Blowing the Big Deal: Why It Will Happen
Big business deals mean huge profits for your company but they also entail much anxiety and stress. It is no wonder then that quite a few big deals do not succeed despite the best intentions from both sides. Although sometimes bad luck and fate stop a deal from being concluded, most of the times human error and miscalculation are the reasons. Here are the most common reasons deals fall through:
1. Little or no preliminary research1
Asking questions beforehand enables you to better understand your client – his needs, capabilities and core activities. It is imperative that both sides know what the other side wants and its expected expenses. For example, it makes little sense to highlight your services as an outsourcing IT service firm if your partners are looking for a one-off technology product. Furthermore, preliminary questions enable both sides to prepare necessary information and calculate whether a proposed offer is economically viable for them.
2. Ineffective communication
The success of big deals depends heavily on the negotiation abilities of the people responsible. They must be able to communicate with accurate, short and influential messages, which should cover all important points but not be too long to read. In the case of e-mails, they should span two paragraphs with bullet points at most, while a graphic can better illustrate a point.
Furthermore, it is pointless if grassroots managers try to convince each other when the decisions will be made at the top. If your side initiates the discussion, try to contact the manager responsible for the final decision and negotiate with him. Alternatively, ask that he is present at most of the corporate meetings.
3. Long and unproductive discussions
Even if all sides have vested interest in the deal, and the right people are talking, there will be quite a few disputed points. These can take so much time that both parties lose interest. For example, the two sides get stuck on the price without realizing the many other issues that also need discussing like delivery and maintenance.
Proper business practice dictates that each side must create a list of important issues and send it over so that the other party can do the necessary research and be ready to quickly reach an agreement.
4. Unrealistic expectations
Far too often firms have unrealistic expectations of where they stand compared to their competitors. For example, they charge a higher premium in exchange for better quality, or they overvalue their proximity to their clients. Unfortunately, most firms will not tell you how many offers from competitors they have. However, cost structures across industries vary only slightly so it is possible to estimate competitor offers and match them with specific benefits. Highlighting previous success stories and customer satisfaction data can be a good start but consider doing a live demonstration with company engineers.
5. Not setting deadlines2
Negotiations which go on for too long are unproductive and wasteful, and might even cause the two sides to lose interest. Furthermore, deadlines have the psychological effect of portraying the company as a serious partner and convincing the other side to select you. State at the start of the negotiations that you want the discussions to go at a specific pace, and that a decision must be reached by a particular date.
6. A bad virtual image
In this day and age, keeping an accurate digital image with up-to-date contact details, company information, and product description is a must for every self-respecting company. The other side will interpret it as a bad signal if they cannot find your company website and do their preliminary research online.