As a global consulting and training firm specializing in negotiation and conflict resolution, Accordence® has partnered with many Fortune 500 companies to develop new approaches for their teams that focus on both substance and relationship value. These case studies represent common negotiation challenges our clients have faced and the unique results they achieved, including becoming effective negotiators, by working with the most engaging and dedicated professionals at Accordence.
Business Issue: A leading pharmaceutical company’s leadership had grown concerned. Less expensive alternate therapies were beginning to erode market share for drugs that accounted for a large portion of the company’s sales. The company’s customers - pharmacy directors for HMOs and hospitals, the purchasing agents for drug store chains - were coming under ever increasing pressure to contain rapidly rising drug costs. Managed care policies were changing the marketplace, and the company needed to find new ways to connect with their customers.
A Transaction Management Unit of a large brokerage services company was struggling to secure large asset business from independent investment advisors at a time when those advisors were leaving the big name firms in droves to start their own business. This Unit provides transaction management services so once independent, the advisor can keep track of their clients’ transactions in order to comply with regulatory requirements and provide value-added services to the advisor’s clients. Not something the advisor can easily take care of themselves, they seek third-party providers such as the Unit. The Unit’s platform is expensive; the Unit had established a threshold amount of assets an advisor needed to bring on to the platform in order to be cost effective and profitable. Due to the competition in the market, the Unit found that its Asset Acquisition Branch was consistently bringing in advisors with less than the minimum assets. They found that many times the advisors actually had more assets than they brought to the Unit but were giving them to the larger players in the marketplace. The recession led to a significant decrease in the Unit’s asset base under management and to new accounts with an excess of minimum asset target by the Unit. While large accounts still existed, the Unit found that the most powerful investors chose the Unit’s larger competitor for these accounts, oftentimes being drawn to the name they better knew. The Unit’s team needed the skills to draw larger investors and meet their minimum asset target amidst a shrinking asset pool.
Accordence tailored its system to teach the Unit the skills it would need in a one-day hybrid course. Working with the sales side of the Unit’s corporate training group, Accordence consultants walked through individual issues that different individuals had, and devised strong solutions to these tough questions. By looking at these different problems, Accordence found that the Unit needed to be assertive and find its leverage. Due to the competitive and economic environment it seemed members of the sales team were forced to accept any asset transfer offer an advisor put in front of them. The Unit had thus been left, at times, with the accounts their larger competitor turned down, because these accounts were either too small or more work than they were worth. Oftentimes these deals were connected with a verbal statement such as “Do well on these and we’ll give you more business”, but the lack of a formal agreement led to many dead ends.
The most notable success was a creative deal struck by the Unit’s San Francisco office. The office was approached with an account of $6 million dollars. This number was below their normal accepted threshold, and under further research, turned out to be made up of non-standard assets for the Units product to manage. These non-standard assets would be difficult to operate, which was probably the reason their larger competitor had turned it down. The Unit used the Accordence framework during the session to brainstorm leveraging this non-standard asset offer. The team discovered that the owners of these non standard assets also had tens of millions of dollars in suitable assets also entrusted to the advisor. The Unit struck an agreement that would ensure them future investments by the advisor of these suitable assets if they also managed the non-standard assets for a set period of time. Sticking to their end of the agreement, the Unit was rewarded with tens of millions of dollars in assets to manage a short time later.
A highly competitive nationally recognized trucking company made a strategic decision to increase their bottom line by investing in their most valuable commodity, their people. In order to enhance effectiveness with customers and improve sales results, they decided to transform older traditional business practices into smarter more stream-lined work systems.
For the last thirty years, a Fortune 500 manufacturer has turned to the same transportation firm to be its largest truckload provider. The transportation firm assigned a new global general manager to the manufacturer’s account five years ago. The transportation company’s global GM serves as a “relationship manager”, handling customer service needs, order fulfillment, and re-negotiation of contracts. Companies normally re-negotiate transportation contracts about every six months based on market intelligence that indicates how fuel prices, driver salaries, and market averages are changing.
The Process Management Teams at one of the largest and most successful biotechnology companies in the world faced a multitude of challenges. These teams focus on early development for biologics and small molecules and are cross-functional teams that work together to determine analysis and formulations for research and production.
The regional manager of an international health care company approached Accordence when he was concerned about losing business with one of his largest clients. The regional manager had recently been hired by the health care company, and was reviewing the average unit price that different labs and hospitals were paying for his company’s products.
A leading women’s health care company approached Accordence when it had trouble growing its share of the market without cutting the price at which it sold its products. This billion dollar firm grew to success a decade ago when it developed unique screening test and related equipment that it sold to human health laboratories. These tests and equipment, which allowed labs to more effectively and efficiently detect disease, gave the firm a solid advantage in the human health market in this disease area.
As another company entered this marketplace, many buyers chose a supplier based on price. The firm, which had a strong belief in the additional value of its product, now was surrounded by a few competitors selling solely on price. Buyers began moving their business away from the firm, oftentimes moving to the new competitor for price reasons and sometimes because they did not want to work with a company that was “dictating the market”. The company needed to find a way to combat gross margin erosion at a time when they were looking to continue to grow market share.
