Salespeople who walk away with the most deals understand that everything is negotiable. They also recognize that successful negotiation with customers is much broader than the ability to haggle over price or other terms.
What is it that creates a confident and effective negotiator? What gives a salesperson an aura of control?
There is a basic set of principles that applies to sales negotiations. They can help you go into your negotiations with a more constructive mindset.
Steps when preparing for a negotiation:
- Prioritize your goals. If you’re going to compromise, you need to know what you must have, as opposed to what would be nice to have. The nice-to-haves may be given up for obtaining the must-haves.
- Know your walk-away point and alternatives. This gives you power in negotiations, because at some point you may be better off pursuing your alternative than settling for a sub-optimal agreement. Know your walk-away point so that if you need to, you can abandon the negotiation.
- Show that you want to negotiate. Look at the prospect’s problems and try to make sure that your proposal effectively resolves some of their key issues. This will give you a reputation for empathy and fairness.
- Promote long-term benefits. Point out that there can be an ongoing, beneficial relationship between the parties (if this is true).
- Remember: All deals are not always winnable. When neither side can completely get what it wants, sometimes a compromise is the best you can do to salvage a bad situation and maintain a lasting, beneficial relationship.
Successful openings lead to successful closes
How you open a negotiation is more critical than how you try to close, according to a recent survey of purchasing executives. If you don’t create interest immediately, you won’t even be given the chance to negotiate.
Here are four strategies top closers use during negotiations:
- Make your opening statement short, understandable and credible. Your goal is to start a dialogue rather than a one-sided discourse in which you preach about the features and benefits of your product or service. Establish who you are, why you’re there and why the prospect should be interested in what you have to say. There are many ways to open a negotiation, but the common objective of good openings is to lead the prospect to agree that you’re allowed to ask questions.
- Ask questions that will help pinpoint their problems and your opportunities. You can’t assess the prospect’s real needs without having an understanding of the problems involved. Establish your role as the seeker of information and the prospect’s role as the provider of information. You can’t negotiate without understanding the prospect’s issues.
- Let the customer do most of the talking. The more they talk, the better you will understand their needs. Listen carefully to their responses, trying to uncover unrecognized problems and trying to come up with unanticipated solutions. Give the prospect the opportunity to ask questions and focus on what’s in it for him or her.
- Resist offering solutions until you have a complete understanding of prospect needs. The more a salesperson knows up front, the more comfortable prospects feel in exchanging sensitive business information. Summarize or re-emphasize key points. Then propose an action that advances the sale to a successful close.
Major negotiation errors
Of all possible negotiating mistakes, two are more damaging than all others combined.
The first is assuming that prospects know about your company and its products. The second is not having a value concept.
What the name of a business or product stands for is critical to gain separation from the competition. Without that essential differentiation, sales are lost. Some salespeople think the way to turn prospects into customers it to talk about themselves.
They forget that prospects are focused on themselves and not the salesperson. Value is the right combination of quality, service and price the prospects want to meet their unique needs.
Three critical questions
The answers to these three critical questions will allow you to establish the value you need to separate yourself from the competition during negotiations:
- Why are we in business? Two quick answers are to make money and serve our customers. While both are important, neither is correct. The major reason to be in business is to create customers. If a business doesn’t create customers, it won’t last. A good way to develop loyal customers is to demonstrate a “we’re here to solve your problems” attitude. Satisfied customers want a positive response when they run into problems or have serious questions.
- Why should someone do business with us? This question usually brings out a laundry list of wrong answers. “We have great people” usually tops the list. While there’s no denying the value of having bright, hard working employees, this answer isn’t enough. The next most popular answer is “We have great products or services.” So do a lot of competitors. Come up with new ideas for your customers and prospects. You have expertise and knowledge. You know what’s happening in your industry, and you know customers’ needs.
- How can you make sure you and your company are in the same mindset as customers? There’s only one way to answer that question today: Always act as if no one knows you or recognizes the value you bring.
