Impact Pricing Podcast

Ep132: Pricing and Sales Negotiation Skills: How to Close More Deals with Sebastian Wrobel

 

Sebastian Wrobel is an energetic and passionate professional leader, helping companies to achieve value and pricing excellence. In order to achieve lasting integration, he is pushing digital transformation. In addition, he has extensive experience working closely with the C-suite and senior stakeholders to formulate and implement major profit and growth optimization plans. In addition, he leverages a collaborative and data-driven leadership approach to build high performing teams.  

In this episode, Sebastian highlights pricing’s role in sales negotiations.  

 

Why you have to check out today’s podcast:

  • Learn why Pricing people are expert negotiators, a good business partner and advisor to sales in negotiations  
  • Find out how to negotiate sales more effectively with value levers  
  • Understanding procurement’s role in negotiating the best deal 

         

Pricing people can do, they can deliver regularly on trainings, at least to create awareness and ability to understand the commercial levers that salespeople could leverage.

Sebastian Wrobel 

      

Topics Covered:

01:13 – Relating an incident that got Sebastian started in Pricing 

01:55 – Getting addicted to Pricing 

03:10 – The extent to which Pricing people should be involved in sales negotiations 

04:30 – What is in Pricing people that makes them a good part in the negotiation 

07:27 – The point you need a professional negotiator to help sales in the negotiation 

08:43 – How from the nature of their roles pricing people are professional negotiators 

11:22 – Misconceptions about negotiations and the importance of preparing for it beforehand 

15:51 – What do pricing people need to have to be effective in negotiation 

18:09 – Value drivers that have commercial impact you can use to negotiate with big customers 

21:33 – The ‘negotiation jacket’ and the role play involved in negotiation by procurement people 

24:55 – Using all levers in negotiation to get the best outcome 

27:00 – Sebastian’s best pricing advice that could greatly impact one’s business 

     

Key Takeaways: 

“The underlying assumption is that in the negotiation, you discuss value. And in fact, you need to know the value for the client much earlier before you go into a negotiation. So, this is the first maybe misconception about negotiation that you negotiate the value at the event of the negotiation. That happens much earlier.” – Sebastian Wrobel 

“To be effective in pricing, you need to have empathy with sales, with your sales team.” – Sebastian Wrobel 

“And I think pricing can help both in the preparation in delivering the data and developing the commercial strategies negotiation, but also being a neutral negotiation partner that is less emotional, and can help on the commercial and objective parts in the negotiation.” – Sebastian Wrobel  

“There are many kinds of tools in negotiations. Once you learn them, it’s by far not as complicated as sometimes perceived. But you need to understand the toolbox, and you need to be able to use it. I’m personally convinced that pricing people has the skill. And once they get comfortable with the toolbox, they can be really good business partners and advisors to sales in negotiation.” – Sebastian Wrobel  

      

Connect with Sebastian Wrobel:

        

Connect with Mark Stiving:   

                          

Full Interview Transcript

(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)

Sebastian Wrobel   

Pricing people can do — they can regularly deliver on training to create awareness and understand the commercial levers that salespeople could leverage. 

[Intro] 

Mark Stiving   

Welcome to Impact Pricing, the podcast where we discuss Pricing, value, and the individual relationship between them. I’m Mark Stiving; today, our guest is Sebastian Wrobel. Here are three things you want to know about Sebastian before we start. He has been a director of Pricing at some pretty big companies, including Siemens and Steelcase; he spent a couple of years leading procurement in that process. And we’re going to talk about that eventually. And the most amazing thing is, he finished an Iron Man race, even though it was 25 years ago, that’s still an amazing accomplishment. Welcome, Sebastian. 

Sebastian Wrobel 

Thanks, Mark, for being your guest tonight. 

Mark Stiving  

Hey, how did you get into Pricing? 

Sebastian Wrobel  

By incident, I would claim — not being satisfied in my role in finance, not making enough impact. And so, they asked my manager that time that I want expansion of my role, and I want to take over some of his tasks. And the next day, I found myself in a meeting with his boss. And they suggest to me there is a project and ‘we would like to have you’; it was about implementing minimum sales pricing and to avoid gray markets, and it was in the early 2000s. So that was my first project in Pricing. And since then, I got addicted. And here I am. 

Mark Stiving   

So, what made you addicted? Why do you stay in Pricing? 

