To maximise value in any negotiation, it is critical to understand the interests of your negotiation counterpart. While a negotiation party may have a variety of interests, some will be more important to them than others. MESOs are a tool that can help us understand the relative importance of different interests to our negotiation counterpart.
MESO is an acronym that stands for Multiple Equivalent Simultaneous Offers. The idea is that by presenting multiple options to the other side, their response will provide more information about how they prioritise their interests.
By presenting the other party with a variety of options, we can use their responses to determine their priorities. The key to using MESOs is that the various options we present should all be of equal value to us.
How to Make MESOs
Assume you're selling dresses to a large retailer and want to create a MESO to put on the table.
Step 1: Establish our priorities.
To begin, we must determine our own priorities. Considerations may include price, timing of the payment, marketing and promotion support and future sales. These may change for different types of deals.
Step 2: Develop a scoring system.
You can create a scoring system to measure the value of different combinations of options by assigning weights to each of the priorities. Perhaps you are a new business and you are willing to lower the price for a commitment to take product for you next season.
Step 3: Create comparable offers
Create at least two offers based on your scoring system that are of equal value to you but would meet the other party's interests differently. You could create a few different pairs of offers to test a variety of potential interests.
Step 4: Present each offer separately.
Rather than presenting all of the options at once, you should present two offers at a time. If possible, each offer should have only one key difference so that the response to the offer will give you a clear indication of the other party's interest.
Each choice between pairs of offers, like an optometrist checking your eyes, will give you clarity on what is important to the other party.
Imagine you're selling dresses to a large retailer. The retailer has asked for 1,000 units from across your range and the breakdown of the order is all agreed. Price and payment terms are left to be determined.
As a new brand, brand awareness is a key issue for you. While this is a big deal for you, it also has the potential to open other sales avenues. As well as price and timing, you also care about promotion and future orders. Instead of making a single offer to a potential customer, you could make several offers that all provide the same amount of value. The first options, for example, could be:
Full list price in 30 days with no commitment to marketing.
Full list price in 90 days with guaranteed number of promotion posts by the retailer in their social media posts and/or a feature in their customer email campaigns.
Rather than asking the retailer to agree to one of these, you want to ask which is more appealing to them. This will give an indication of where their interests lie. Is timing or promotion contribution more valuable to them.
You might then offer two further options:
Full list price with no commitment to further orders
10% discount with a guaranteed minimum order quantity for the next season.
Once again, you are not looking for a commitment, just an indication of which is more appealing - price or flexibility. The discussion around this will help you to learn how the retailer sees value and will help you assess where trade offs may be made.
It is important to leave some room for negotiation when using MESOs rather than putting your best offer on the table. At this point, you're looking for information rather than a firm commitment. MESOs can also complicate a negotiation, so don't put more than three options on the table at once.
If you'd like to learn more about using MESOs to improve your business outcomes, please contact us to set up a meeting.