Negotiating in times like these can be difficult, as customers seem to hold all of the cards, unless you have strategies for shuffling the deck.
Even in a down economy, customers are buying and prospects are being courted by your competitors. Selective buyers will not automatically choose the lowest price. They usually try to determine the best value. Neil Rackham, president of Huthwaite, a leading sales consulting organization explains how:
By clarifying and developing the value you can offer the customer and by skillfully negotiating after that value is established, you can shift the emphasis from” lowest price” to “best deal.”
For some salespeople, negotiating in hard times starts and ends with price. They think the only way they can conclude a successful negotiation is to make price concessions.
Most prospects worry less about price and more about risk. They don’t want to make buying mistakes that can put their companies in risky positions.
Salespeople who do a good job of understanding and meeting customer needs usually don’t have to discount when they get to the negotiating table.
Skill at focusing
Skill at focusing on areas of maximum leverage is directly related to how good a job you do at uncovering and prioritizing the customer’s decision criteria. The better you understand a customer’s decision criteria, the easier it will be for you to decide which concessions will have maximum leverage during a negotiation.
Plan and use questions
Of all the tools and techniques which a negotiator has available, questions are probably the most important. Questions expose problems and reveal strategic information. They give salespeople thinking time and allow them to control the negotiation.
Skilled negotiators think in terms of ranges rather than absolute limits as it gives them more flexibility in offering incremental concessions. Here are four simple steps:
- Set your ballpark upper and lower limits
- Refine your upper limits in terms of customer expectations and competitive strength.
- Refine your lower limits in the same way in order to arrive at a realistic range.
- Negotiate, starting at the top of your realistic range and making concessions in increasingly smaller increments until you reach agreement.
Test for misunderstanding
The object of a negotiation is an agreement which works. It’s no good reaching an agreement if there are misunderstandings regarding the particulars. Mutual understanding is vital to successful negotiations.
Excellent negotiators spend a lot of time clarifying points of agreement and areas of disagreement. They probe and test to ensure that both they and the customers are on the same page.
Create interest immediately
If you don’t create interest immediately in this tough environment, you may not get a change to negotiate. Here are tips to help you open negotiations successfully:
- Make your opening statement short, understandable and credible. Establish who you are, why you’re there and why the prospect should be interested in what you have to say.
- Ask questions that will help you assess the prospect’s real needs and 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. Stay focused and concentrate during the negotiations. Listen for cues that the other party gives about his or her needs and wants.
- Let the prospect do most of the talking. The more prospects talk, the better you will understand their needs. Listen carefully to their responses, trying to uncover unrecognized problems and coming up with unanticipated solutions. Give the prospect the opportunity to ask questions and focus on what’s in it for them.
- Resist the temptation to offer any immediate solutions until you have a complete understanding of the prospect’s needs and are ready to offer credible solutions. The more you know up-front, the more comfortable prospects feel in exchanging sensitive business information. Summarize or re-emphasize key points. Define the problem and put common interests on the table. See if you can get the prospect to problem-solve with you so you can come up with a solution that maximizes the gain for both of you. Then propose an action that advances the negotiation to a successful close.
- Be patient. Don’t rush the negotiation. Hear out your prospect and try to keep an open mind. If you can stay somewhat flexible, you may end up with a better deal than you originally thought.