Mark Stiving  

The ability to make a true impact. You know, my background was in Finance and Accounting. And I spent a couple of times controlling, but always, you were ending up providing some data, and inside, you saw the value, but nobody picked it up. And that’s the tremendous difference when you’re working Pricing; you truly impact the company’s bottom and top line. 

Mark Stiving 

I think there’s so much opportunity in Pricing. And what’s funny about what you just said, as I spend a lot of time, a lot may not be true. But I spent quite a bit of time interacting with CFOs and Finance people and just trying to talk about the role of Pricing and what they could contribute to and how they can get better at it. So, it’s fascinating because I love the fact that they have so much power and influence in a company, but they just don’t understand the value. The big topic I wanted to talk to you about today is Pricing involved in B2B sales. And let me just tee it up like that. Give me a big picture; how do you think Pricing should be involved in individual sales deals that are going on? 

Sebastian Wrobel   

You know, my personal standpoint is that Pricing, at least at senior levels, let’s say, senior pricing managers, pricing directors, should be involved in supporting sales in a negotiation, even on-site with the client. And I think that’s something that is pretty unusual or uncommon. Now, just in this context, I did an exercise. I want to write 50, yeah, requests for pricing roles. And if you look at the pricing roles HR is posting, you know, CFOs, pricing directors, or leaders are writing, you hardly find one, claiming that the pricing person hired should be capable of negotiating as a skill requirement or should be able to train the skills. So, this was surprising to me. And yeah, that’s the starting point here where I believe Pricing should be involved. 

Mark Stiving   

Okay, first of all, I find that fascinating, because I’m not sure I agree with you, which is going to make for a great conversation. I don’t know that I disagree with you, either. So, I’m open, go ahead and convince me; what is it about Pricing that you think they could do a good job being involved in negotiations? 

Sebastian Wrobel   

It’s, you know, if you look at sales people, they get well-trained on sales skills, explaining products, listening, building up relations. You know, managing, continuing when being confronted with somebody saying no, but at the end, when you look at, let’s say, training programs for sales, you will find barely negotiation training, especially commercial negotiation training. And when I was in my pricing role and was growing this pricing role, I came to a moment where I was totally dissatisfied with the outcome. And I was trying to find out the reason we couldn’t manage the bottom-line impact that we were projecting, that we convinced it, the initiative should deliver. And effectively, we tried all measures, you know, towards better processes, better data, better insights, user-training on systems, and still didn’t go to that degree I was expecting. And this is the point. You know, Pricing is about science and art. And the art is about the human side in Pricing. And it happens when people interact with each other. And your sales, typically, I have experienced leg skills capacities for good commercial negotiation. And I think Pricing can help both in the preparation in delivering the data and developing the commercial strategies negotiation, but also being a neutral, let’s say, negotiation partner that is less emotional, and can help on the commercial and objective parts in the negotiation. 

Mark Stiving  

Okay, so I don’t want to talk about procurement quite yet. But I’m going to bring up your experience of procurement for just a second. And that is, I’ve seen a lot of studies that show companies spend a lot of money training procurement people on how to do procurement. And I can imagine any individual procurement person is probably negotiating a deal a day or, you know, a deal a week. So, they’re constantly negotiating and getting the practice and getting the training. And then, we look at a B2B salesperson. And if they close, let’s say, they’re closing six deals a year, that means every other month, they engage in negotiation. So, they don’t get the experience procurement people get. And so, I could see making the argument that says, we’re going to take a, and I’m going to use the word professional negotiator for a second, I’m not going to say pricer. But we could use a professional negotiator to help the salespeople because the salespeople aren’t going to be negotiation experts, is that part of the argument that you want to make? 

Sebastian Wrobel   

Essentially, this is the point you need a professional negotiator helping. And you know, it doesn’t necessarily need to be the pricing person, which I believe should be at a certain seniority level. And I will give you a reason why it should also be a pricing person. But there are consultancies specializing in negotiation consulting; you can also leverage these consultants since it’s a good payback if they work closely enough. Pricing can contribute both to the preparation providing the right data insights and value argumentation commercially. And the point is, as usual, it’s external spending, right? So, companies tend to avoid this, even though there is a return on investment. And I think here, with the right development of pricing people, you can partially overcome this hurdle. 

Mark Stiving   

Yes. So, from what I know about pricing people and all the experience I’ve had, and people have talked with, I don’t know of any of them that I would call a professional negotiator, right? I don’t think they were trained that way; they’re not expected to do that. So, it doesn’t feel like it’s a skill set that they have, not that they couldn’t learn it. 

