Not Another Negotiation!

Negotiation. One of the worst occupational hazards of the sales profession. It’s not fun. Nobody ever looks forward to it. We want it to end up a win-win for both sides (but does it ever really turn out that way?). It’s inevitable.

Hear me out. If a sale is qualified properly (all items in the qualifying process done to a Tee… meaning PAIN, Budget & Decision are all uncovered), & expectations are crystal clear (Ground Rules established). Why the need for a negotiation? Tough question but take it seriously. If we do our job & uncover ALL PAIN points. We have the budget (target pricing) or money conversation & we understand who the decision makers are & how they go about making decisions why are we negotiating. It doesn’t add up.

Photo of a man negotiating on the phone

Negotiation happens when sales are not qualified properly. Leave a gap or take a short-cut & you can be damn sure your prospect or customer will take advantage of it. Happens all the time.

Here in the Metro Detroit area it’s an epidemic. Based on our geography alone there is a gigantic glut of automotive suppliers. Many of these sales organizations have succumbed to the belief that the negotiation is inevitable. The OEMs have done a great job of perpetuating this. Their annual productivity reductions/ expectations or “cost downs”, are standard operating procedure for the OEM’s. Is it fair? Fair is just another 4-letter F word. It’s incredibly important for the salesperson to know the buyer’s productivity goals in the negotiation & include them in the proposal. Remember… it all comes back to their PAIN. No PAIN = No Dice!

Here are 10 things to keep in mind entering into any negotiation:

1. Define the concessions you’re willing to accept in advance

In the heat of the moment, a 20% discount or additional six months of service might seem perfectly acceptable. It’s only when you get back to your desk & start drafting up the contract that you realize you agreed to terms you can’t or shouldn’t accept. Clearly defining the limits on price discounts, freebies, or other add-ons before you meet with your prospect will ensure you come to a mutually beneficial agreement.

 2. Let the prospect go first

You’ve presented the terms of the deal. The prospect would like to negotiate them. You have to let them start the conversation. In the spirit of being accommodating, salespeople are often tempted to offer a discount or an adjustment before the prospect even opens their mouth. But you don’t know what they’re going to say! Just as in other areas of sales it pays to listen first & then speak. Be patient.

3. Don’t give a range

If the prospect would like money knocked off your product’s price, don’t say, “Well, I could probably reduce the cost by 15 or 20%.”  Who would accept 15% when 20% has been offered? If you are negotiating (big if) always quote one specific number or figure & then go higher or lower as necessary. The word “between” should be avoided at all costs.

4. Avoid splitting the difference

Offering to split the difference can do more harm than good. For example, if the product or service costs $10,000 & the prospect wants a 50% discount, you shouldn’t counter with $7,500 although it seems logical to do so. If you offer a slight discount but still keeps the number in the neighborhood of the original price, the prospect will likely accept & the margin takes less of a hit. In other words, don’t WIMP OUT.

5. Negotiate with the decision maker

This tip might seem obvious, but you would be surprised how many salespeople make the mistake of negotiating with the wrong person. This means that when talks begin with the true decision maker, they’ll likely start at an already discounted price. A great outcome for the prospect, but a poor outcome for you.

 6. Don’t put anything in writing until the conversation is over

Negotiations can swing back & forth & around again. Many ideas will be proposed. Some will be accepted.  Others will be shot down. You will be wise not to revise the contract until the entire negotiation has ended & all parties have verbally agreed to the terms.

7. Get something in return for concessions

Healthy salesperson-customer relationships are borne out of mutual respect & trust. With this in mind, you shouldn’t accept every single one of a prospect’s demands without making some requests of their own. By keeping the negotiation a win-win for both sides, you & the customer remain on equal footing, which lays the groundwork for a mutually beneficial relationship.

8. Take the conversation away from money

The most commonly negotiated aspect of a sales deal is price, so salespeople go in prepared to talk discounts. Big mistake. Since price is tied to value, & value is tied to a customer’s perception of & satisfaction with a product, you might consider offering other add-ons or items in lieu of a lower price. Understand that this is not a hard & fast rule — the specific concessions you can offer depends on the situation.

9. Keep the conversation light

Although the prospect & you sit on opposite sides of the table during a negotiation, they will be partners if the deal is signed. Keep the talk light & jovial to avoid creating bad blood. You need to work together when it’s done.

10. Walk away if necessary

You shouldn’t be willing to accept any curveball a prospect throws at them. If demands become unreasonable or unprofitable for your company, don’t be afraid to walk away from the deal. A customer who only agreed to sign if the contract was radically amended or the price was drastically dropped is bound to cause problems down the road.  Since they clearly don’t see much value in the offering, it’s only a matter of time before they become dissatisfied. Get out for your & your prospect’s sake.

And another thing. Don’t lose the war over a single battle. There is a lot more on the horizon for you at these accounts. No need to puff out your chest & win the battle & shoot yourself in the foot for the rest of the war. Happens a lot!

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Dave Tear

Dave is passionate about selling & helping others understand the sales process. Whether a client company has a 5 person sales team or a 300 person National sales force, Dave can Coach & Train them to be the best in their industry.
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