Friday, April 8, 2011

Communication - Using questions

Questions are a great negotiation tool, and the use of questions to help in the negotiation will start well before the formal negotiation process begins. As part of their selling activity, salespeople may spend substantial time probing to determine the Buyer’s need, interests, timing, volumes, etc. They ask questions to determine the acceptance of their product versus the competition, whether any unique features they have are needed or desired by the Buyer that may reduce the competition. They may also probe to find out who the competition may be, so they get a better understanding of the competitive environment based on where they know they will stand their competition from their recent dealings. All this questioning by the Supplier needs to be managed so it doesn’t impact their perception of competition and the uncertainty in their getting the business.

As part of the Buyer’s pre-qualification of the Supplier, the Buyer should also be questioning the Supplier about what they do, how they do it, who their customers are, etc. to gather information they may be able to use in the negotiation. This questioning should also try to uncover the Supplier’s motivations, needs and hot buttons. For example, a simple question on their capacity and current business load may show how much they need the business. During any visit you should look at and question what they do as a standard and check for signs of potential issues or problems and ask questions to see if there are any issues or problems that you may want to raise during the negotiations to get an advantage. For example, I’ve seen Suppliers want to change extra for a step in their process that they perform for all their customers, which means it’s already built into the product cost. For example, if you found a large amount of product returns, you might question what is causing them or why the amount is seemingly large, and then use that in negotiating quality levels, replacement turnaround time, or controls over changes.  

In the actual negotiation, questions are used for a wide variety of purposes:
  1. As Fisher & Uhry say: “Focus on interests, not positions”. Asking questions allows you to have an open discussion on the point(s) instead discussing and listening to their position(s).
  2. Questions force the Supplier to talk, which helps you learn about them, and the underlying issues or concerns.
  3. Questions can provide a break in your discussion and can keep you from potentially saying too much too soon.
  4. Questions force the Supplier to think about their position or their argument and what they really want, which may be different.
  5. Questioning can narrow the Supplier’s focus to a specific issue or issues.
  6. Supplier’s responses to questions become their proposal, which makes it easier for them to understand and agree upon if you like what you hear.
  7. Questioning breaks down barriers in communication which helps identify what the real problem, issue, or concern may be that needs to be addressed. Sometimes the stated problem or issue isn’t their real or primary concern.
  8. Questioning and listening attentively shows that you are interested in what they have to say, which allows better communications as you are respecting what they have to say.
  9. Questioning buys you time to mentally formulate your next steps, approach, tactics or next question.
  10. The right string of questions can help lead the discussion and Supplier to a position you want.
  11. They can solicit information to understand the underlying problem or reason for their response.
  12. They can invite joint problem solving
  13. They can help clarify information you received.
  14. They can verify that the information you have is current and accurate.
  15. They can check whether your current understanding is correct.
  16. They can be used to rephrase to determine whether there was agreement.
  17. They can probe for the degree of importance of an issue
  18. They can be used to share information or knowledge that will help you.
  19. They can help set expectations.
  20. They can show problems with their position or strengthen your position.
  21. They can use the Supplier’s information against them.
  22. Questions can help understand how close or apart you are
  23. Close ended questions can be used in making conditional concessions
  24. Questions can be used to introduce specific tactics.

Questions are structured as either close-ended or open ended. Closed ended questions should be used when you want to direct the discussion and limit the possible responses. Closed ended questions call for a simple response like yes or no. E.g. “If I do X, will you agree to that?”

Open-ended questions allow for an open response and are used to try to get at issues, motivations or invite problem solving.  “What if” is an example of an open-ended question.

Questioning is also a way to introduce different tactics. For example, asking the Supplier “Do you understand the impact this will have on your competitiveness?” introduces the competitive nature of the activity and the use of total cost impact as part of the negotiation.

Most of the time you want to move from broad open-ended questions to narrow closed ended questions to continue to narrow the focus, but that’s not necessary. You may need to ask several closed ended questions just to effectively set up the right open ended question. For example, you could ask a number of closed ended questions to have the Supplier acknowledge that there is a problem, they understand it, and they understand the impact, before you ask they an open end problem solving type question like “how are we going to solve this problem?” or “What have you done with other customers to get over this same issue?”

Keep your questions simple and don’t ask multiple questions at the same time as the Supplier can then select which one it will answer, and that may not create the flow you want. Script out most of your questions in advance so you are careful to not ask a question that you may not want the answer to or which could hurt your position. Never ask a closed ended question when you are down to one issue and the response could leave you without any other options. After you ask the question stop talking and listen. You don’t learn anything by talking, you learn by listening. Listen to not just the words, but what they say, how they say it, the conviction they have and look at the body language during the response. This helps you understand the degree of importance or the pain they have with the issue.

Here some questions you’ll hear in many negotiations:

What if ____________________________? (Open-ended probe)
If we do _____ will you do ______________? (If, then tactic)
Do you understand the impact this has on your competitiveness? (Competition tactic)
Are you aware that your competition provides this? (Competition)
When you purchase from your own Suppliers:
What terms do you expect?
Would your Procurement people accept this?           
Could you effectively manage your business with this?
All provide validity to your position by comparing it to what they do.
Who else do I need to talk to get agreement on this? (Escalation)  
Can you explain why _____?

Here’s an example of using questions:
Assume the supplier is offering only a 1-year warranty, but all their advertising and marketing for the product says that the product has 100,000 hours of reliability and you want a 3-year warranty term. Your questioning could follow these lines:

  • Doesn’t your Specification show you as having a reliability of 100,000 hours?
  • If your product has 100,000 hours of reliability, doesn’t that mean that it should fail on average in 11 years?
  • If the product has 11 years of reliability, how do you explain why you are only offering a 1-year warranty?
  • Is there a problem with your reliability you haven’t made us aware of?
  • Are you having a higher incidence of failures in the initial years that would drive up your financial exposure above the normal statistical rate?
  • If you don’t have a reliability problem, and you aren’t seeing excessive early failures, what are you seeking to avoid?
  • If your product were as reliable as you say it is, wouldn’t both the risk and cost be minimal for years 2 and 3?
  • If it isn’t a cost or reliability problem, what’s the real reason behind this?
  • Do you understand the impact this may have on:
    • Your competitiveness?
    • You getting this business?
    • Your product being restricted in our use of it?

No comments:

Post a Comment