Mind Your Farm Business — Ep. 108: Beyond just price: How to pull more levers in negotiations

Foreign. Business on RealAgriculture.com is brought to you by RBC Royal Bank. Hello and welcome to another episode of the Mind you'd Farm Business podcast, brought to you by RBC Royal Bank. I'm your host, Shaun Haney of RealAgriculture.com Today we're talking about a skill that is absolutely essential to running a successful farm or ag business, but one that doesn't get nearly enough attention. It's negotiation. Now, whether you're buying equipment, land inputs, or selling your crop or livestock, you're negotiating every single day. And yet most of us are never, ever taught how to do it well. We just make assumptions. A lot of it's in hindsight. To help us change that, I'm joined by Mark Refen, founder of Negotiations Ninja. Mark trained sales, procurement and business leaders on how to get more value out of every deal without burning bridges. He's worked with some of the biggest companies in the world and today he's here to share practical farm relevant negotiation strategies that can help you reduce costs, secure better service, and walk into every deal with confidence. We're going to dig into why most people just wing it and why that's a real mistake. Plus how to prepare, plan your levers, understand your walk away point and manage your emotions at the negotiating table. Let's get to it. Mark. Welcome to the Mind you'd Firm Business podcast. Thanks so much for having me on, Shaun. I appreciate it. Yeah, so negotiating, this is something that we do every day, every day in our business lives. In fact, I just got off a phone call where I was having to negotiate. Right. But even though we do it so often and so frequent, there's not a lot of like tutelage and courses and seminars on this. Why is that? Great question, man. I mean, we could take the conspiracy theory route and see what the education system is really designed for if you really wanted to. But no, I just think it's mainly a result of just lack of knowledge and lack of people who are able to teach it from a practical background. Look, there's a lot of university courses and knowledge out there, but it's not a part of the required curriculum for many degrees, diplomas and certificates, which when you think about it is very, very odd. Especially if you take anything related to business, sales, marketing or anything like that, because you would assume that you would need to know how to do this. It's sort of one of those things where you're like, well obviously I would need to learn how to negotiate. And yet here we are a Thriving business because they don't do those things. So thankfully they don't do it. We hope they continue not doing it so that we can continue to make a lot of money. So from your experience, what are the characteristics of a good negotiator? Characteristics of a good negotiator. When it comes down to personal characteristics, I would say your ability to be quiet, number one, over talking, generally gets you in a lot of trouble. Most people attribute sort of the slick sales tongue, being able to string a whole bunch of really great sentences together, learning how to inflect at certain points as skills that a good negotiator has. And certainly those don't hurt unless you do it too much. And we've seen that a lot of people just are not willing to be quiet. So being quiet, number one skill, because you allow the other person to talk. The other skills are your ability to plan well, because your planning is the thing that leads to great results in negotiations, and your ability to listen. I would say those are probably the top three characteristics that people should be looking to develop. You mentioned the be quiet and be a good listener. Are there. Are there other common mistakes that bad negotiators make that we need to be. We need to be all the time. The single biggest mistake that people make is thinking that negotiation is just something that you can win, right? Like, they go into it and they kind of shoot from the hip and they're like, I'll just see what I can get in this negotiation. The problem is, is that see what I can get is not a strategy, right? Like, if you don't know what you want, guaranteed you're going to get something that's not within the plan, and you don't have a plan, so it doesn't really matter in the first place. So you're going in to try and generate something that doesn't really make a lot of sense if you're winging it. So the biggest mistake that we see people make is just they don't plan, they don't prepare, they don't have a strategy. They don't even know what they want. They say things like, well, I want to get a good deal. To which our response is, okay, what is a good deal really? Right? Like, what does a good deal mean for you? And most people say something like, well, I want to make money or I want to save money, or I want to reduce risk. And we're like, okay, now we're slowly moving in the right direction. Unfortunately, we need more detail than that to be really, really effective. Yeah, Now I think a lot of times, and you mentioned the slick salesman. Like I, I think we think of the stereotypical, the, you know, the disc profile. The D would be like, you know, the, the hard driving negotiator that just forges ahead. But I'm sure that all the personality types can be good