What’s your BATNA?

What's your BATNA?

A BATNA, or Best Alternative to Negotiated Agreement, represents the best option for either party in a negotiation if the talks fail. Known colloquially as ‘Plan B,’ this is your alternate plan when your negotiations begin to wobble out of control. It can also be your trump card to make the deal happen to your advantage. Having your BATNA prepared enables you to walk away from the deal altogether if it is not suitable for you.

In any negotiation, the party with the strongest BATNA has the least intrinsic incentive to come to an agreement, which means it can easily walk away from any agreement that it does not consider adequate. Think about the time you walked away from a street vendor while haggling for a price. As long as you genuinely walked away with no real intention of returning, you would receive the least possible price… but if you walked away hesitantly, the vendor would probably have given you a marginal discount, just to appease your ego.

Consider this example:

Assuming you may need the below products or services, grade the Seller’s BATNA in each of these situations (1 being the highest & 4 being the lowest)

  1. Retailers selling mobile phones
  2. Doctor prescribing medicines
  3. Mortician offering a variety of coffins
  4. Beautician offering a variety of hair treatments

Most would choose option 2 as the answer. However, let me put forth this extreme poser – do you not go for a second and even third opinion if your heart specialist asks you to immediately undergo a bypass operation for your clogged arteries? If so, then can we still say that the Doctor’s BATNA is infallibly strong?

You may have options on Retailers and Beauticians, but imagine option 4, wherein you have to organise a coffin for a recently deceased relative. Would you bargain or walk away from the seller if you felt he was asking too much? Are Coffin sellers available all over to choose from? Doesn’t sentiment take over reason sufficiently enough to override your misgivings over an expensive coffin? After all, time is of the essence, and a decaying corpse cannot be kept endlessly whilst you go from undertaker to undertaker attempting to wrestle a good price!

Peter Drucker was known for stating the obvious, ‘the purpose of a business is to create customers.’ Harvey Mackay famously wrote, ‘Take care of your customers or someone else will.’

The idea of stating the above is to caption that a strong BATNA should never be misused, for the consequences of customer exploitation can be disastrous.

While working for a leading luxury hotel brand, and on a sales blitz to Mumbai many years ago, I met with several Key Decision Makers of corporates who expressed angst against our Bangalore Hotel for overcharging and pricing rates way above the Plimsoll mark. While these corporates were ready to pay a premium for luxury, they felt the rate negotiations were one-sided. Not only were the rates too high, the corporates felt that they received no significant benefits or preferential services while contracting. We were the closest hotel to the airport at that time, and there was no competition nearby. The traffic congestion on this airport road was very severe during peak times, and other hotels took over an hour to drop off or receive their guests. With such a strong BATNA, the hotel milked its customers for several years.

A few years later, the airport shifted to North Bangalore. The Result? Room, as well as F&B occupancies, dropped drastically overnight, and the hotel GM and sales teams had to go out and meet up with their ruffled corporate KDMs, to re-establish a sound bipartisan relationship… a process which took over a year to stabilise.

In the pre-Covid era, some hotels sacrificed their goose for its golden eggs, at the altar of instant gratification; by squeezing the client dry as long as their own BATNA was strong. After all, didn’t the clients squeeze them dry when their BATNA was high? Not anymore though, as all has changed over the past couple of years. With corporate travel just beginning to open up, hoteliers are busy vying for a share of the minuscule, but growing pie. With supply being far greater than demand, the obvious BATNA is firmly in the Client’s camp, for the nonce.

So, what must a Salesperson do to improve his/her BATNA?

  1. The first possibility is to strengthen one’s BATNA. The second way is to weaken the BATNA of the other side, or at least affect the other team’s perception of their BATNA.
  2. Ask what other options you might employ that could improve your bargaining position. Brainstorm the situation with all the key players in your organization. Your planning must also factor in the other negotiator’s priorities, interests, and options.
  3. Improve Your BATNA: Endeavour to expand your options. One possibility is to consider bringing more vendors or buyers into the mix. If you weaken the other side’s best alternative by adding valuable new terms to your offer, the game takes on a whole new slant.

The answers for the above lie in today’s reality, wherein hotels may strengthen their position (BATNA), by considering the following:

  • Most employees consider corporate travel a perk, millennials consider business travel an enriching experience, and frequent business travellers also feel more empowered and engaged. Can hotels use this nascent customer mindset to strengthen their BATNA?
  • Companies are desperately wooing their employees to prevent attrition in today’s scenario, where many are not keen on returning to offices. Companies will offer more flexible travel policies to their employees and even support blending business with leisure travel – Bleisure or workcations.
  • Work-from-home (WFH) will encourage localised corporate business.
  • Consider ESG Travel (Environmental for carbon footprint, Social, and Governance).
  • Pay attention to the Quality and Safety of Technology (Wi-fi) for online communication platforms.
  • Look at Immersive technologies, Augmented Reality & Virtual Reality – AR/VR technologies where people will be able to take a virtual tour of their hotels, for reassurance before travel.
  • Safety Initiatives – Travel managers will assess Travel Risk Management and see if the travel is essential, assess if the employee is fit to travel for their age, evaluate risks & business ROI for each trip, and do robust scenario planning. Apart from this, they will need to give employees the autonomy of managing their business trips
  • Travel patterns are resetting globally (leading to more international corporate travellers to India).

