THE VALIDATION MEETING

There are essentially five elements that you need to take into account when planning and conducting a validation meeting. These include:

1. Setting up meetings

2. Asking questions and listening

3. Sharing/Trading data and answering questions from the other side

4. Avoiding things you shouldn’t do

5. Evaluating the success of a validation meeting

Setting Up Meetings

When you’re in the negotiation phase of a sale and ask to meet with a customer, the customer typically thinks you’re coming in to “sell” them or to start price negotiations. There is, of course, a good reason for them to think that—it’s what usually happens. So given that history, it’s extremely important in setting up a validation meeting to establish a clear objective and make sure your customer understands what that objective is.

Before you do that, though, determine exactly with whom you want to meet. If, in your sales process, you called on multiple influential buyers in the customer’s organization, you absolutely need to call on those same individuals—not only buyers but influential managers as well— during the negotiation process. Because a number of individuals may be involved in the process as a result, you may end up with several small meetings rather than one large group meeting. You may also, at this point, encounter resistance from some of those individuals concerning the time required to attend a meeting. I have found, though, that if a customer won’t agree to a face-to-face meeting, more often than not they will agree to a telephone call, particularly if you promise to keep it to no more than 15 minutes and to send the questions in advance.

The advantage of negotiating at multiple levels within the customer’s organization is that the more influential buyers and managers you speak with, the more customer needs you can learn about and address. If, for example, you only interview a buyer, all you may hear is “I want the lowest price.” At the same time, if you interview a senior vice president, you may learn that the customer is also interested in your bringing your solution to both their domestic and their international operations. The more you know about what the customer really needs, the easier it will be to create trades and, ultimately, more value.

The way I usually handle this is to send the client an e-mail asking for an appointment and providing the following information:

• The purpose of the meeting is to find out the client’s needs as they relate to the upcoming negotiation.

• I will primarily be asking questions that allow me to formulate an offer, one that speaks to the client’s needs, sometime after the meeting.

• I will not be presenting price or product at the meeting.

• Some of the questions I’ll ask include these:

• What specific items should we focus on in the negotiation?

• How important is each of these items?

• What are some target metrics for each of these items?

• How do you view the supplier landscape in our marketplace?

• What are the strengths and weaknesses of those suppliers?

• What would you like suppliers to do that they don’t?

By providing this kind of information to your customers before the meeting, it makes it clear to them that you’re not going to be making a sales pitch or getting started in what is traditionally thought of as negotiations. Perhaps even more important, it makes it clear that you are genuinely interested in understanding their needs, even though in fact these meetings provide you with an enormous tactical benefit. It can also help you avoid situations—which we’ve occasionally run into ourselves— in which validation meetings backfire because management-level customers come to meetings expecting to learn more about our services, find us asking a lot of questions, and go away frustrated.

Asking Questions and Listening

I imagine you’ve heard the old 80/20 rule to guide your listening and speaking, respectively. This couldn’t be more important in a validation meeting. Virtually the only time you should speak is either to ask a question, to follow up on a question, or to trade specific data from your side. Remember that the primary purpose of this meeting is to gain information, so the less you talk and the more you listen, the more you will accomplish.

The questions you ask, of course, are the CNA-related and Wish List–related questions you prepared earlier in the validation step of the process. I’ve found that it’s advantageous to ask the questions as systematically as possible—to stick to your plan but not be so rigid that you can’t explore unexpected opportunities. In terms of what questions to ask first, I suggest that you open the meeting by revisiting the purpose of the meeting as outlined in your invitation, then ask Wish List–related questions, and only then CNA-related questions

Although, as you’ll recall, you prepared the CNA questions before the Wish List ones, I’ve found that most people are much more willing to share what they want (their Wish List) than what happens if they don’t reach agreement with you (their CNA). Asking Wish List questions first, then, gets everybody loosened up and talking. In fact, if you look back at the sample questions I suggested you include in the e-mail to your customer, you’ll see that they’re divided into two groups, the first having to do with Wish List items and the second with CNA. Of course, when you get to the meeting, your questions will be much more targeted and will have your initial estimations embedded in them.

