In this morning’s newspaper there was an article about the Tennessee Valley Authority (TVA), our local electric utility here in Chattanooga that was the perfect example of a company that is routinely validating successes. The headline read:
Dams Avert $722 Million In Damages
The story talked about how the numerous dams that the utility has built on rivers in the Tennessee Valley for power generation and flood control have benefited the people and the cities throughout the area.
I became intrigued and went to the TVA’s website to look over their press releases. There I found an even better headline:
Nearly $1 Billion in Rainfall Damage Averted in February
TVA’s skillful management of the Tennessee River system helped avert major damage to the Valley’s towns and cities during the rainy February we just had.
Which was accompanied by this graphic:
Even though the TVA is a utility company with a monopoly on providing electricity for a huge portion of the Southeastern US, they still regularly put out press releases like this one. You might ask who they are “selling” to when there’s no other place to go for your electricity needs. But managing their perception with the public is an important goal for the TVA.
Here’s why: because most of us take our electricity for granted.
We expect it to come on 100% of the time if we turn a light switch on or plug in a vacuum cleaner. In other words, perfection is the standard we hold the power company to. So, when there is a problem with the power—like that 6-hour outage last summer when it was 98 degrees and the air conditioning wasn’t working—it stands out in our memory.
We notice and hang onto the mental image of a problem for months or even years, while ignoring great service every day.
What does this have to do with negotiating? Well, in the MAP Price Increase Boot Camp we talk about the topic of raising prices with existing customers. And as part of that discussion participants learn a five-step process they can use when renewing agreements or when they need to increase pricing during the life of an existing contract.
The first step in the process is Validating Your Successes. What do we mean by this?
It’s similar to what the TVA did when they issued their press release about the huge amount of potential flood damage that was averted because of their skillful management of their flood control system. To counteract the public’s tendency to only think about the power company when it’s dark (or hot!), they remind us of the ALL the good they do for us.
When you go to your customers to negotiate a higher price for existing products, expect some push back. And to try to avoid paying more, buyers will frequently raise concerns they have about the quality of your product or service. They may even produce a long list of problems they’ve had with your company and argue that such poor quality warrants a price decrease, not an increase.
Sometimes the problems aren’t with the product or service you are selling, they are with your customer service, or your delivery times, or some other aspect of the experience you’re raising prices on. Whether or not they complained at the time of the problem, you can bet they will bring it up now. Even problems that were resolved might make the list!
Rest assured that in many cases there will be a litany of difficulties that are carefully documented. Tragic tales of the costs, hassles, and damage to their reputation caused by your shoddy service will be told. Sound like an exaggeration? Maybe, but not by much.
Since your buyers are likely to search far and wide for reasons not to pay more, it’s critical that you think far ahead as you plan your negotiation. Begin documenting and validating the things that go right with your products and services on a regular basis—as soon as possible after the agreement goes into effect.
Regularly remind your customers of the great customer service you provide and the times you or your company went above and beyond to help the buyer.
Show savings in terms of money, time, labor, hassles, quality problems, warranty claims—everything that comes to mind.
Make periodic contact with people throughout the customer’s organization and call attention to what you’ve done well. Try to be creative and present your information in a variety of ways. Don’t let reviewing your success turn into just another routine (and maybe boring) meeting.
Provide reports, charts, and graphs—in writing—and ask the customer to confirm the data. Better yet, get on a whiteboard, hand the customer a marker, and get them calculating the savings themselves. They are far less likely to argue with you about numbers that they came up with! You can shoot a picture of the whiteboard and email it to them after the meeting.
Then, Enjoy The Payoff!
This validation process may seem like extra work and planning. While it will require discipline and preparation on your part, the payoff when it’s time to renew a contract can be huge—even if you’re not asking for a higher price.
- You’ll have a number of positive interactions with your customers throughout the duration of the contracts you have with them.
- If the buyer is an internal champion for your company, you will be providing evidence that they made a great choice when they backed you.
- You help make your buyers look good to others inside their company.
- If they are keeping score of the negative experiences they’ve had—and they are highly likely to do so—you’re balancing those unhappy memories with your positive ones.
So, the moral of the story is this: be like the Tennessee Valley Authority and put out those positive “press releases” with your customers early and often! Get in the habit of validating your successes! You’ll be glad you did.
How are you validating your successes with your clients and customers?