The battlefield landscape has changed and only the fit and adaptable will survive – Darwinism at its best! So, what’s your BATNA?

This article has appeared in ET HOSPITALITY WORLD.COM March 2022

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Wanted – A Passionate Hospitality Salesperson

Wanted – A Passionate Hospitality Salesperson. 

Where has the passion of the salesperson gone? Or, was it ever there in the first place? Is glib-talking a pre-requisite of a salesperson? Does an MBA warrant a quality salesperson’s potential? And does experience suggest supremacy in the art of selling?

‘Madam, kindly grant me a couple of days to assess your requirement vis-à-vis other booking options we have – accordingly allow me to revert if we can permit your conference at our hotel,’ said the Sales Head of a 5-star resort hotel, glibly. While the terminology sounded very impeccable, there was no warmth or caring for the client’s needs in this script. Also, it stank of a shade of arrogance. This choice of words was sufficient to convince the ‘Key Decision Maker’ following up on a possible closure for a 250 room nights sales conference, that this was not the place for her requirement.

In a rare moment of candour, this senior corporate professional who books 1000+ room nights (international + domestic) annually for her company, confessed that she is still looking for a salesperson who cares for the client with a passion only superseded by that of a mother bear for her whelps! Wanted – A Passionate Hospitality Salesperson!

A truly wanted passionate hospitality salesperson brims with passion, has a caring heart, an unselfish attitude, and a desire for the client’s needs. When the customers feel this, they are more likely to be motivated to reciprocate and give the order to this salesperson. Helping customers succeed or get what they want is not being philanthropic. It is a powerful means of achieving one’s sales budget. That’s the paradox. The more important it is that one makes the numbers, the more important it is to stop concentrating on one’s budgeted targets, and start concentrating on the customer’s needs.

Here are some typical situations I notice happening far too frequently over the past few years.

  • The client calls the salesperson to elicit rates and details and is told the salesperson is in a meeting, sales review, or budget review.
  • The salesperson cuts the client’s call and sends a pre-set or automated message… then does not call back.
  • The client does not get a revert from the salesperson, even though it was promised in a specified time.
  • No apology is forthcoming for the delay in revert, nor any intimation from the salesperson as to when they will now revert.
  • The client is connected to the Sales Head, who diverts the query to a team member, then disconnects from the conversation thread, rationalising that their underling is now handling it.

It would be an interesting exercise to audit the client’s impression of the salesperson handling the client’s account. Startling revelations may tumble out and help hotel leaders re-engineer their sales orientation. When we take guest feedback for departments and people in our hotel, why should we not do the same for our corporate and MICE clients in their dealings with our salespeople? This way, we would identify the truly wanted and Passionate Hospitality Salespersons from amongst the team.

So, where has the passion of the salesperson gone? Or, was it ever there in the first place? Is glib-talking a pre-requisite of a salesperson? Does an MBA warrant a quality salesperson’s potential? And does experience suggest supremacy in the art of selling?

‘Skills are cheap, Passion is priceless,’ says Gennady Vaynerchuk, a successful Belarusian-American entrepreneur.

This brings me to the Root Cause Analysis as to why a Passionate Hospitality Salesperson is a rarity and is so wanted! After coaching sales teams and conducting numerous sales seminars over the past decade, my understanding of this issue is far greater than when I was a General Manager with sales teams reporting to me. I have also been fortunate to meet some passionate salespersons during this time, albeit far less in numbers than I would have expected.

I enumerate below, the possible reasons for this ‘lack of passion.’

  1. Has the salesperson entered the profession by intent or by default? Most salespersons enter the selling space without initially planning to do so. While this is not inherently wrong, and also happens with other disciplines, it limits potential performance vastly. In our industry, graduates who take up Food Production (Kitchen), Front Office, F&B, Spa, and even Housekeeping, normally opt for these verticals knowing what these departments entail. Not so in Sales, as they normally do not get industrial experience in this line.
  2. No takers for ‘sweat & toil’ field jobs. For hospitality sales, where personal connect will remain the ‘sine qua non’ for successful client relationships, one nowadays observes the hotel salesperson preferring to connect online from the office, rather than trudging over to the client’s office… There are enough excuses not to meet personally, what with alpha, beta, delta, gamma, and now omicron!

Of course, all this may sound Greek to Eureka Forbes (market leaders in water purifiers and vacuum cleaners), who has been a pioneer and trendsetter in direct sales in India and is amongst the larger direct-selling companies in the world. The company has gradually extended its sales efforts online, but it has not given up on its ‘tried & tested’ direct selling model. So now they connect with potential customers online, get a prior appointment, and then visit their homes. But all this is hard work and not for the faint-hearted.

