detailing physicians about their products in a very limited amount of time, perhaps as little as 30 seconds while the doctor signs for their samples. Some busy physicians see as many as 15 different sales reps in a day. Most pharmaceutical reps see upwards of 10 physicians a day (often with a variety of products in their “bag”). The message has to be clear and concise and yet the “call to action” has to be more subtle than a direct sale – “Will you try Product X on patients who present the following indications…?” is about as direct as you can be within the pharma guidelines. The best “close” a pharmaceutical rep can hope for is a promise that the physician is willing to try the product at some point in the future.

The pharmaceutical sales rep has no direct control over the “sale”. The physician makes the prescribing decision on their own in the examination room after the sales representative has left the office. The doctor has built a prescribing habit over time and it is very dfficult to change the habits of a highly trained, intelligent and busy physician.

We believe that the key to successfully changing a physician’s prescribing habits is based a sales representative’s ability to develop three critical components of INFLUENCE:

1. The Credibility of the sales representative when educating the doctor about their products;

2. The Relationship that the physician enjoys with the sales representative; and

3. The Value that the sales rep delivers to the practice.

If the sales rep can build enough credibility, and the relationship with the practice and the value delivered to the physician outweigh the RISK of switching the prescription (the efficacy, safety and patient economic impact of the new product), the sales representative has started to influence the physician successfully.

In the next post, I will show you how the systematic approach to negotiating can be applied to influence physicians more successfully.

John Buelow

John is the Chief Learning Officer at Shapiro Negotiations Institute (SNI), a training and consulting firm based in Baltimore MD. SNI has trained over 300,000 professionals around the world since 1995 helping people to close more deals, faster at higher margins.

Welcome to the SNI DealCoach Daily!

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Hello and welcome to The SNI DealCoach Daily – a community of experienced negotiators, sales consultants and everyday dealmakers who want to maximize your results in today’s turbulent times.

As the economy tightens, effective negotiation skills become more important than ever. It is imperative to commit yourself and your organization to achieving “win-win” deals. Though overused and often misused “win-win” simply means: “the best way to get what you want, is to help them get what they want.” The simplicity of this phrase, however, is belied by the difficulty many people have in executing on it, particularly in challenging economic times.

To survive in the short term, it may be tempting to take advantage of the other guy. You may convince yourself that tough times call for tough tactics, and that the end justifies the means, but how will you feel when your ‘partner’ can’t or won’t fulfill their end of the bargain? One-sided agreements are often broken because players will either find a better deal or will be unable to keep their own doors open.

Using an upper hand to strike an unfair deal might seem like a good idea initially, but this approach fails to take into account the enormous cost associated with replacing a ‘partner’ or ‘vendor’ that is no longer able to perform. Not only do costs increase, but the problems can impact your own clients or customers…missed deadlines and reduced quality. Ultimately these “win-lose” deals impact on profits due to higher costs, or the increased concessions and higher discounts you must offer your customers in order to retain them.

One aspect that many people tend to overlook is that relationships built during challenging economic times are the ones that tend to last a lifetime (and beyond). One famous example is McDonalds and Coca-Cola. The story has oft been told of a struggling Ray Kroc trying to obtain a soft drink vendor. Kroc did not have the money to pay for the equipment as he quickly expanded the hamburger chain. Coca-Cola saw an opportunity and struck a deal that deferred equipment payments. Other soft drink vendors had the opportunity to make this deal, but they were unwilling to take the risk. Coca-Cola saw the opportunity and forged a partnership that has lasted decades

You must start by completely understanding what your customer is trying to accomplish and then deliver your service or product in a way that will help them accomplish that goal. Recently we consulted with a software company that was trying to negotiate a deal with a chain of bookstores. We asked them: “What is your goal?” It was a simple question, but we received 12 different responses, ranging from: “close the deal” to “get all of their budget” to “prevent our competitor from bidding”. No one in the group provided the answer we were looking for, i.e. that their goal was to find a way that they could help this bookstore chain sell more books! If they find a way to do this, all of those other goals will fall into place.

For more information on negotiations, sales optimization or influencing, please visit www.shapironegotiations.com.