negotiators. How they go about it may be a little bit different. Is that true? Yeah, I would say so. You can definitely lean on your strengths in terms of the communication type that you are, whether it's disc or Myers Briggs or whatever tool that you're using that can give you a lot of ability. I would say that your negotiation skills should be seen as separate from your communication ability because it requires more planning and strategy. How you express those negotiation skills through the words that you use and how you approach the negotiation, Sure, I think that comes into your communication profile, but I, I would suggest that you can almost view them as two separate things because most of good negotiation comes to your planning and strategy. Now you, you've mentioned cadence and words and inflection through a number of these answers. And, and I think that's a lot of times we think about negotiation. We think about, you know, what's the ask or you know, yes, you know, how, how you negotiate. But you, you've mentioned some softer things here that I think are worth some time to kind of dig into. Yeah, well, there's, so there's two major parts. So we, we focus almost exclusively on planning and strategy. The second part to that is how you deliver and execute on that planning and strategy. So what words do you use? How do you use those words? What body language do you use? How do you use your non verbal cues to be able to elicit certain types of things? How do you frame your sentences? All of that matters for sure. In the absence of a strategy, it's ineffective. And here's why. Because it doesn't really matter how good you sound if you don't know what you want, because you could sound phenomenal. You could be inflecting, as you say, on all of the right things. You could have the right pacing and cadence and the right pitch and tone and all of those things and it would sound amazing. And you would walk away with a deal going, I feel great about it. And then I would come in as an auditor of the negotiation after the fact and say, hey, it looks like you got a good deal. And you would say, yeah, I got a phenomenal deal. I was like. And then I would say something like, okay, prove it. To which the Response would be, well, here's the result I got. Okay, but what did you want beforehand? No, but here's the result I got. Yes, but does that match the result that you wanted before you went in? Yeah, and that's where most people completely go off the rails. Now, that is not to say that all of those things like cadence and tone and all of those things aren't important. Certainly they are very important. And when it comes to negotiation, what really, quote unquote sells in negotiation is the sexy, you know, DJ voice that many people hear about, you know, when you. We have a conversation and that sounds smooth and almost alluring and how I ask for things, but that's not what really matters. Okay, so let's let, let's go through this a little bit. I am looking for a, you know, a 10% cost reduction in some sort of input for my business, whether that's maybe tractor, fertiliser, whatever. I, I'm, I, I know that I'm looking for a 10 reduction. Right. So I know the end goal. But we know we, we're not just focused on the outcome. We need to have the, the process in place to raise the probability of us getting to that goal. So what, what does that process need to look like? What do you suggest? I'll actually show you the planning process. Oh, great. Step by step. So let's. We'll get back to the rest of the Mind you'd Farm Business podcast, but a quick word from our sponsor, rbc. This episode of the Mind you'd Farm Business podcast is brought to you by rbc. Your idea of preparing for the unthinkable happens here. No one knows what tomorrow will bring, but with RBC and their team of experts by your side, you can plan for the unexpected. From market risks to exploring new tech to weather challenges, they'll help you get the peace of mind you've been looking for. Visit rbc.comagriculture to learn more. Foreign. Let's do this. All right, so you said you wanted to have a 10% reduction in input cost on something, right? Whatever that one thing is, whether it's fertiliser or whatever it might be. Now, that's the outcome. Let's zone out on this a little bit more. What you really are looking for is it sounds like you want to reduce overall cost. What else do you want to achieve from this negotiation? Let's just say it's from a tractor provider. Do you want better service as well? Yeah, maybe. Maybe. Yeah. Weekend call service like I know I can. Seven days a week. I can call for service. If you want better service, let's just put in better service. What else do you want from this tractor provider? You know, a coat would be nice. I. I'm. It gets a little chilly in the Canadian winter. Maybe some. Some swag would be good. Swag. All right, let's limit it to those three for now. Now, these are what we call aspirational goals. In negotiation, they're things that we aspire to. They're directional, they're visionary, they help us get there. Most of the Western world, for example, sets the aspirational goal of losing weight on January 1st of every single year. But that goal in and of itself is not very helpful because it needs more detail. So if the number one goal, for example, is to reduce cost, then we can start to think