Sebastian Wrobel  

Yeah, I would claim pricing people from the nature of the roles already are professional negotiators because of the interconnectivity of the pricing role. Being also in the middle between Sales, Finance, Product Marketing, Pricing people typically negotiate all day long when they are at a deal desk. They negotiate on the one hand, which says why the price should be higher, while they might negotiate Finance, Product Marketing, why they still claim the price is not high enough to defend sales. That’s the nature of the role that you need to have, and pricing people should have the competence to say no or say no and based on data and express a different opinion and be able to evaluate multiple dimensions that make a deal. And this is not the first step from being a good negotiator. And interestingly, I went through a couple of trainings, both being trained as a participant and later on also training six people. There are kinds of tools in negotiations. Once you learn them, it’s by far not as complicated as sometimes perceived. But you need to understand the toolbox, and you need to be able to use it. I’m personally convinced that pricing people have the skill. And once they get comfortable with the toolbox, they can be a really good business partner and advisor to sales in negotiation. 

Mark Stiving   

Yeah, so I certainly am going to buy your argument that says, a successful director level of Pricing or high-level pricing person has to sell and negotiate inside the company, right, from department to department, I think they have the knowledge or ability. The question is, do they have the skills? Now, I’m going to push back on one more thing. I tend to believe that pricing people don’t set prices. Pricing, people help product managers or business units figure out what the value of their product is. That says to me that the pricing people don’t really know the value of all the different products that we’re selling inside our company. And I would tend to rely more on somebody who knows value, to do the negotiation, than somebody who doesn’t know the value to do the negotiation. 

Sebastian Wrobel   

Yeah, the underlying assumption is that in the negotiation, you discuss value. And in fact, you need to know the value for the client much earlier before you go into a negotiation. So, this is the first maybe misconception about negotiation that you negotiate the value at the negotiation event. That happens much earlier. So, if you think about, you know, Pricing, preparing, on B2B, bigger projects, because I’m talking not about the day-to-day projects, right? It’s the more complex, potentially internationally configured projects involving multiple products, a longer period of delivery, maybe services, installations, logistics, exchange rate, topics, maybe commitments related to volume, or delivery times, multiple parameters that might have different values for the client. And typically, you start planning for that much earlier before going to the negotiation. And I would claim that the pricing people do not need to truly understand the value. But if they prepare early enough, we say it’s a negotiation; they start a journey on being in customer sets, anticipate and envision the value drivers in a negotiation, commercially evaluate them, and prepare the negotiation levers. And the experience I also had in Pricing participating in negotiation is that you truly learn understanding the dynamics of decision making, and the differences, how clients can value or not certain parameters of your offering, more or less. And then typically, when you go back to your Pricing daily role, you can provide better recommendations moving forward based on your experiences. 

Mark Stiving  

Okay, I’m going to restate what you just said. Because I actually thought that was brilliant. In my mind, I was thinking, pricing people, don’t know the value of a product. But if I take a product manager, the product manager doesn’t know the value of the deal. Because there are lots of different products, there are lots of different things that are going on in the deal. The deal is way more complicated than one or two or three products and a pricing person. If they see enough of these really large deals, they start to understand the issues of things like logistics and what’s going on with logistics and installation, and how we tie all the pieces together, and how we get finance involved. So, I could see how a pricing person could be very effective at that if they were doing it on a regular basis.  

Sebastian Wrobel 

Absolutely.  

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Mark Stiving   

Okay, so you may have me close to being convinced, Sebastian.  

Sebastian Wrobel   

You said close, so something is missing.  

Mark Stiving  

So, I don’t know. It doesn’t feel right yet. But it may just be that I haven’t thought it through long enough yet. But I don’t have a good objection at this point. 

Sebastian Wrobel   

I tell you what might intuitively not feel right about it. When I started, you know, training salespeople in negotiations, sending them to professional training, and starting to participate in negotiation, senior executives see one topic as a risk on the one side. To be effective in Pricing, you need to have empathy with sales, with your sales team. This is what I claim: Pricing teams still often lack what they are convinced of or perceived, sometimes just as number crunchers or just the business partner or, even worse, sales preventer. And the reality is true, trusted advisors, and I think this experience, even though it might be not regular, but just the capacity and the willingness to offer to be on the side with a salesperson and to prepare for it creates higher acceptance of the pricing measures, whatever you do in sales. That’s one side of the story. But what comes with empathy as many of us and even senior executives might think when you do that, you might get less objective and sympathize with sales. So, losing your objectivity, and maybe starting tending to a behavior that we try to protect, not giving too much discount, because this is what we claim. Pricing people are not exposed to the pressure of being in front of a procurement person. And truly, that’s a challenge. But I would claim the challenge is worthy of exploration. Because I have seen great outcomes from it. 