For example, rather than simply asking the generic Wish List question “What specific items should we focus on in the negotiation?” you would say, “It’s my understanding you want to focus on price, volume, length of contract, and service agreements in the upcoming negotiation. Is that right? Is there anything missing? Is there anything that should be deleted?” Similarly, instead of asking the generic CNA question “How do you view the supplier landscape in our marketplace?” you might say, “I understand that if you don’t choose us for your partner on this initiative, you’ll choose ABC Corporation. Is that right?” Again, by asking the questions in this way, you show the customer that you’ve done your homework, and you’re likely to get answers that are of more value in developing trades.

Regardless of how you phrase your questions, however, it’s important to try to keep your tone as conversational as possible. Even though your questions have actually been very well thought out and designed to both solicit and share information, people get nervous if they feel you’re “filling out a form” and can become self-conscious about what they say. Keeping the conversation as casual as possible helps to ensure a freer flow of information in both directions.

Finally, I suggest that you write down what the customer tells you. There are actually two schools of thought on this. The first claims that people are likely to be more guarded if you write down what they say. The other school argues that your taking notes makes the speaker feel that you value what he or she is saying and consider it important. My experience suggests that the latter is almost invariably true; recording what customers say doesn’t seem to inhibit them at all. Moreover, if there’s more than one person on your side in the meeting, having written notes makes it easier to compare what you heard when you begin the next step in the process.

Sharing/Trading Data and Answering Questions from the Other Side

If you’re going to ask customers to provide information during a validation meeting about what they want, it’s only natural for them to expect you to reciprocate. In other words, you have to give something to get something. Of course, the idea of sharing information is often counterintuitive for both sides, as many of us have been taught to “keep your cards close to your chest” in a negotiation. Needless to say, it’s going to be very difficult to trade data if either you or your client take that approach. In fact, the only way that both of you can get a deal better than your CNA and realize as many of your Wish List items as possible is by sharing that information with each other. In fact, the most value-creating agreements we’ve seen are those in which both sides openly share data on their Wish Lists.

Although the likelihood of that happening in your first validation meeting is slim, the more meetings you have with a customer in which you demonstrate your desire to create joint value, the more the customer will trust you and consequently be willing to share data. The results of a recent study by the consulting firm A.T. Kearney bear this out. After analyzing trust in high-level business alliances and the effect it had on relationships and profits for both parties, the firm reported two findings, among others, that are of particular significance here. The first was that trust is built between parties based on their actions over time. The second was that a direct correlation exists between trust and profit. What that means in terms of validation meetings is that if you consistently share data with customers, not only will trust go up but so too will the quality of your agreements and your profits. Again, it may take several negotiations to develop this trust, but it pays off.

But sharing information doesn’t only help build trust in a general sense. It can also help you get your customer to share information during the meeting itself. Look at it this way. If I come up and yell at you, there’s a good chance that you’ll yell back. But if I’m nice and polite to you, there’s a good chance you’ll be equally nice and polite to me. It’s the same with trading data. Let’s say, for example, that you say to a customer “I understand price, volume, and length of contract are the key items you’re interested in negotiating,” and the customer stonewalls you. If you share the same list for your side, and can show the customer that you’re willing to trust them, so you’re much more likely to get a meaningful response when you go back later and ask the same question again.

The next question, then, is what should and shouldn’t be shared in a validation meeting. Here are some guidelines, going from the safest to the riskiest:

• Share the Wish List items you would like to negotiate.

• Share your ranking of those items.

• Share your weighting of those items.

• Share the high end of your range for those items.

• Share aspects of your CNA.

You obviously must be willing to share the items on your Wish List with your customer because if you don’t you’ll have nothing with which to trade. But you should give out information about rank, weight, and ranges a little bit at a time, in that order, and in exchange for information from the other side. CNA information should be shared sparingly, because it’s from CNA data that the low end of your Agreement Zone can be diagnosed and the power analysis completed, both of which would provide your customer with an advantage over you.