about, okay, what is actually going to help us drive the successful achievement of that reduction in cost? First, let's talk about reduction in price, which is what we talked about earlier. So reduction in price of the tractor. What else is going to help us reduce cost on a tractor purchase? The interest rate. You offer interest rates or reduction in interest rate. What else. Would you include stuff like penalties for, like remove penalties for early payment, stuff like that. No penalties. Yeah, those are good. Okay, so now we've got three things that could help us to reduce costs. Now, earlier on we had the micro goal of reducing 10% price on the truck. Right. My goal here was to get you to zoom out, to say, well, what is it that we're actually trying to achieve? We're actually trying to reduce cost, but there are a number of different levers for us to be able to do that. Where most people go is they go too micro too quickly, and then they limit themselves. So now they don't have as many levers that they can pull and they make that negotiation super myopic around one thing. Now we start, if we do that, we just start haggling over that one thing. We don't want to haggle, we want to negotiate. So we have to have more levers that we can pull and trade on. And then when we start tying in additional things like service, let's say we have, you know, 24. 7 service line, maybe there's a dedicated rep or service person, dedicated rep or service person that we speak to, whatever it might be, maybe there's a few more things. Now we've got even more things that we can start negotiating on. Now these things in and of themselves are not just, you know, either we get them or we don't get Them, they're not binary. So what we can do is we can actually take these and map these out so we can say price over here, interest rate over here, penalties over here, etc. Etc. We can have a worst acceptable outcome, a target outcome, and a best expected outcome for each of these. And each of these now has a range of acceptable outcomes that we can start negotiating. So not only can we negotiate based on one of the items at a time, now we can start trading between each of those outcomes. And so we could say, well, I want to maximise a reduction in price on the tractor and I might be willing to give up a little bit on the interest rate to be able to maximise that reduction in price. This, for example, is what your dealership is doing to you all the time. To be able to maximise their outputs. You should also be doing the same thing. And you can tie in service and you can tie in swag and whatever you want. The goal with this, of course, is to help you to become significantly more strategic in what it is you're doing. Because if you don't do that, you're going to be stuck in a negotiating these onesie twosie things all the time and you're going to ruin your negotiations because fundamentally you've been had in the negotiation. When you start doing the, you know, I just want 10% off. You've really missed the big picture of what negotiation can do for your business. I like that going too much into the micro right away. Yeah. Start a higher level up at first. Start thinking about, okay, well, what is it that I'm actually trying to achieve? And then once you've done that, you can start to think through, okay, how am I going to drill that down, what am I going to get to? What's actually going to be able to move the needle here? And let me work on that. Now you may say to me, mark, well, I actually only want to reduce price. To which I would say, okay, but there's probably other other things that you could want. Yeah. And then the major pushback that I get from people whenever I say those things is they say things like, well, that's not achievable. To which my response is, have you asked? Right. Most people haven't. Most people just assume that it's not achievable and then what ends up happening is that they don't get it because they've never asked in the first place, because they've also never known what to ask for. Well, and in our example that we just worked through in this Made up example you can figure out. Okay, listen, in this dealership example, okay, you can only, you know, you can only take that because of some internal floors and things like that. I know you can only take the tractor to that price and I'll pay that price. Which is not, you know, in your head you're thinking, well, it's not my 10% reduction, it's only like, you know, seven and a half. Okay. Then you start to work on the service and those other components. Or yeah, the is going to be, look, I might be able to do your price on the tractor, Mr. Or Ms. Dealer. If you can work on interest rate, no penalties, swag, better service. Which of these can you do? Well, we can move a little bit on interest rate and we can move a little bit on this and we can give you a tonne of swag. Okay, great. I think we can probably get a deal done at that kind of level. Now if you don't work on moving those levers, you're just stuck on price, then there is nothing else to negotiate. There is no thing that you can start to trade on those deals. It becomes a very, very closed off deal. So a part of this is, is really not just understanding, you know, what you want, but also thinking about the other side. What, what do they have to offer? What, what are all variables, the