  1. No allure in Sales Jobs. Pre-Covid, my business partner hosted a sales seminar series with three different management institutes. The students were to graduate with an MBA in Sales and Marketing. He asked the participants which vertical they were interested in opting for, now that they were almost ready to graduate. The majority raised their hands for Marketing, then Advertising, then Brand Management, then Product Management, then P.R. & Marcom. Finally, only 3-5% raised their hands for a career in sales!
  2. India has yet to offer a concerted MBA graduate program for Sales. The closest it comes to it, is an MBA in Sales & Marketing. While we know that these are two distinct topics, the institutions are yet to act on this and create separate streams. The students are more attracted to Marketing, even as a moth to a star… (remember the English poet Percy Shelley,who saw the moth’s desire for the light of the stars as a symbol of our heart’s desire for something distant, maybe even transcendent?)
  3. Recruitment considers Degrees, Experience, and Personality. I have interacted with extremely proficient salespersons having moderate education and linguistic skills, but who are super-stars in their organisation. H.R. departments know that these unpolished jewels are star performers. Yet, I find that organisations still recruit for skill over will. In spite of experiencing great sales performers who do not necessarily have the H.R. job specifications, this does not change the mindset of the recruiter, and the malaise continues – thereby building a plethora of nonpassionate salespersons in the field. Would it not make sense to brush and polish the passionate salesperson, instead of concentrating on the stylish, yet ineffective one?
  4. A high churn in Sales. This department suffers from one of the highest employee turnovers. Adequate options, burgeoning competition, the lure of better salaries, a demanding work landscape, a perceived lack of development, and an escape from performance review (especially for salespeople who have been promising business thus far eluding them as the ‘will-o’-the-wisp.’) are reasons enough for this high churn.
  5. Are we at fault in this, as leaders?
    • How often have salespeople been told that to be considered good at their job, they need to have the skill set to sell ice to an Eskimo, or a comb to a bald man? Salespeople believe that they need to be slick talkers, and be able to talk a dime a dozen to impress their clients. Sadly, both these beliefs are incongruities, and they instead end up antagonizing the client. This philosophy propagated by leaders stuck in a time-warp when demand was greater than supply, is one of the principal reasons why clients avoid salespeople.
    • As an organisation, do we develop our sales team on a continuous basis? Most salespersons find themselves intermittently developed, with ‘training’ conceived in organisations, more as a KRA rather than an ethos. How can a training workshop, for example, be effective if given once in 3-4 years only? Most sales-people we ask, tell us that this is the average gap since the last time they attended a sales-training intervention.
    • What accountability do we proportion to the salesperson for the development we have initiated for them? Do we review their learnings, to ensure an adequate ROI on their development cost?
    • Do monetary incentives always work? In the months when sales budgets are steep, the mediocre salesperson does not seriously attempt to achieve it, as he/she knows that incentives cannot be achieved. In lean months they work to achieve their incentives, as budgets are lower. For the nonpassionate salesperson, if they get incentives in half the number of months in a year, with a marginal effort, they are gratified.

We need to ask ourselves tough questions which may help us understand why our sales teams are not passionate and ‘cutting the mustard,’ as desired by the organisation. Can we better motivate them and achieve higher retention of our sales teams? Can we feed their passion for the customer rather than only talk of sales figures they need to attain? Can we also lead from the front and keep the customer ahead?

Achieving organisational revenues by selling to the customer resembles the ‘chicken and egg’ story – a metaphorical adjective for a causality dilemma… Which one comes first?

This article has appeared in ET HOSPITALITY WORLD.COM December 2021

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Will the Hotel Salesperson ever get obsolete?

Circa 1991, when just an Assistant Manager in the F&B department of The Oberoi Towers, Mumbai – I was summoned to the office of Mr. S.M. Datta, Chairman – HLL (now H.U.L) by his Executive Assistant to discuss plans for a business lunch. I casually strolled across to the HLL building and met his E.A. who, without any further ado, introduced me to Mr. Datta. I spent a good 15 minutes with the chairman, understanding his requirements and then strolled back to work, to initiate the execution for his lunch event.

It never struck me how fortunate I had been to have gained entry to an office, which the most experienced and accomplished sales head would consider hallowed ground! In those days, there was very little competition, and I was a cog in arguably the country’s most professional hotel company – hence I took this tryst for granted.

Today’s scenario is a far cry from those days. Competition has mushroomed, and how! Customers have the upper hand, and they are spoilt for choice; even as hotel products are fast becoming commodities, and the digital age is ushering in a ‘selling from a distance’ mode.

In the Indian hospitality context, salespeople had to struggle less in the 1990’s, while the 2000’s brought in more competitive field battles. This acutely intensified in the second decade (2010’s) of the third millennium. The current and third decade (2020’s) has been augmented by the pandemic, and the entire sales model has taken on a different hue. Are we now seeing signs of a possibly exacerbated demise of the conventional salesperson?

A star salesperson’s results have always been the exponentiation of Motivation, Activity Level, Direction of Efforts, and Effectiveness.

“Hard Work for the Unutilized-Talent-Salesperson,” and “Smart Work for the Work-Horse-Salesperson” is the success mantra for a successful sales team, made up of assorted performers.

Today’s salesperson deals with a different market. Hotel General Managers, Sales leaders, and Owners that we talk to, mention a transmogrified segment of source business, and clientele with diametral needs. No longer can salespeople be reactive and work like order-takers. Salespeople need to come out of their comfort zone, and be pro-active in this ‘new-normal market.’