Mark Stiving  

Yeah, and I think I’ll take the other side and say, look, I think this is a good idea in the following sense. Salespeople typically have a financial incentive to close the deal. And a professional negotiator, whether it’s Pricing or someone else, may not have that financial incentive; their incentive really is to do the best for the company. Sure, we want to close the deal. But we also want to do it at a good price, a good profit. And so, I can see how there might be a little bit less willingness to give unnecessary discounts. 

Sebastian Wrobel  

And there’s another dimension observing, you know, our business gets more complicated day by day in big international projects, especially in B2B. Also, the math gets complicated. You know, I have been participating in contract negotiations of multi-tier contracts. We have run like 20 levers, right? Starting from okay, there are multiple products with multiple configurations, you talk about delivery times, delivery terms, payment terms, price, commitments, volume commitments. You talk about currency exchange rates, certain periods of time, and how to leverage fluctuations. You might talk about system integration, EDI procurement integration, and seamless process to the client, customer catalogs require potentially SAP qualification on the vendor side. Many value drivers have a commercial impact because programming a catalog and implementing SAP for our clients on such big deals is a commercial impact you need to evaluate. The price sells commitment for two years required to anticipate inflation. When you see how salespeople typically act upon, they tried to simplify it because it’s complex to just discount and get it closed. The commercial evaluation of the multiple levers is difficult. I think this is where pricing people can provide the value add. Because that’s the power of negotiation saying hey, help me to help you. If you then me and I say okay if you want this price, we need to reduce your payment terms or vice versa. Also, to find out the willingness to pay and the relevance of those only criteria and saying, what is the value behind that? What is the value for the claim? Find having an SAP integration in the process. And you will find out procurement, I think, yeah, I’m willing to acknowledge that, for me, because there are less issues with accounts payable and the delivery process or quoting process might be faster. So, it’s less effort. 

Mark Stiving   

So, Sebastian, I have to say that that list you just gave of value drivers was worth the price of admission for this podcast. And so, to our listeners, if you miss that, or you just let it glide over, rewind for a couple minutes and go listen to that again. So, it’s just a fantastic list of all the different places where you’re going to get to negotiate with a big customer. And it’s pretty fascinating, so excellent. And we’re going to run out of time, and I have, I just feel this obligation to talk to you about procurement. Because I personally do not like procurement people. And so, you’ve done such a great job convincing me of things so far. Allow me to tell you why I don’t like procurement people, and then convince me that I’m wrong, please. I do not like procurement people because I believe it’s the only role in a company where they are paid to lie. And every time I’ve seen someone walk into a negotiation with a procurement person, I feel like that procurement person is absolutely just making stuff up and lying to the salesperson talking to them. So, feel free. 

Sebastian Wrobel  

Yeah, I would claim you’re right and wrong. And I think that what you described is exactly the, you know, there’s a really great consulting, the Gap Partnership, they would claim it, there’s this negotiation jacket. So yes, procurement people in negotiation moments, they are supposed to tell you why your product is insufficient. It’s less competitive, or too expensive still, whatever. That’s part of a roleplay. And also, understanding negotiations and understanding the role plays, you look at this differently. And I tell you, and I would pull out a theory that the get partnership has recently done about procurement. And about the changes happening there. And based on the changes, I will tell you why procurement, even in some companies, may be as you described, just purely focusing on claiming wrong stuff and just trying to get the cheapest price. I think the disruptive changes with the COVID crisis has accelerated a different movement in procurement. So, all of the surveys say that procurement has become a more strategic function over the years. That’s true. And this is what I liked about the survey that says 2020 and the epidemic have accelerated procurement change and how procurement professionals choose suppliers. And now listen, that’s the pricing point. Cost is still a priority, but not at the expense of quality, service, innovation, and resilience. And here comes the points. Good procurement people and B2B naturally, relations are not one-off and never see each other again. Typically, the relations are built on; you have a supplier for a longer period for 5, 7, 10 years, even longer. And if you want to be a good procurement person, you need to think about the long-term relationship strategically. And nowadays, even more, you will be judged as a procurement person, whether you’re good, whether your relation is not providing the best price, but the total cost of ownership. So, procurement person on this side, a good one will not just talk about price, they will negotiate in a collaborative mode thinking strategically. The other point is if you truly prepare and negotiate well, you will not sit in front of a procurement person. And that’s something that also is role playing. Many salespeople do it well, others not because they do not have the capacity to know your stakeholders to really manage the stakeholders and, ideally, have the stakeholders at the desk. Because then the risk of being exposed to somebody just claiming you wrong stuff is little. 