components of this arrangement that are negotiable? Yeah, yeah, exactly. And thinking not only from your perspective about the things that you're trying to achieve from the negotiation, but now doing the same and putting their hat on for a moment before you even go into the deal and think, okay, well if I was a dealer, what would I want? What does a dealer actually trying to achieve in this deal, in this negotiation, in this outcome? Maybe they just want me to refer them to my other buddies who are also looking for tractors at around the same time. And if I can prove to them that I've made a referral to these other farmers, then perhaps I can get a better deal on my stuff. So maybe there's a deal there that you could work out. This is way more strategic than the. I think there's a lot of people that still work on the meet in the middle approach. I'm going to ask for X and hopefully I get. Yes, absolutely. And that's the myth that we're trying to bust essentially with a lot of negotiation. When people think of negotiation, they think of going on to Kijiji or Facebook Marketplace or Craigslist or wherever you find your used goods. Lowballing whoever is on There and then trying to figure out what the middle actually looks like. But you're running a large B2B business that has many different complexities, that has many different levers. If you approach your negotiation the same way that you approach a kijiji negotiation, it's probably not going to work out. Yeah. You know, a real estate example, you know, you know what? I'll. I'll. I'll pay full price, I'll pay asking price, but you're going to cover the closing charges. Like, you know, that's another example, Right? Yeah. Similar sort of idea. And there's way more to talk about in real estate as well. Right. There's lots of different levers in terms of even, like, furniture that they would leave behind or whatever it might be. There's a tonne there that can be done. Yeah, yeah. Is, you know, we talked about your own personality and we talked about what you want, what the other side wants. I would think also understanding the behaviours who you're dealing with, like what kind of, what kind of negotiation style turns them off. Right. Cultural differences, too. We look at, you know, Canada versus the U.S. or versus Europe, or maybe you're, you know, you're negotiating a soy edible soybean contract in Japan or something. You need to understand what makes that person, the other side of that table, tick a little bit. Yeah, absolutely. That's entirely true. Especially when it comes to cultural differences. We see big, big swings in differences when it comes to negotiating with people from other countries because how they approach the negotiation tactically may be completely different to how you approach the negotiation. And even how they. They think their whole worldview may be completely different as well. So very, very important to think of things from who they are and what they do. And there's really a couple of different levels here that you need to think about, because the person that you're negotiating with is likely someone who is representing someone else, meaning they're representing a business. So you're not just negotiating with a person, you're also negotiating with the person who represents a business. So there's two levels. So you're negotiating with the business and you're negotiating with the person. So you got to think, what does the business want and what does the person want want? The personal motivations of that person are going to be different than the business motivations of that business. For example, the person may really value validation and respect and praise from their peers or their boss or something like that, whereas the business doesn't necessarily care about that. They may just care about the profitability that they make on the deal or the co marketing that they get on a deal or something like that. So you've got to think about it both from the business perspective and from the personal perspective. I had a mentor that taught me early in my business career about leverage. And that's something we haven't talked about yet. In a negotiation is understanding and using leverage. Where does that all fit here? Leverage is super important. I think a lot of people get very confused. Buy leverage because it feels like a complex topic. The number one area where most people get confused about leverage is they confuse power with leverage. And they're not the same thing. For example, we're seeing this live between many nations all over the world with a lot of geopolitical stuff. The power differences between each country are vast. Right. For example, Canada just does not have the brute force power that the United States have. They just don't. But Canada has a lot of leverage, right? We have access to natural resources. We have lots of great farming. We have phenomenal relationships abroad. We have things that other countries just don't have. That gives us leverage in the negotiation, but we don't have the power, so to speak. So don't confuse those two things. If you confuse power with leverage, often what ends up happening is you create a lot of head butting in the negotiation, a lot of chest bumping. You know, typical teenage boy kind of fight where, you know, everyone starts bumping chests. That's the kind of thing that