Sales Negotiation

Sales negotiation is like golf or tennis; it has formal and informal rules and guidelines. But unlike sports analogies, in successful sales negotiations everyone wins.

 

If you haven’t already, please read ­­Part 1 first before proceeding with Part 2.

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The six steps to successful sales negotiation are:

  1. Guidelines
  2. Targets
  3. Nuggets
  4. Commitment
  5. Design
  6. Presentation
  7. Recycling

This article covers steps 3 to 7.

3. Nuggets, The Golden Opportunities

What you will now find out is that the actual sales negotiation game begins when you say hello to the client in your first meeting. Old-line thinking is sell first, negotiate on the back end. Today’s best salespeople know that you cannot separate the sales negotiation from the sale.

Questions, Questions, Questions

Great salespeople ask a lot of questions and do a lot of listening. Many of the questions you use in your sales interviews set up and apply to the sales negotiation game. These include timing, decision-makers, competition and desired outcomes. This is also the point to begin refining what color your partner is.

Time is one of the key factors in the sales negotiation game. The Japanese are famous for delaying talks and socializing to the eleventh hour. They then hit you like a ton of bricks, knowing you want to wrap up the deal by a certain time.

Time is your ally

The key to making time your ally, or at least neutral, is to find out when your client intends to start using your product or service. Discuss a timetable that needs to happen for that to become reality. You will then know the exact drop-dead dates for making a deal. The bonus is that by discussing timetables, you also move the client into an agreement mode and are setting up your close.

Depending on the product you sell, the decision-making process may be simple (one person) or complex (multiple layers ). You need to identify all the parties involved, their role and how they feel about your product. This is “Sales 101,” but it plays heavily in sales negotiations, also. In a simple process you only need to confirm that you do indeed have the person that can make the deal happen.

Prepare for complexity

Complexity requires you to get temperature readings on all the people involved. If you know that the technical advisors rate your product highly, this gives you power in sales negotiation. Knowing that the end-users of the product find it the most reliable is another chip in your favor. Should you find that a competitor has preference or is close, you need to sell before you negotiate price. The more available a suitable substitute for you is, the greater the clients WAM.

What your client expects from your product not only determines the likelihood of buying, it dictates the leverage you have in sales negotiations. A good nugget mining here should tell you the money saved or made with your product. It should also cover total expectations, including credit/payment, shipping/delivery dates, additional services and what makes a company a preferred vendor.

How your client answers many of these questions will provide evidence as to their color. Open and direct indicates a Unicorn. Difficult, control-oriented, means Bull. Snakes will avoid answering or provide answers that test the walls of credibility. Mice will often not be able to answer or will need to check with others for responses. Now is the best time to determine color. Knowing this will prepare you for the game ahead.

4. Commitment, Yours And Theirs

Before you dive into the meat of negotiating, pause briefly and review your commitment to yourself and your company. Quickly focus on all the great things about your company and its products. Re-affirm your belief in the people you work with and your abilities.

Finally, commit to playing win/win. Set up a deal that makes everyone a victor. Should you have any doubts at this point, get a time out. Tell your client that you can’t proceed at the moment because you are lacking some important information. Schedule another appointment. Then, go back to your office and get your head on straight.

Once you’re on-line, it is time to start gaining commitment from your client. Be sure to determine that the person you are dealing with has the power and authority to make the deal happen. Have them commit to this and promise not to introduce another player at a later date. You must also confirm that you have the same level of authority for your company.

The players are now established, so timetables fall next. When will you meet? Where will you meet? What deadlines need to be met? The control of time is a key power in sales negotiations. Your goal at this point is to make time a non-factor.

You close the commitment step by affirming the client’s desire to buy your product. Review quickly all the benefits they will receive. Key in on their primary needs and how you can solve those problems. A good transition question is: “It appears that our product fits your needs, and assuming we agree on terms, can you move ahead with the purchase?” A positive answer is a green light to negotiate further. A negative answer is the red light. Stop and re-sell the product before talking terms and issues.

5. Designing The Deal

The proposal you prepare will be the foundation sales negotiation is based on. It is important that you do two things: put it in writing and deal in complete programs.

The proposal should have three sections: selling the proposal, cost and specification and the specifications appendix.

The selling section and appendix will be the same. The cost and specs section will offer three complete options: a deluxe package, exactly what the client had requested and a slightly lower cost program if the client wants a deal.

IT IS VITAL THAT YOU DEAL ONLY IN TOTAL PACKAGE MENTALITY.

Once the client has you playing restaurant menu – with one from column A and another from column B – you will quickly forget your pre-established guidelines and end up in a win/lose deal.

Design contains another element that is extremely important. You have to design your psyche to deal with a few of the games and tricks that may surface. You have become a Unicorn and do not play games. The other player may not be so enlightened. Your best way to deal with the tricks and games is to first expect them, then identify and dismiss them.

Watch out for the “Poor, Poor Pitiful Me” game

This is a popular buyer’s game. This is the ploy of business is bad, my budget was set by others and they estimated poorly, or we did not anticipate this cost in our fiscal plan. The client wants pity. Give it and your on a slippery slope. When this tactic is used you should attempt to help the client re-allocate or create dollars. If that option is not there, you counter with your No.3 budget package.