There are, however, instances in which sharing your CNA information can be beneficial. Let’s say, for example, that you’re in a validation meeting and your customer is telling you that they’re looking for your solution at a price that’s 50 percent lower than your average market yield. At the moment, though, the demand for your services is high. In that kind of situation it may be in your best interest to share those data with them. In addition, “leaking” this kind of information can serve to alert the customer to what to expect in the final proposal and subsequent negotiation.

Avoiding Things You Shouldn’t Do

In addition to those things you should do in a validation meeting, there are, of course, things you shouldn’t do. Principal among these are those things you promised your customer you wouldn’t do when you asked for the meeting—start “negotiating” (i.e., discussing terms) or “selling.” Sometimes it’s hard to not do these things. When, for example, you hear something crazy from the other side in regard to a particular item you’ve asked about, it’s difficult to not start trading over that item or trying to correct an incorrect anchor. But emotional or tactical reactions like those serve only to stop the flow of information from them to you. And that’s the last thing you want to do at this point. Moreover, although ultimately you will be haggling over terms, this is not the time to do it, if for no other reason than that you don’t have enough information yet. The only exception to this might be when you are using the process to blueprint a negotiation in real time, that is, you’re involved in a nonstrategic negotiation or one in which there’s not very much money involved and you’re going to go through the whole process in one sitting. But even in that kind of situation you should hold off beginning to prepare and present your offer until you feel you’ve learned enough to do so.

“Selling” during a validation meeting is equally counterproductive. Even if the customer seems to want you to sell him or her—and sometimes they do—you prepared for and promised something else, so you should stick to your promise. As with “negotiating,” if, having said you want to listen, you proceed to just talk, all you’ll accomplish is to keep the other side from providing you with the information you supposedly came for. Perhaps even more important, when you tell a customer that you’re there to understand their needs and you start selling, you can do serious damage to your credibility as well as to any hope of building trust between you. And without that trust, there is no hope of getting the customer to share the information you need to develop value-creating offers.

Evaluating the Success of a Validation Meeting

Conducting a validation meeting is essentially the same as doing market research. When you do that kind of research, you always start with an end in mind—the kind of information you’re hoping to gather. So, as with any market research effort, you measure the success of a validation meeting by the extent to which you’ve learned what you set out to learn. Of course, in this case what you’re hoping to learn is more about the customer’s CNA, the positive and negative effects of that CNA, and the customer’s Wish List of items.

Remember that the main purpose of blueprinting a negotiation is simply to answer two questions: What are the consequences if we do not reach agreement? and What items are likely to be included if we do reach agreement? Your estimations, the internal and external validations, and the questions you prepared for this meeting were all designed to give you and the customer a clearer picture of the blueprint. So the more capable you’ve become of answering those two questions, the more you’ve been able to blueprint the negotiation, the more successful you’ve been, and the more successful you’ll be in the remaining steps of the negotiation.

But there’s another means of gauging success in a validation meeting, one that’s a bit more difficult to measure but also extremely important. Aside from enabling you to gather data about the other side, the validation meeting provides you with an opportunity to help your customers become more rational about their own CNA and organize their desired trades. So even if a customer doesn’t answer your questions, the fact that you asked the questions—particularly when you’ve embedded your estimations into them—can start them thinking about their CNA as well as about items other than just price. This is essentially a proactive anchoring approach that’s beneficial to both sides.

As I’ve mentioned, most people still think of the face-to-face presentation of offers as the most important tactical aspect of “negotiating.” But whether the validation meeting is a 15-minute phone call with one buyer or several meetings with several buyers at multiple management levels, it is vastly more important than that final discussion. That’s why preparing good estimations, embedding those estimations into thoughtful questions, posing those questions in a logical sequence, and listening to and recording the answers can make a difference not only between impasse and agreement but, even more important, between “win-win” and value-creating negotiations.