Win-Win Deal Structuring: Creating Value for All — In conversation with Lisa Spadafora Thompson
More than four decades ago, how businesses thought about negotiations took a sharp about-face, thanks in part to the bestseller Getting to Yes: Negotiating Agreement Without Giving In (Penguin, 1981). We began to move from a “win-lose” perspective, where one party winning meant the other one losing, to see the value of “win-win” — an outcome that’s good for all involved.
What’s the “secret sauce” in win-win deals today? We asked Lisa Spadafora Thompson, a seasoned dealmaker and expert in strategic pricing, for her thoughts on successful negotiations.
Lisa, what is your approach to structuring and negotiating business deals and partnerships in a way that ensures all stakeholders benefit?
I can’t fathom why any company would partner with, sell to, or buy from another company unless it could be a win for both parties. Helping businesses grow profitably requires negotiating win-win deals on a sustainable basis.
My approach is to dive deeply into my client’s business models and their customers’ business models, finding the points of intersection in how they can help their customers drive revenue, decrease costs, and reduce risk. The key question is: How is my client’s ability to meet customer needs different from what every other competitor offers, and what’s it worth? If you don’t know what it costs your customers not to do business with you, then you’re not ready to sell to them.
For example, many companies will start from the premise, “We need to figure out how much the customer is willing to pay.” My response is, “No! That is not the right question. The right questions are, ‘How much economic value do I create for this customer relative to any other competitor? What factors affect how much of that value I can (or can’t) capture? And what do I need to arm my sales team with so they can convince the customer to buy at that price?’
Costs are, of course, a key input to the negotiation, but companies usually look at what their product cost to make, slap a margin percent on top of it, and call that their price. Again, my response is, “No! That’s not right. The question to ask is, ‘Given how much value I deliver and can convince the customer to pay, how much cost can I afford to incur in serving them so that I can still make a fair profit?’” This requires serving different customers differently.
The final question addresses competitive advantage. Instead of asking, “How do I need to price my product to beat the competition,“ the question to ask is, “Where am I competitively advantaged in delivering this value to this particular customer, and where am I disadvantaged? And therefore, what should I be offering this customer that aligns with what they need, which is where I’m competitively advantaged?”
If you ask those questions, in those ways, you go down an entirely different path of getting game-changing answers than the more traditional questions that everybody usually asks.
It’s an interesting approach. Is it one you’ve used from the start of your consulting business, or has it evolved?
I “cut my teeth” in sales management before moving on to other parts of the business world. Sales came naturally. In fact, my parents said I was selling and negotiating as soon as I could talk!
In sales, I learned key lessons that have carried through my own business and into the guidance I offer my clients. Before you can sell anything, you have to understand the three-way intersection of the needs of your customer, the costs/constraints/capabilities of your company, and the offerings of your competitors.
Then, you need to ask those different questions. That’s the secret sauce in what makes this approach so unique and so powerful — and a win-win, time after time.
We appreciate your winning perspective, Lisa!
Lisa Spadafora Thompson is a pricing and profitable growth expert with an entrepreneurial mindset. Through her company, Sturbridge Growth Partners, she delivers highly customized, actionable solutions, helping companies break down self-created barriers that keep them from growing profitably. The result is viable pricing strategies and win-win deals that consistently exceed revenue and profit goals.
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