In his book ‘All I Really Need to Know I Learned in Kindergarten,’ Robert Fulghum explains how the world would be improved if adults adhered to the same basic rules as children. Likewise, salespeople must appreciate that they need to get their basics right, in this new adjusting world.

One of the concerns we are often asked to mitigate while designing and delivering a sales intervention workshop for a hotel sales team, is how to craft conversations with a senior resource of a corporate. Hotel Owners, Sales Leaders, and General Managers bemoan the fact that their sales team members are relatively inarticulate when meeting with a company’s senior most Decision Maker. Through decades of conducting such programs, and having interacted with thousands of salespeople, we find that interactive conversational skills by most salespeople lack the following:

General Awareness: It still surprises me to note that by a show of hands in any session, approximately 2 of 15 participants read the newspaper, daily. Another 5-7 claim to read it online in bits and parts – these when probed further, have no real depth of knowledge of current news. Specific awareness of any industry visited, along with the overall economic scenario, is a sine qua non for any salesperson. How otherwise then, can they have a cultured tête-à-tête with a well-travelled C-Suite leader?

You, before I pattern: Even as the word ‘business’ has u before i, a smart salesperson understands that putting the client first will eventually help in achieving business targets. Sadly, often salespeople kill the golden goose to take all its gilded eggs at one go!

Creating Trust: This is defined by the salesperson establishing commonalities, showing positive intent, and through trust transferred by the brand represented by the salesperson, its people, or its customer-speak.

Creating a connect: The salesperson who invests time and integrity into his client relationships will tower over colleagues. Mark McCormack in his book “What They Don’t Teach You at Harvard Business School” cites an interesting observation all salespeople would do well to reflect upon: “All things being equal, people will do business with a friend; all things being unequal, people will still do business with a friend.”

Salespeople sell three things: their product, their company, and themselves. Selling themselves is actually the differentiator, as products and companies tend to be similar. Can the salesperson become an enabler-assister offering altruistic support? If so, then the ubiquitous salesperson now advances from being a hunter-gatherer to a trapper, ensuring long-term business relationships with clients.

Talking less: How often have salespeople been told that to be considered good at their job, they need to have the skill set to sell ice to an Eskimo, or a comb to a bald man? Salespeople also believe that they need to be slick talkers, and be able to talk a dime a dozen to impress their clients. Sadly, both these beliefs are incongruities, and they instead end up antagonizing the client. Remember, the empowered client now lives in an era where social media is stronger than direct communication with the company… a progressive take on the metonymic adage ‘the pen is mightier than the sword.’

Listening to the client: Talking less definitely helps salespeople concentrate more on their listening skills. To hone this, they need to first understand what the client is saying, before responding with their opinion. Here, their body language and ability to understand, need to be attuned to client-needs, rather than their own. Savvy hospitality companies today, are capturing digital signals on websites, to hear from customers in real time, what information they need upfront to be informed enough to successfully complete transactions. Needless to say, if the digital world is doing this, the human interface needs to do this more so, to stay ahead of the curve.

Adept probing skills: Asking situation questions and problem questions is a skill yet to be mastered by many a salesperson. Post trust-building, and creating a connect, the salesperson must understand the client’s clear and strong needs through skillful probing; using open, closed, and leading questions – with the clear intent of using the answers gleaned, to resolve the client’s challenges.

Decades ago, the telephone operator was replaced by the EPABX. At the turn of the new millennium, computer salesmen grew redundant thanks to commoditization of the laptop. Today, the famed Mumbai Dabbawallas are having an axe to grind with food aggregators Swiggy, Zomato and the likes.

Digital Marketing is the current big innovation. Using AI (artificial intelligence), ML (machine learning) and IoT (internet of things), Digital Marketing is challenging the traditional ‘hunter-gatherer’ salesperson, and is already beginning to perform the role of the ‘digital hunter-gatherer.’

Half a century ago, legendary business thinker Peter Drucker said, “The aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him or her and sells itself.”

So, should the salesperson worry about redundancy?

Is the digital age a clear and present danger to the universal salesperson?

The answer lies in how the salesperson attempts to stay relevant, so as to continue to exist, and in fact, flourish. Value creation is still within the sphere of the human intellect, and salespeople will always exist as long as they can create a higher value in the customer’s mind – greater than that within the product.

In order to stay ahead of the tech-age, salespeople need to append the farmer mode to their hunter-gatherer approach. Farmers (in the sales context) are specialists at servicing the existing customer base; keeping relationships going, and staying attuned to opportunities to sell to it again. This will be hard for machines to emulate.

The left brain (aka digital brain) deals with linear thinking, while the right brain (aka analog brain) emanates creative or spiral thinking. As of today, the IoT is taking over left-brain tasks. Right-brain tasks are yet very much exclusively within the human domain. What salespeople need to do is to complement their left-brain along with their right-brain, to maintain selling dexterities that cannot be mimicked by machines.

No longer are salespeople required to simply take orders. They need to ‘value-create’ inspired solutions that will benefit both, the client, as well as the hotel.

