Sales negotiations is an awry business, it can be simple or complicated, courteous or brutal, fast or slow. Negotiations are termed successful when real and perceived differences are adjusted while preserving credibility, customer value, and profit margins. While there is no surefire approach to barter positive results from a sales negotiation, one can decrease the chances of the negotiation getting derailed by developing the essential skills for negotiations.
Even if the salesperson has properly qualified the prospect and was able to manage their expectations precisely, the deal could still end in a negotiation. The sales rep who took the role of a consultant should now take up the role of a negotiator to engineer the deal to a win-win agreement. In the midst of all that tension and contracts, negotiations can make things go haywire. But with the right skills and tactics, sales reps can turn negotiations to the direction they wish to take.
10 Essential Negotiation Skills For Salespeople
Skill #1. Define the Absolute Bottom Line
The bottom line is the limit you are willing to give in for getting business. The best way to be prepared for a negotiation is to clearly define your bottom line of what you are willing to settle for and beyond which is unacceptable. This will help reps to avoid getting manipulated by prospects. Accepting negotiations and compromises on the fly will leave you unhappy at the end of the day. Remember, when you are compromising, you are shedding a portion of the margin the company should have earned. The absolute bottom line is your worst case scenario, anything less should be blindly refused.
Skill #2. Always Negotiate with the Decision Maker
Salespeople make the common mistake of negotiating with people who are not the decision makers. The biggest and basic rule of negotiation is to always negotiate with the decision maker i.e, the signing authority. The problem with negotiating with others is that when you begin negotiating with the true decision maker, they’re likely to start the discussion with the discounted price quoted or agreed. This is again used as leverage by the decision maker to quote lesser, pushing you in a tough spot.
Skill #3. Be Prepared before Negotiations
Being prepared before entering negotiations account for 90% of negotiation success. The more and better prepared you are, the more likely is the outcome of negotiation to be positive. Prepare for detailed negotiations and plan strategies for every encounter. Knowledge is power, and power is always on the side of the person with the best information. Get all the information you can about the prospect with whom you will be negotiating, think through the entire negotiation process, and be fully prepared for any eventuality. Create a detailed description of what your prospect is looking for, this will help in revealing commonalities that lead to creative solutions.
Skill #4. Build Value to Justify Price
Before entering the crossfire, build value in your prospect’s mind by focusing on the underlying interests of your prospect. If you are able to quantify the values that can be gained through your product/service, convincing the prospect will be easier. Give your price legitimacy by providing prospects with reasonable justifications. Remember, decision makers buy values and benefits, not features.
Skill #5. Offer Alternatives to Cash Discounts that Cost Less
Prospects typically throw in the price towel in every negotiation, demanding discounts and rebates in the price. And we can only hope that they are reasonable. To counter such claims and demands, offer prospects with alternatives to cash discounts that cost little or less in comparison. But make sure what you are offering have high-value perception for the customer. You don’t want to cut them short. Design a list of alternatives that resonates high value to the prospect.
Skill #6. Get Something in Return for Discounts
A straight price reduction is the most expensive discount a company can offer, and the hardest to avoid in a negotiation. So even if you try justifying the price or offer alternatives to discounts, there will be a deal where you will no other option other than discounts. But you can still turn that around. Since you gave up on price, ask something in return. Giving away discounts will invariably hurt your company’s bottom line, so make sure you get something in return. Some things you could ask for return include
- Shorter payment terms/Prepayment
- A larger order (Up-sell)
- Purchase additional products/services (Cross-sell)
- Opportunities for recurring revenue (business)
Skill #7. Find the Alternative Solutions that interest your Prospect
Negotiations are when prospects come up with a list of alternative solutions that they could look at for a better lead or for something else. Identifying the alternative solutions your prospect might come up with will give you a headstart. Now that you have a list of the alternatives you can provide reasonable data and information to the prospect to demonstrate why your product is superior. Remember, better the deal on the table, fewer will be the alternatives.
Skill #8. Use Silence to your Advantage
Silence is a powerful tactic in negotiations. It gets the other party to think about what you just offered and reinforces the statements you made. ‘Silence’ can speak louder than words, but can also be counterproductive if not properly trained to manage silence. Silence creates a void which the prospect is forced to fill with words, words that are more likely to favor you. Make a statement or an offer, and remain silent.
Skill #9. Be Patient
If significant game-changing decisions are made that might need radical changes to what was previously agreed upon, don’t rush into finalizing. Request for a break to think it over and schedule a follow-up meeting. Radical changes might catch you off-guard and rushing into decisions can only hurt both you and your company’s bottom line. So slow down, take a deep breath, and get back to them after you have evaluated the situation through.
Skill #10. Know when to Walk Away
If your prospect demands massive price reductions or radical amendments to the contract that is unprofitable to the company, walk away. Gradual withdrawal is a better way in which you send signals to the other party that you are dissatisfied with how the negotiation is going.
Now that you know the Sales Negotiation Skills needed to be mastered before your next sales negotiation, you could also gauge how successful you were with these sales negotiation metrics.
- Fewer Prices Concessions to get Business
- Increased Margins and Revenues
- Improved win rate in competitive situations
- Shorter sales cycle
- Stronger customer relationships that bond on value, not price
- Greater power and influence throughout the Decision Making process