The firm needed to train a variety of their market-facing organization on strategies to deal with this business issue. Beyond the sales team, which needed to strengthen their everyday negotiations, the company wanted to train its corporate contracts group, field customer service group, legal group, and marketing team to all be on the same page. After researching the human health laboratories market, Accordence was able to devise custom role plays to prepare the company for their future interactions. Accordence looked at real problems the company was dealing with, such as its trouble uncovering the other side’s interests, a lack of realization of their own leverage, and reluctance in developing and implementing sound concession strategies, which up until this point meant caving on price alone. By customizing the Accordence teaching model to deal with these precise problems, the company developed objectives around them and a foundation for future sound decision-making in negotiation scenarios.
The company saw immediate monetary success following their experiences with Accordence’s ICON model. This model, which spends time focusing on building objective criteria, came into play before the company’s second two-day learning seminar was even complete. Two members of the sales team received a phone call after day one of their seminar with Accordence, in which a hospital called them to try to quickly close a deal that the sales team had been working on for some time. The company was eager to make this sale, but then was surprised when the hospital tried to take “one more bite of the apple” by asking for a discount at the last moment. The firm used the skills they had gained that day and asked what objective criteria this price change was based on; using their new techniques, the hospital could not justify the new price and agreed to the original price. By not making this concession, the firm saved $110,000 in additional gross margin that they would have lost without their new teachings. In the months since working with this company, Accordence consultants have continued to receive e-mails about successes in which the Accordence model came heavily into play. Today, the Accordence model has been delivered to three other divisions within the company and is the framework by which all sales and contract renegotiations are handled by the company.
A major IT solution enterprise approached Accordence with a somewhat surprising challenge. Despite their massive global footprint and broad market penetration, they found negotiations with strategic suppliers to be unexpectedly difficult. The typical image of the corporate procurement function is that it is a major heavyweight: in exchange for the reality or illusion of volume buying, it exacts leverage over suppliers in a number of ways: Procurement organizes purchasing centrally or at least coordinates it internally, it distances the buyer agents from the end-users to reduce the suppliers' influence strategies, it attempts to consolidate purchasing in exchange for preferred pricing, it can facilitate increased competition among the supplier community, and even make suppliers compete against themselves to get into tiered relationships with the buyer, in which the supplier makes guarantees on volume, quality, and relationship.
For many massive purchasers of substitutable goods and services, the procurement function has an easy time playing hard ball with suppliers. But these and other procurement advantages are not always automatic, even for the major buyers in the marketplace. Detailed, data-driven analysis of the existing procurement relationship, and enhanced strategies for maximizing the negotiation help to build up the capacity of the procurement function and identify opportunities for increasing leverage, professional and organizational skill.
For the major IT enterprise, a closer examination at their challenge revealed that the supplier acted as the sole source supplier it believed itself to be and refused to return phone calls, regularly declined to provide email addresses and otherwise generally made itself unavailable. The supplier managed a large and diversified number of relationships with the IT enterprise, each of which was isolated from the other. Close relationships had been built among supplier and the IT enterprise's sales function as well as with internal end-customers and external end-customers. Most problematically, there were very different discounting programs in each of the lines of the relationship, and internally there was a concern that if procurement drove down price in one area, the supplier would simply raise prices elsewhere, in a more vulnerable function.
Accordence helped reduce the uncertainty of the procurement challenge by taking a number of proactive steps with the client: First, we encouraged the client to focus on getting solid data on their total spend. To everyone's surprise, the supplier and purchaser were equally valuable to each other. In a recent business quarter, they had nearly equal purchasing from each other. However, the supplier was more centralized. The key weakness identified for the client procurement function was the proliferation of contracts and programs and the lack of communication among the different internal stakeholders. In the absence of widely dispersed data, inaccurate information and misperceptions existed as to the effect of an eventual renegotiation of the master purchasing agreement. Accordence therefore facilitated meetings of the various internal stakeholders to share knowledge and program data, discuss the Procurement Organization's goals, build buy-in, assess points of resistance and discuss openly how to overcome them. The meetings also helped the community of internal stakeholders identify and prioritize strategies for Procurement's negotiations with the supplier, along with any trade-offs inherent in each approach. Finally, Accordence leveraged lessons learned from the first encounter with Procurement regarding the one supplier, and went on to conduct a deeper and broader study of the various global procurement areas within the client organization, and assessed the representative challenges they faced that were either unique to them or shared across the organization. Using this information, Accordence created, piloted and rolled out a customized training program aimed at enhancing the analytical and interpersonal skill level and confidence of the individuals and teams operating in Procurement.
Additionally, Accordence facilitated discussions and training programs in which the sales organizations and procurement worked together, sometimes for the first time, in order to build in each other's concerns and facilitate each other's work. Accordence learned the external challenges, internal dynamics and organizational characteristics of the client's procurement environment in order to create customized consulting and training solutions. These built our client's confidence and negotiation competencies, permitting them to leverage their many supplier relationships to deliver millions of dollars in savings for our client, thus enhancing their competitive stance in the marketplace.
The art and science of persuasion has become an important competency for many companies. We have seen a rise in requests from the clients we work with to help them build this skill in their employees. On the job, influence skills enable people to:
The Corporate Sales Division of a leading provider of technology magazines was facing losses on page rates and other negotiation terms due to pressure from large clients who pushed for unprecedented discounts. Part of the challenge was that account managers were not sure how to deal with threats of “Give us a discount or else” and were uncomfortable pushing back or walking away from a deal.