It would bode well for the salesperson to be cognizant of this!

This article has appeared in ET HOSPITALITY WORLD.COM Aug 2021

 

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Improving Negotiating Leverage – BATNA

“Rajeev, we have been given a mandate by our management. Due to the Covid-19 crisis leading to a steep fall in customer demand, you are expected to reduce the price of your cutting tools by 50%,” said Mr. Padmanabhan, (the purchase manager of Shockproof, a shock absorber manufacturing company from Delhi) adding a veiled threat, “else we have no choice but to switch over to the competition.” Rajeev is a technocrat running ‘Techno Enterprises,’ a MSME manufacturing cutting tools enterprise with a turnover of around Rs. 10 crores. When asked about the customer details, he shared his understanding that ‘Shockproof’ is a major supplier of shock absorbers with a turnover of ₹ 1000 crores catering mainly for the two wheeler industry.

One of the questions often asked in our training and consulting assignments is ‘how does one deal with such arm-twisting tactics, especially when the customer is too big compared to the supplier?’

One important concept in Negotiation theory is BATNA, which stands for the Best Alternative To a Negotiated Agreement, a term coined by Roger Fisher and William Ury of the Harvard Program on Negotiation. BATNA is an important tool while preparing for negotiation. Both parties have their BATNA independent of each other. The party having a stronger BATNA has a stronger negotiating leverage. In case the parties are not able to conclude the negotiation, the best option each one has can be called as their BATNA. In the above example, if the negotiations fail, the BATNA for the customer and vendor can be improved as follows:

Customer: Look for other vendors who can give a similar product at the desired price.

Vendor: Develop alternate customers who can provide the requisite amount of volumes at the desired price.

It is not as simple as it looks above. Does the customer have a vendor who can provide deliveries just in time to meet his production targets? Alternatively, does the vendor have alternate customers where his current inventory can be offloaded? Now you will appreciate that BATNA is not only decided by the number of options but also the feasibility and attractiveness of those options.

Whose BATNA is stronger? The conventional answer favours that of the buyer who is much bigger in size. Some points to ponder:

  1. Identify your BATNA: The tool required for cutting/drilling is made with precision which requires tungsten carbide or diamond as the raw material. It also requires a great deal of R&D to develop a tool for a specific application. The vendor has been supplying the tools for the last 15 years. With considerable technical expertise, the production department found the tool useful. The rejection rate was less than 1% and the cost-per-component was low.
  2. Identify the weakness in the other party’s BATNA: The seller knows that the buyer has the option of other vendor but also has the critical information that the rejection rate of the competition’s tool is close to 50%. Also, the shop floor people do not appreciate the tools supplied by the competition.
  3. Spot the customer’s bluff: Even though the Indian two-wheeler volumes fell by 15% in FY 20, the impact on Shockproof was much lesser at around 8.4%. The customer was able to absorb the shock (pun not intended) as it focussed more on improving the content per vehicle. As per a newspaper report, Shockproof had notched up a top-line of ₹ 5000 crores and its EBIDTA rose by 4% to Rs. 800 crores. (Remember the excuse of the Covid -19 crisis the purchase manager articulated earlier?)
  4. Do Proper Homework: Rajeev shared that the customer’s turnover was ₹ 1000 crores, whereas in reality it was 5 times. This can be perceived two ways: conventionally it may produce a feeling of helplessness. Alternatively the helplessness could be transformed into strength as in the end result of a David vs. Goliath fight. The vendor could feel that a supply of ₹ 1 Crore of material is insignificant from the customer’s perspective and there need not be any need for the customer to be so aggressive in reducing the price. Can David stand his ground?
  5. Improve your BATNA: Let us take a different example where both the customer and the vendor are equally strong. For its Power PC, Apple had developed its microprocessor in collaboration with Motorola and IBM. In 2005, Steve Jobs took a call to switch over to Intel, which apart from being a market leader in microprocessors was offering a cutting edge technology in computing. Developing microprocessors needs a huge investment and also technical expertise. Intel had both and was the only vendor for such a high-technology product. With a single vendor, the vulnerability was high for Apple. Three years later, Apple bought over a 150-employee start-up in chip design called PA semi. Most of the team members had worked earlier at Intel, including Johny Srouji who now reports directly to Apple CEO Tim Cook. In 2020 Apple announced that it will use its in-house microprocessors for the new range of Macs. ( International Herald Tribune, Don Clark and Jack Nicas – After 15 years Apple prepares to break up with Intel DH – June 23, 2020)
  6. Risk Mitigation: Apple was giving a business worth $3.4 Billion of microprocessors for Macs to Intel every year according to C.J. Muse an Evercore analyst. For Intel it was like losing a major account which was powering around 20 million Macs shipped by Apple annually. The impact of such a Key Account leaving Intel can be minimized when the figure is perceived not in absolute numbers but by the percentile share. Apple was contributing to 5% of Intel’s annual business and the total no of PCs sold annually are 260 million. While understanding one’s BATNA, apart from the actual value an account produces, the share of the total business also needs to be considered. It is better not to keep too many eggs in too few baskets. An important tool in risk mitigation is the sales funnel which can help in improving your BATNA.
  7. Guard against Pitfalls while analyzing one’s BATNA: There are two mistakes people make while going in for negotiations. Either they are too optimistic or too pessimistic.

