Articles on IT Acquisition and Doing Better Deals
Tips & Tactics
- Negotiations: Principled Concessions
- Financial Analysis — a Refresher
- Presenting vs. Positioning
- Even Pros Make Mistakes
- The Power of No
- The Dip
- Caveat Venditor
- Champagne and Scarcity
- Urgency—Guard it at All Costs
- They Know That You Know
- Why a Checklist
- Beyone the Handshake
- The Challenge with Buying Technology
- The “Try It, You’ll Like It” Ploy
- The “We Don’t Need To Write That Down, You Can Trust Me” Ploy
- The “Low Ball” and “When I Hit Your Hot Button, I Gotcha” Ploys
- The “Price Protection Contract” Ploy
- The “Form Contract” Ploy
- The “Solutions” Ploy
- The “We Can’t Do It For You Because We Would Be Setting A Precedent” Ploy
- The “Unfortunately, I’ll Have To Get Any Changes Approved By Corporate” Ploy
- The “Price Protection Contract” Ploy
- The “Tie-In” Ploy
- The “Fait Accompli” Ploy
- The “Price Increase is Coming” Ploy
- Table of contents
- “We Don’t Need To Write It Down. You Can Trust Me” And Other Grim Fairytales
- The Negotiations Agenda Part 1
- One Bite at a Time
- The Negotiations Agenda Part 2
- Don’t Let Vendors Hold You Hostage
- The Right Attitude
- Finding Responsibility
- A Fair Audit Clause
- Looking Beyond “Needs”
- Before Saying “I Do,” Think About Divorce
- A ‘Top-Down’ Look In Challenging Times
- Don’t Allow Vendor Disappearing Acts
- Vendor Short-listing: The Long and Short
- If a Vendor Offers the ‘Lunch’ Ploy, Don’t Bite
- Make Sure Consultants Will Keep Your Secrets
- Two Essential Parts for Service Contracts
- Keep Consultants Far From the Enemy
- Be Wary of Annual Revenue Commitment
- Leasing’s Different When It’s Laptops
- Two Truths Behind Securing Better Deals
- Not in the Contract, Not Part of the Deal
- Feeling Safe With IT Security
- Avoid Surprises in Subleasing Deals
- Insist on Language to Cover Billing
- Manage the Contract
- Clear Ordering Procedures
- Winning with Leases
- A Ploy that Didn’t Fly
The “Unfortunately, I’ll Have To Get Any Changes Approved By Corporate” Ploy by Joe Auer
This ploy is particularly effective when used by a major vendor against an inexperienced customer. In the basic version of this ploy, the vendor’s marketer indicates that, as much as he/she would like to meet the customer’s demands, the matters desired by the customer must be approved by “corporate” – a difficult and time-consuming task. The ploy places substantial pressure on the customer by forcing him/her to “sell the vendor.” If the customer fails to meet the necessary burden of proof, the vendor wins.
Experienced vendor marketing personnel generally use the ploy in one or more of the following situations:
- The customer wants to write things down.
- The customer wants to change the vendor’s form agreement.
- The local vendor marketing representative is over-committing (or has already over-committed).
- The marketing representative wants to test the customer’s seriousness or desire for real negotiations.
The ploy has a number of advantages for the vendor representative.
First, it is logical and, therefore, relatively easy to use.
Second, it can be used to enhance other “sense of urgency” ploys such as those involving year end, price increase coming, and time dependent customer hot buttons (for example, delivery schedule).
Third, the ploy can be used to present the marketer as a “good guy” or a “non-negotiator.” In essence, the vendor’s representative emphasizes his/her own willingness to do everything possible for the customer, but continually stresses his/her problems in dealing with his company’s “corporate” or “legal” departments. He/she stresses, “I don’t want to go to the well too many times, so let’s make sure we have all your demands (with emphasis on “all” and “demands” to stress the customer’s unreasonableness) before I stick my neck out for you.”
Finally, the ploy can be used to bolster the vendor’s trust or relationship oriented ploys. Again the vendor stresses the problems of getting things through “corporate” or “legal,” but readily offers an oral or local commitment of support, resources, or special terms. By using hurt, confused body language, the representative can convey ideas such as: “You obviously don’t trust me, despite our fine personal relationship, or you wouldn’t make me try to get these demands through corporate – especially since I’ve already told you we can handle these matters at the branch level.”
The effectiveness of this ploy can be traced to one of several characteristics:
First, the ploy constantly forces the customer to justify his/her negotiating position. The customer wastes time and professional talent on relatively minor points and, in the process, is slowly worn down.