power arguments start happening about. When it comes to leverage, it's significantly more strategic. And what's really interesting about leverage is a lot of the time it comes down to not only the actual practical leverage that you have, but the perceived leverage that you have. There's a great negotiator named Herb Cohen who is still alive. He's in his late 80s right now. He wrote a fantastic book. In fact, I have it right here that's called you can negotiate anything. It's a fantastic book. He once said to me in a conversation, the interesting thing about leverage, Mark, is if you think you got it, you've got it. If you think you don't got it, you don't got it. And a lot of the time that's true. If you go into the negotiation assuming that, oh, I have no leverage, I'm going to get screwed. They're going to completely steamroll me. That's going to bleed through in how you interact in the negotiation. And then they are going to do those things. Now fake it till you make it right. Yeah. Now here's, here's the unfortunate reality. You can't let positivity bias replace competence and preparation and actually trying to build leverage. You still have to do those things, but you also can't go into the negotiation going, dang it, I'm going to get screwed. Right. Because then you are going to get screwed. So there is a balance that has to be made around that. Now you can, fortunately enough, there are ways to build leverage prior to going into a negotiation, but it takes a long time and it takes a lot of effort. So this is why we ask people whenever they're going into a negotiation, please don't wing it. Right. Try to plan at least three to six months ahead of time so that you're ready for that deal. Especially if it's a big deal. That's a lot of money, that's going to cost a lot of things. And if it's risky. Right. You want to make sure you're ready. Yeah, that, that, that, that prep that is so key here in, in all of this. It's, it is about the preparation. Absolutely. Just allow yourself to have the chance to be, you know, as successful as you can be in the negotiation. One of the things that I know many of us are not the best at in a negotiation is actually the heart is the part about. It's easy to say, yeah, let's do it. This is great. The harder one sometimes is to say, you know what, I'm walking away. This heel isn't for me. Maybe that's buying a neighbour's farm or, you know, a bunch of grass cattle. And prices are steamy. You just, ah, you know what? I'm gonna walk away. That, that is hard. Yeah. In order to be able to do that, you have to know where you're actually going to walk away. And not only where you're going to walk away. Like what your line in the sand is your red line. Yeah. You have to know at what level this doesn't make sense. So is there a profitability number where this doesn't make sense? Is there a risk number where this doesn't make sense? Is there a vibe that you feel where, like, this doesn't make sense. This person feels a bit icky in terms of the ethics of the deal. Like, if I start feeling that feeling, then do I walk away? So what are your criteria that you set up where you know you're, you're not going to make the deal work? Okay, fine, now we have that line set. But now you have to ask the other question, which is If I do walk away from this deal, where do I walk away to? Yeah. And most people don't have that answer. So they may get like in a huff and say, you know what? I'm not doing this deal. And they walk away from the deal and they go, ooh, okay, now I've got to source other options. I've got to figure out what I'm going to do because I've just walked away from a deal that I thought was going to work. I don't have an alternative to go to. And so a lot of people get stuck, Shaun. They get stuck in situations where they're going, okay, now I've got to figure out something really fast. And now they're rushing and then they rush to put a new deal in place and then they get a worse deal than they had in the first place. So whenever you go into a negotiation, not only should you be figuring out where your line in the sand is for that negotiation, but also start planning for what happens if you walk away. Where do you go to next? And know the opportunity costs of the decisions that you are making or not making? For sure. What you just, what you just hit on there too, which we haven't talked a lot about, is your emotions. Yes. Right. And, and the, the example you just gave of like, ah, you know, you're getting upset, you're getting frazzled. You know what? I'm out of here. I'm flipping the table over and we're not doing this deal. Then when you calm down, you're like, what the heck was I thinking? I should have that. I got out of my head. I was frustrated. Actually, that was a pretty good deal. Yeah. Controlling our emotions is, is a key part here. Yeah. And if you can't control your emotions, get someone to do it for you. Yeah. Because if you go into a negotiation and you are emotionally unregulated, it becomes really challenging pretty quickly. Because if I am, if someone like me is sitting across the table from you and I know, and I found out where your buttons are and I know when to push them and how to push them to get exactly what I want, I'm just going to keep pressing them all day long to get exactly what I want out of that deal. Now, here's the