Being too Optimistic: There is a tendency to aggregate all the options and assume it to be The BATNA. Consider for example, Rajesh, an unemployed engineer in Bangalore who has applied for a job in IT and feels that he deserves a salary of Rs. 10 lakhs as he has the following options:

  • Has applied for similar jobs in Mumbai and Delhi.
  • Has plans of a start-up in 3-D printing.
  • Is exploring further studies in the US by answering GRE and TOEFL.
  • Is pursuing MBA by giving CAT.
  • Joining the family’s 2-decade old fabrication business which is running well.

It is risky to assume the sum total of all these options as the best alternative because at any moment Rajesh can select only the best one. Contrast this with Gautam who already has a job with a ₹8 lakhs CTC. You will appreciate that Gautam has a better BATNA than Rajesh as a bird in hand is worth two in the bush!

Being excessively Pessimistic: The other mistake in negotiation is being too pessimistic when one is too committed to reaching an agreement without any preparation. There is an assumption that agreeing to all of the customers’ demands will make him happy, giving rise to a long-term business and relationship.

In the cutting tool example, the vendor though small in size vis-à-vis the customer, had a better product quality, a low rejection rate, a lower component cost and a shorter delivery period vis-à-vis the competition, which meant him having a better BATNA than the customer. Does it mean that he should rest on his laurels? Competition will be always trying to catch up with him, which necessitates him having to improve his BATNA all the time so as to keep the competition at bay.

Thus, negotiating strength, rather than being decided by the absolute size of a party or the size of the deal (as in the case of Apple vs. Intel) or the number of back-up options, is decided by your BATNA.

Whether you are a buyer or a seller, starting a new venture or looking out for a new job opportunity, please spend time in identifying and developing your BATNA.

Remember, in life, you do not get what you deserve, but what you negotiate and that is decided by your BATNA, the Best Alternative to a Negotiated Agreement!

Rajan Parulekar – Director, Hospitality Paradigm

 

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Tips for Hospitality Sales Persons post Covid-19

1. Work on building relationships with organizations. When the outbreak has lessened and customers are considering rebooking, they are going to remember how you treated them. Focus first on maintaining relationships and then on prospecting in the future rather than trying to do any hard sells. Check in on customers to see how they are doing and find out what specifically they need. Focus on what we can control right now. What we can control is having conversations with customers and getting their feedback by asking the right, quality questions.

2. Be aware of new and current opportunities. Airline fares are extremely low right now and people are still taking advantage of that. If you recollect, after 9/11, leisure travel was one of the first segments to come back. People are stressed and they need to get out there and blow off a little steam.

3. Businesses are going to change the way they operate. This is going to be a completely new world that our sales organizations are going to be facing. Some may be naive and say that the virus is gone and it is business as normal, however it’s not going to be business as normal. You are going to have to rearrange your whole sales strategies, your staffing levels, and your business mixes to really recover what you can on the back end of this. As more people are working remotely, it is possible that business travel may decrease, possibly even permanently, but because this crisis has taught us to work more efficiently from a distance, there may be more of a need for us to convene in person at conferences in the future. The possibility of renting out boardroom suites to employees who need a place to focus on their remote work instead of working from home may emerge. Hotel rooms may have to become adaptable to conversion to such needs.

4. We’re in uncharted territory. Some people are predicting that the coronavirus will affect the industry for just a few months, while others have heard that it could last up to a year. This is something different than anything the industry has faced before. It is quickly becoming apparent that this is less SARS and a lot more 9/11 in how it feels. People are scared to fly or they are being restricted to fly. So that’s a different set of changes in demand and hotels will have to deal with that.

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What great sales people do…

Just as great brands cultivate mutually beneficial relationships with their customers, great salespeople cultivate a deep connection between their company and their client’s business. To borrow a term, the best salespeople are brand evangelists.

Guy Kawasaki first adopted the term “evangelism” into the business world by applying it to an innovative approach to sales, marketing, and management.  Evangelism, as he defined it, means “convincing people to believe in your product or ideas as much as you do” because evangelists believe that what they offer is truly helpful and valuable to others.

Brand evangelists — that is, great salespeople — build up support within a market for a brand so that it becomes the brand leader in its category.

Importantly, brand evangelism is not another one of the customer-centric or customer-driven sales approaches that have become popular in recent years.  Customer-centric sales and most other sales improvement approaches are pursued for the sole purpose of increasing sales.  Brand evangelism is about engaging customers in a way that produces stronger and more valuable brands and sustaining long-term business success for their companies and their clients.

This is what great salespeople do.

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Value Proposition

Creating a Value Proposition

A value proposition is a promise of value to be delivered and acknowledged and a belief from the customer that value will be appealed and experienced. A value proposition can apply to an entire organization, or parts thereof, or customer accounts, or products or services. Benefits help in creating a value proposition for the guest. Hence to create a value proposition for a guest, the product/service must be first seen from the guest’s perspective rather than the organisation’s perspective.

