How Keeping Quiet Saved Our Startup $225K
Most startup founders don’t think of themselves as master negotiators and struggle to come up with the right things to say in crucial moments. These moments are the perfect time to exercise one of sales’ most valuable tricks: silence.
It’s hard to embrace silence during negotiations due to the level of fearlessness and discipline required. However, it’s an incredible tool and saved our company $225,000.
So why does silence work in negotiations? Being silent in a negotiation creates social awkwardness for the other person, resulting in the urge for them to continue talking. In those moments, the other party will slip up and give away their negotiation high ground to their unstructured thoughts.
Bingo.
All you have to do once someone keeps talking is remain silent and let them negotiate with themselves until the right moment appears. That’s exactly how I saved $225,000 in a 10 minute phone call.
Here’s what happened: The founding team of Close.io was doing something completely different when we first started out. We offered a simple service that allowed consumers to sign up with their credit or debit card in order to have us round up all their transactions and give the change to charity. To do that we had to license somebody else’s technology. We signed a three-year contract with that company for a shitload of money.
We thought we were super smart so we negotiated a special deal with them: The first year of the contract we’d pay almost nothing. The second year a bit more, and the third year we’d pay them a crazy amount of money (around 90 percent of the entire contract value).
We assumed that after three years we’d either be so successful that we could afford to pay, or our startup would already be dead so it wouldn’t matter anyway. The account executive from the company didn’t care since his commission was paid on contract value not payment terms. Win-win.
However, one year later we completely changed our business. We didn’t use their super expensive technology anymore and couldn’t afford to keep paying them. So we tried everything we could to get out of it. We called them, used our network to reach out to them, visited their offices, wrote letters. We tried everything because we were in a desperate, hopeless situation.
Our account executive kept telling us that he would love to help but “The evil guys from finance aren’t allowing me to do anything so you’ll have to pay the entire contract amount to get out.”
He wasn’t interested in helping us out and I don’t blame him. We were worth more to him as a bankrupt customer than a customer he let out of a valuable contract. Eventually we got connected to one of their board members and convinced him to send our account executive an email and tell him to help us out.
That got his attention.
http://techcrunch.com/2014/12/28/how-shutting-up-saved-our-startup-225k/
No comments:
Post a Comment
Please leave a comment-- or suggestions, particularly of topics and places you'd like to see covered