Second, the ploy allows the vendor to hide behind the shield of his/her “standard way of doing business.” The customer is, therefore, placed in a defensive position and must constantly ask whether this position really is unnecessarily onerous, as alleged by the vendor. This uncertainty is likely to be particularly strong where the customer and/or his/her professional advisors have little experience in sophisticated data processing negotiations. Even experienced customer lawyers find it difficult to continue to stand up to allegations by the vendor’s marketing representative and the customer’s management that the customer’s attorneys are blowing the deal.
Third, the ploy allows the vendor to emphasize that the vendor’s standard form agreement is the easiest, fastest, and best way for the customer to obtain the necessary equipment – “especially since our contract has been accepted without change by Fortune 500 companies considerably larger than yours.” (Unfortunately, the vendor’s representative may be telling the truth, but that’s no reason to compound the error.)
Fourth, the ploy causes the customer to disclose his/her entire “shopping list” at the outset to keep the nice-guy vendor representative from having to “endure the pain” of going to corporate or legal more than once. As a result, the customer loses effective “slice at a time” negotiating strategies and the vendor has time to quietly plan ways to sell or maneuver around or through the concessions desired by the customer. In addition, the customer finds it strategically difficult to add to his/her shopping list during later negotiations. (The marketer invariably says, “You told me I had all your demands. Do you mean I’ve got to go back to corporate with this?” And, the inexperienced customer often gives in.)
Finally, the ploy enables the vendor to use the benefits from the “limited authority” negotiating technique. With this tactic, the vendor’s representative can probe the depths of the customer’s concerns without divulging the vendor’s final position. In addition, the marketer can use a silent “bad guy” to be responsible for the bad news that the customer’s position will not be accepted (thereby effectively implementing the “good guy, bad guy” ploy and also preserving the local “relationship”).
Despite these problems, this ploy can be effectively dealt with by an experienced customer. The following suggestions may be helpful in deflating this vendor strategy:
First, recognize the ploy for what it is: an excellent way to sign up a customer quickly, with little hassle and few formal vendor commitments.
Second, remember that “if it’s not part of the contract, it’s not part of the deal.” Refuse to accept side letters and “local” vendor promises in lieu of formal contractual agreements.
Third, keep in mind that most computer acquisitions involve sizable amounts of money and serious business risk problems for the customer. Anything that involves such factors deserves to be fully studied, negotiated, and documented. Haste does make waste, especially in computer acquisitions.
Fourth, remember the value of prioritizing your negotiating shopping list and planning your negotiating strategy. Do not be tricked into spreading out your entire wish list at the first negotiating session.
Fifth, recall the dangers of permitting the vendor to use the limited authority ploy. Refuse to negotiate if the vendor will not provide the necessary senior management and legal personnel, or at least direct access to same.
Sixth, use a good Request For Proposal process and make certain that the vendor agrees to provide deliverable commitments in the bid proposal. At the same time, avoid giving away your entire shopping list by including a standard customer agreement with your Request For Proposal.
Seventh, do your best to indicate that you have no intention of signing, or even seriously considering, the vendor’s standard form agreement. Wherever the vendor’s marketing representative asserts that something is covered in the standard vendor agreement, ask that the marketer read the applicable provision without self-serving (and non-binding) explanations. And then ask how the provision involved provides adequate protection to you.
Finally, use the ploy to your advantage wherever possible. If the customer remains calm, recognizes the ploy, and insists upon getting clearance from “corporate,” the following benefits may be available:
- The vendor will be forced to increase the level of corporate and legal involvement in the negotiations, possibly involving high-level vendor personnel who can offer alternatives and concessions not known to, or available from, local marketing personnel.
- The customer can better determine the final negotiating authority on the vendor’s side.
- Any concessions gained with “corporate” or “legal” approval will have more validity, thus improving the likelihood of appropriate contractual coverage and actual vendor performance.
- Negotiations will be placed on a more formal and businesslike basis, thereby reducing the effectiveness of the marketer’s “personal relationship” tactics.
- The customer will be able to turn around the vendor’s “sense of urgency” ploys by indicating that, in light of short time, the vendor had better bring its top lawyer and contract signer down for the negotiations. (As a result, these vendor representatives will be on site and in a frame of mind to address reasonable customer demands; alternatively, the vendor’s marketer will be forced to admit that the deadline is not so urgent after all and that alternative negotiations will have to be arranged later on when the proper vendor personnel can be made available.)