The value proposition is, by definition, different than a company’s mission statement. A mission statement talks about how the company is going to offer a product or service to a specific market segment, while a value proposition explains why the people/companies in that market segment should want to engage with that business.

Value is innately subjective. Different people value the same thing differently.

For a restaurant, you must establish the value proposition that will best resonate with your target customer base. Make sure that the value proposition permeates through each part of the restaurant. For example, if your value proposition is simply “great seafood and the largest selection of white wines in the city,” then all restaurant employees should focus on delivering that value proposition. The wait-staff should lead with this statement at each table they serve. The kitchen should have a consistent menu of popular and unique seafood, and must also try to add a unique, seasonal choice. The wine-waiter should do the same—highlight the wide selection, but suggest special “pairings” of wine with featured seafood.

Deciding on the value proposition also helps with its focus. You might have a fantastic kitchen staff that makes great-tasting food, but you can’t be all things to all people. No single restaurant has the best steak, chicken, fish, wine, beer, appetizers and dessert. Any restaurant that tries to be the best at everything will find that they have spread themselves too thin. When you create an appealing value proposition for your restaurant, you are creating a reason for people to choose it over other options.

Keep in mind that your value proposition does not necessarily need to be food-related. For example, if you’re running a beach bar, your value proposition could be “sun-downer cocktails” or “beach games” or “trendy local live musical performances”.  Different people value things differently. Some people may not be interested in beach games, but you need to research what your guests may want and use the answers in creating your value proposition.

In summary, to ensure that your value proposition is successful, you must strategize such that the value as perceived by the guest is actually greater than the actual value in the product or service you are offering.

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Up Selling and Cross Selling

An up-sell is to get the guest to spend more money – buy a more expensive model of the same type of product, or additional features that relate to the product in question. A cross-sell is to get the guest to spend more money by adding more products from other categories than the product being viewed or purchased.

Say the guest is planning a special anniversary dinner with his wife at your hotel. He comes to reserve a table in your restaurant for a 3 course table d’hôte dinner with a bottle of domestic house wine. You offer:

  • A three course table d’hôte seafood dinner in the private gazebo on the restaurant lawns with a bottle of champagne ~ Up-sell, same product family, more expensive
  • A couples Swedish Massage at your spa followed by a 3 course table d’hôte seafood dinner in the private gazebo on the restaurant lawns with a bottle of champagne ~ Cross-sell

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Importance of Understanding Needs

Selling when needs are absent, may lead to lot of objections. Also. if the needs are abstract and not formed clearly, the selling process may still lead to some objections. Creating concrete needs make the selling process smooth. A high-pressure salesman is the one who starts selling before establishing concrete needs whereas the effective salesman spends time in creating and developing the right type of needs. There are essentially two types of needs:

  • Abstract or Unclear Needs: Dissatisfaction/Problem may make the customer worried and make him think towards change. However due to inadequate value propositions he may live with the problem rather than accept your solution, making price the main issue.
  • Concrete or Clearly Felt Needs: These are the strong desires and wants which are clearly felt and perceived by the customers. Concrete needs make your selling process smooth.

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Features, Advantages & Benefits

Features: Facts or characteristics of a product or a service. Example: Our hotel provides 24-hour services which include a state-of-the-art Business Centre, Concierge service, Doctor on call, In-room dining, i-pod with docking station, Laundry and dry-cleaning, Broadband and Wi-Fi internet, Car and Limousine service, and various other international amenities and services. Research shows:

  • Features have a small impact during the initial stages of a selling process
  • Telling more features creates an opportunity for the guest to front more objections
  • Features have very less impact in the advanced stages of a sales call

Advantages: Show how a product can be used or is better than that of the competition. Example: Our hotel is the closest to the international airport as well as near the central business district and is located in a high security zone. Research shows:

  • Advantages have a positive effect in the initial stage of a selling process.
  • Have less impact in the latter stages of the sales cycle.

Benefits: Show how a product can meet the concrete need expressed by the guest. Examples: Having our own Pan-Asian restaurant ensures that your Japanese guests staying at our hotel will be very comfortable with us, especially since our staff have also learnt basic Japanese and will be able to converse with your guests / Is parking a major concern? Do not worry as our hotel offers parking for up to 400 cars at any point of time / Our rooms with balconies directly overlooking the sea will offer your guests the opportunity to take in the sea-spray during their stay. Research shows:

  • Benefits have a consistently high impact throughout the selling cycle.

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Info, Time, Power – Negotiating Leverages

Information, Time & Power – Leverages of Negotiation

In negotiations, Leverage is power. Whoever has the most… wins

Here are some primary questions you must ask yourself when you are negotiating: “Who has the superior bargaining position? Why is it superior?” The next question you must ask is, “How and when can you use your leverage to your foremost advantage?” Timing and technique matter. Now, as you analyze your situation, realize that everything the opposing person wants or needs for agreement is to your advantage (as long as you understand their reasons). On the other hand, everything you need or desire for an agreement adds to the other side’s leverage (also only if they comprehend your reasons).