Mark Stiving  

I was in sales a long, long, long, long time ago. And I sold big capital equipment. And what was fascinating was procurement never made the decision. But once you get in the room with procurement, they pretend like they have all the power. And it was just incredible. At the time, I was scared to death and didn’t know how to handle it. Now, as I look back on it, I just laugh at the fact that they were just totally be assing me the entire time. 

Sebastian Wrobel   

But this is the great topic about negotiations. It’s a kind of roleplay; everybody plays a role, and procurement is the role of getting the best deal. So, they need to use all the levers in negotiation to get a better outcome. The main procurement KPI is a better price because that’s the easiest to measure. But the point is, as a good negotiator on the other side, you need to prepare the concessions. And what I have seen very often is that people can just reduce the concessions to the discount, and they are not capable of dealing with the variables and say if you then me and say if this one then that one. 

Mark Stiving   

So, I’m really curious, do you think then it’s okay for salespeople to lie during negotiations? 

Sebastian Wrobel   

I think, not necessarily. What would be the moment you would lie? What would be the thing you would lie, you know? 

Mark Stiving   

Oh, I have two other clients; they’re going to come ahead of you. If you don’t close this deal today. And then you will end up pushing your delivery off for a month, as one example. 

Sebastian Wrobel   

It’s just the threat to release a reaction from the other side to understand. I think it’s a play, it’s not necessarily a lie. You know, as a procurement I did it pretty often. I said, ‘Oh, I have a better offer from, it’s 20% or 15% cheaper.’ You know, I found in the beginning, I have seen salespeople that were just instantly turning in defensive mode. I don’t believe it shows me here, let’s talk about what is exactly more expensive and why? Because I tell you this offer is not comparable to what I offer you. And this is why I observed when I was in procurement weaknesses. 

Mark Stiving   

Sebastian, this is just fascinating. I love this conversation. Thank you. But we are going to run out of time. Let me ask you the final question. What’s one piece of pricing advice you would give our listeners that you think could have a big impact on their business? 

Sebastian Wrobel   

Three things, check the salespeople, how they are trained on negotiation. If not at least as a pricing person, you should ensure that you work together with your senior executives and HR to ensure that your salespeople get educated on negotiation skills. The second one Pricing people can do, they can deliver regularly on trainings, at least to create awareness and ability to understand the commercial levers that salespeople could leverage. Search. You can have salespeople early in advance because this is the power of Pricing; if you have the right tools, processes, you know when a contract will end. So, you can anticipate it, you can prepare the negotiation with all the insights and facts to make your sales partner strong in front of the client, and also being able to defend value delivered. And if I will give a recommendation and I’ve tried it — join negotiations but never without getting proper training before. And without really preparing well and preparing with your stakeholders, you clearly define the walk away, you understand the commercial levers and calculate. And then it becomes really an exciting experience that when you turn back, you can accelerate your pricing initiatives outcome. 

Mark Stiving   

Nice, Sebastian, that was just fabulous. Thank you so much for your time today. If anybody wants to contact you, how can they do that? 

Sebastian Wrobel   

Just easily, go on our web page at pricingworks.io. We can share my contact details over LinkedIn in your podcast’s information.  

Mark Stiving  

We also have your LinkedIn in the show notes. So, thank you. All right, Episode 132 is all done. Thank you for listening. If you enjoyed this, would you please leave us a rating and a review? GeraldinedCarter said,  

“Thank goodness Mark has a podcast about Pricing. Finally, I have a place to go where I can get a steady drip of useful pricing expertise that I can immediately pass on to my own clients, as well as put to use in my business. Thank you, and keep up the great work!” 

Well, thank you, Geraldine. I hugely appreciate it. And I’m going to send you a copy of my new book ‘Win Keep Grow.’ And finally, if you have any questions or comments about the podcast or Pricing in general, feel free to email me at mark@impactpricing.com. Now, go make an impact! 

 

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