How can AI make your negotiations more efficient? How can it improve outcomes for your organization? What will the ongoing role of AI be moving forward? These are some of the questions Martin Rand—Founder and CEO of Pactum AI—answers in this episode of Negotiations Ninja. While AI is still considered a new frontier to some, it is quickly becoming more applicable to the everyday functions of a business. Tune in to this episode to find out how it could impact you—positively OR negatively.
Outline of This Episode
- [1:24] Martin Rand’s background
- [4:09] How cognitive biases impact negotiations
- [4:40] Creating value from neglected areas
- [8:43] Do people want to negotiate with a bot?
- [11:52] The future of bots in negotiation
- [17:40] The ideal client for AI negotiations
- [21:04] How to connect with Martin/Pactum
The lightbulb moment that led to Pactum AI
Martin was a product manager at Skype when he launched his own Startup, VitalFields. He scaled that internationally and sold it to The Climate Corporation. So he became the commercial lead at Climate Corp, a digital subsidiary of Monsanto. His task was to negotiate with big food companies in Europe.
Martin enjoys negotiating in Europe and jokes that you begin the week with Ukrainians and end the week with the French. He states that “I got to see every cognitive bias and every cultural difference there is to see negotiations (at least in Europe). And I thought. ‘Wow. This is really more painful than it should be.’”
He thought that there’s got to be a better way. He had a lightbulb moment when he realized that technology could make everything more efficient—and Pactum was born.
Creating value from neglect
Pactum’s customers are very large enterprises who all have a similar problem: They have tens of thousands of vendors, 80% of which are long-tail. They’re dealing with a lot of unmanaged tail spend. But a bot can step in and handle the 90% of negotiations that are mundane, repetitive, and small. Martin points out that “The beauty of our AI is that we don’t substitute people. We create new value that was neglected before.”
The unmanaged tail spend often goes neglected for years. Most of those deals should’ve been renegotiated years ago. But a multibillion-dollar enterprise—if they send an email or do a phone call—will spend more on operational expenses then the additional value they would have gained in these deals. Historically speaking, it hasn’t been worth their time. That’s where Pactum comes into play.
Who would benefit from AI negotiation?
Martin notes that the perfect customer is the one that negotiates thousands of deals that are somewhat similar. If the bot only has to negotiate one or two vastly different deals—such as lawn mowing or buying cars—from one day to the next, the bot is not necessary. But if it has to negotiate 200 lawn mowing contracts and 100 car buying contracts, then it’s a perfect fit.
There has to be repeatability so that it can learn. Every negotiation makes the next negotiation better. Martin notes that when they negotiate for a customer they don’t store business-sensitive data. However, they DO store the data around the negotiation itself: What strategies and tactics worked? What ways of phrasing sentences work? How many seconds does a “yes” take versus a “no” take?
The other reason they want repeatability is that the front-end is a bit heavy. They invest time and effort into building the value function. The bot needs to understand how to negotiate. So what is the interdependence of all the levers and all of the negotiation items? What is the goal of the negotiation? So they go into the enterprise with their analysts and spend time on detailed analysis and interviews with them to build negotiation flows and value functions.
To do this they need some scale. If there is scale and there is repeatability, give the longtail to the computer so people can focus on the strategic side of negotiations.
But do humans like negotiating with bots? And where is the future of AI in negotiation headed? Listen to the whole episode to hear this futuristic discussion that can truly add value to your business.
Resources & People Mentioned
Connect with Martin Rand
Connect With Mark
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