Hopefully your preparation has given you as much information as you need to be a strong negotiator. As you negotiate, new information will come up that will help you understand where the other person is coming from. As much as possible, make sure you don’t give too much information to the other side. Try not to contribute any knowledge that would grant them superior power. This is not easy, but the better you do it, the better your leverage during a negotiation.

You have to evaluate your leverage over and over again as well as the leverage the other person is showing you. Why? Because as talks move forward, events, positions, and attitudes change. More than likely, your adversary is also performing the same calculations. It’s very much like a chess match. Each advance changes the posture of the game. The correct moves at the proper time can threaten your contestant’s king. So you should deliberate many times on how and when to use your leverage during a negotiation to achieve dominance.

If you fail to stay updated and informed as the process unfolds, you may not maintain any advantage. If you require an emergency appendectomy the doctor and the hospital obviously have the advantage and the most leverage. You are not in the position to negotiate the cost of the operation while you’re rolling in pain on a gurney to the operating room. However should the sickness be one which is not an emergency and in which you can take a second or third opinion, your leverage increases as you may have options to obtain medical opinions with other hospitals and doctors.

Here’s another factor: It’s not entirely the scrutiny of powerful positions that creates leverage. It’s also how that force is handled. You can use it subtly or with a hammer. You can apply it when circumstances are proper and when you are at your best, or use it at the improper time and destroy your superiority.

Finally, there are two important questions to ask yourself continually: Who needs it more? Who has the greater motivation? If you determine the other side’s needs are greater than its wants, you have the advantage.

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Probing Techniques

Guidelines in using the Probing Technique

Request permission and then ask a few closed questions to get the client’s response and to know his inclination. [Explain that you are asking these questions to be able to subsequently match your product/service with his need].

Subsequently, ask open questions to get more details. Do not ask too many questions which may irritate the client. It is recommended to provide some info about your company/product after asking a few questions.

Note: Questions using ‘Why’ and ‘Who’ are tricky and should be used with caution.

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Ask and Ye shall Recieve

The seller’s task is to translate the value from his product to the guest’s mind. The selling process becomes easy if the guest’s needs are identified before proposing your solution. Asking the right questions will help the customer identify his needs. Though there are a wide variety of questions, the most important types of questions are:

Closed Questions… where the expected response is a YES or a NO.

Leading Questions… Can be considered as a type of closed question where you get a desired response which can be either a Yes or a No. If you are able to get three Yes’, it is possible that the customer’s apprehensions and resistance will be reduced.

Open Questions… where the customer is led to give a detailed answer. The simplest way to achieve this is to use the 6W+1H (What, Why, Where, When, Which, Who + How).

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The importance of Listening

There are four ways in which we communicate viz. reading, writing, speaking and listening. All of us use the above skills on a day-to-day basis. During our school and college days which skills were predominantly tested? Our competency was predominantly tested on the way we scored marks during the examinations. The marks, the grade etc. depended on what we wrote during the examination. The writing skills depended upon the way we read and understood a particular subject. Some of us had to answer the Viva Voce or Orals wherein our speaking skills in answering the questions were tested. Later on as we planned to enter a professional life, we attended interviews. In short, our skills in reading writing and speaking were predominantly tested.

But then why so much fuss about listening? We have been listening to our parents, our teachers, our bosses, our friends etc. all along. Then do we really need to know what listening skills are all about?

Hearing is involuntary. As students, when a minimum of 70% attendance was compulsory to qualify for the examination, did we really listen to all the lecturers? Or were we physically present while mentally absent? Listening is voluntary where our mind plays an active role and thus can be termed as hearing with an attentive mind.

Empathic Listening is the highest and the most effective form of listening. The listener not only responds to the words and actions of the speaker, but also understands the feelings beneath the words/actions/body language. Empathic listening is listening with an intent to understand, where the listener gets inside the other person’s frame of reference and sees the world the way the other person sees it.

For example, a guest who enters a lounge bar may have a reality of how he may quench his need for a hot brew and a light snack to tickle his taste buds. However the Lounge captain may look at this guest as just another ‘bill’ and how his order can help him towards his revenue objective.

If the Lounge captain is preoccupied with his operating reality without bothering about that of the guest, the communication may not be effective and he may try to push high-end beverages to the guest. On the contrary if he is able to look from the guest’s perspective, the Lounge Captain may fully understood the guest’s need for a coffee and light snack – thus paving his way towards an effective relationship.

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Upselling or Overkill?

On Christmas eve, I visited a popular seafood restaurant in Mumbai along with friends. Known for its popular seafood dishes and fresh fruits de mer, we were  looking forward to a culinary delight. What irked me however was the intention to upsell amongst all service staff. Right from the beginning, from the order for mineral water to the starters and the main course through dessert, there were a plethora of upselling techniques being used. Dishes not on the menu were being recommended, tiger prawns instead of king prawns were recommended, the catch of the day was shoved into our faces and so the evening wore on…

While the meal was a delight, the upselling did leave a poor taste in my mouth and this was aggravated when the basics of service were not being followed (e.g. ladies were not being served first on the table).

Where does operational training draw a line? Is it not more important for the service staff to know how to please a guest rather than killing the golden goose? I for one will not want to go to this restaurant again!

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