trick. What a lot of people don't realise about getting frustrated or angry. There's two big parts to this. Number one is managing your own frustration and your own anger. And the other is managing the frustration and the anger of the other person. Let's talk about yourself for a Second, if you're going to get frustrated and angry, it's better to just step away for a day, an hour or 15 minutes, or take a timeout, basically, is what I'm saying to you. Give yourself a timeout. Doesn't matter how long it is. Don't make it too long, obviously, but just take a moment to take a breather and then come back to the negotiation. And that's very simple to implement. All you have to do is tell the other person, hey, I just need to take a couple of minutes to be able to assess some numbers on my side or verify a couple of things or speak with this person. I'll get back to you in a day or so or two weeks from now or whatever it might be. Take that time to decompress, reevaluate your position, and then go back into the negotiation. That's totally okay. It's fine. Go ahead. No, no, go ahead, go ahead. If the other person is getting angry, your job's to try and de escalate that situation as best you can. And that's really hard to do because for a lot of us, we're going to get into this sort of primal fight, flight or freeze scenario when someone gets angry with us. Instead of doing that, I want you to try and do the opposite. Right. And you sometimes see the negative effect of this when you go. If you ever go to the zoo and you go to like the gorilla enclosure or the chimpanzee enclosure, one gorilla hits the other gorilla, you know, from behind, and the other gorilla turns around, has no idea what's going on. But because this gorilla hit me, I'm now going to react. And then they start fighting. And it almost becomes like an anger arms race, right, to see who can get the most angry. And then they end up beating the hell out of each other. And everyone's starting to scream and shout and it's chaos and madness. We're just like that. Yeah, we're exactly like that. So instead of reacting, our job is to try and do the opposite to that situation, which is very hard to do in the moment, which is why the timeout is so important. But we're going to try and breathe through it, lean into the conversation, soften sort of the furrows of your brow, relax, get curious and ask the counterparty, hey, it sounds like you're frustrated. What's going on? Help me to understand this. What's happening? What about gamesmanship? Because some of this, you know, there is that element too, is that, does that tend to be fruitful? And helpful or is it more of. A distort if you know how to do it? Okay. Where a lot of people go off the rails is that they, they try something fancy and have no idea how to actually implement it and also don't know how to pull it back if it doesn't work. Because sometimes even the pros will implement something where, you know, they think this idea, this gamesmanship idea is going to work. So they launch an emotional attack or they prod in a certain area or they act stupid in a certain arena and they think, okay, let's see if this works. And then it goes wrong. But because they're pros and they do this all the time, they know how to walk it back and they do this all the time and they just run, run the same routines. So it's no big deal. Most of the folks that are doing like one or two or three negotiations a season, they're not doing it regularly enough to know what to do if something goes wrong. So please don't try any bluffing or, you know, the classic like act stupid sort of idea, the Colombo approach. Right. Like none of that. Don't do that. Just approach it in a straight up manner. You're going to get better results more consistently. Great stuff, Mark. Really, honestly, this has been incredibly fruitful for the audience. Thanks so much for joining us here today on the Mind you'd for our Business podcast. Thank you so much for having me, Shaun. If folks want to find out more about what we do, they can go to Negotiations Ninja or find me on LinkedIn and connect with me there. That wraps up another valuable episode of the Mind you'd Farm Business podcast. A big thank you to Mark Raffin of Negotiations Ninja for joining us today. Mark's key message Negotiation isn't about winging it or meeting in the middle. It's actually about planning, strategy and knowing what levers you can trade to get the ideal outcome for yourself. Whether you're negotiating price, service, financing, maybe even some swag. Yeah, swag. It all starts with understanding what you want, what the other side wants, and being ready to walk away if it's not going to work out. He also reminded us that emotions can derail even the best laid out plans and that controlling your reactions and reading the room can be just as important as the words that you actually speak. For more episodes of the Mind you'd Farm business podcast, visit mindyourfarmbusiness.com or wherever you get your podcasts. And thanks again to our sponsor, RBC Royal bank for supporting this series. If you got feedback or questions, maybe some thoughts, maybe some strategies that have worked for you, send me an email shaneyaalagriculture.com or you can call the RealAg Feedback Line, 855-776-6147. Thanks for tuning in and until next time, keep on minding your farm business.