“Bracketing” is the game of fencing you in

The client states a high/low figure of what they will spend based on very fuzzy details. The idea is to have you agree to a small price range (such as $50,000 to $57,000) and then try to load the program with a lot of extras.

When offered a bracket like this, your counter is to state that you have a few options available for the client and one of them will fit in that range.

They are vague about what they expect to be included in this price range, and you are vague as well.

“Nit-Picking ” is the most used ploy

Think of a loose string on a sweater. You pull it and no big deal. Then there is another loose string. And another. Soon you have a major hole in your sweater, and it is ruined. The same thing in negotiating.

One small concession. Two. Next, the whole deal is out of balance. When the nit-picker starts move to a mode of “that’s included in one of my options that we can discuss,” hold fast to the total package plan.

Two ploys are cousins. “Take It/Leave It” and “Deal’s Off” spring from the same well. Both are veiled threats that a better alternative is available. Like a bluff in poker, this must be called. You state that it appears they may have another way to proceed. You can possibly design a program along those guidelines if they can tell you what they are. Be sure that if they do pull a competitor off the shelf, that you re-sell the quality aspects of your product.

The final game is “By The Way”

It comes after the deal is struck. The most common way it is presented is when the client says, ” Oh, by the way…..” While the client will act like it is a small after-thought, it is usually a major concession they want. Respond to that with a simple, ” Gee, if that is important to you, maybe we should consider a different option that includes that.”

Once you establish the high ground of win/win sales negotiation and call these ploys, the vast majority of clients gain great respect for you. They realize you are skilled, have strong values and will make a powerful business ally. They will also start to respond to you in the Unicorn style. This will lead to better deals, more profits for all and long-term collaborative relationships.

6. Presentation, Working The Table

The game of Monopoly really gets exciting after all the properties are bought. The luck of the roll and the art of the deal determine the outcome. The sales negotiation game is the same. We have been going around the board buying our spaces and setting up the game plan. Now the deals begin.

It is important that a meeting begin with a roll call to determine that all the correct decision-makers are present. Also, re-confirm that the people do have the power to conclude the deal. Should a key person not be available, it is best to re-schedule. If you now find that a “man upstairs” exists, this too means re-scheduling and pushing for having them present.

This is most important in dealing with branch offices or subsidiaries. Proceeding at this point will only get you a few smiles and head nods from decoys. Your entire program is then open to be sliced and diced by the key figures on their own timetable.

People are first. Next, you must do a quick check that all nuggets your proposal is based on are still valid. Check that the competition has not put a new concept on the table that will knock you off track. Any negative responses at this point forces you to retreat to the nugget-mining stage. Only move forward if all the lights are green.

You have gotten permission for take off

Present your first option ( high-price spread) in its entirety. Cover the selling proposal, investment and specs. During the process be sure to use mini-closes. Any negative responses are a red warning light. Stop and dig for information.

All positive responses take you to close on the entire package. The response, “Great program, can we work a deal?” is a sign that you have the lead but must work to get across the finish line. You will not put counter offers on the table at this point. Your goal is to identify any ploys that may be played. You also need to see if any BUMS surface at this point.

Mice should not be present at this step

Perhaps you did find a very strong mouse. You know that a deal cannot be made with them. They will play either good guy/bad guy or man upstairs. You must react by first identifying the game and in a humorous manner, dismiss it. Then, firmly state that to continue the discussion, you need the key decision-maker. Remember, this client has given you buying signals and committed to the product. Price and terms are the issues.

Bulls and Snakes take full action at this point. Deflect the Bull by remaining calm and focused. Lower your speaking voice and even whisper at times. Focus only on facts related to the product or business. Slowly and calmly walk the Bull through the specs and find the true objections. This forces the Bull to deal with facts and put histrionics in the closet.

Proceed the same way with Snakes

Remember, the Snake is full of half truths and false information. Tactfully challenge the information. Ask for documentation. Spend time in your tech appendix to put the true facts on the table. Let your Snake know that you support their position and it’s just the facts that are out of line. This allows the Snake to slither away by blaming poor reference material or information. Continue to knock all the ploys off the table.

Once the games have ceased, review this proposal and close again

Any objections at this point tend to be valid. Assess which of your two remaining proposals will fit the newly clarified guidelines and present it in its entirety. If you are not able to get agreement on the second proposal, keep your eyes wide open for nit-picking. Your client will start by liking the price of No. 2, the features of No. 1. Your response is to review No. 1 and be clear that it is a “package” in its entirety. Point out the extra value in No. 1 and the minimal cost difference. Your partner will then opt for No. 1 or No. 2.

Once they decide, you can work out some small details that you had built into the program. Be very sure that you keep to the package and its allowable concessions. Once you start to exceed them, retreat to another package. Also have your WAM firmly in hand.

You only go to option No. 3 when your partner declares that the first two are absolutely out of range. Once No. 3 is on the table, all packages revert to the original form and can be done only in their entirety. You must exercise your WAM if No. 3 does not work. Do this in a business-like manner. State that the expectations of your client must have been misunderstood and that your proposals are off-center. Suggest a new meeting to further gather nuggets and return with a re-designed plan that meets these new budget constraints.

The skills you have practiced to this point should have resulted in a positive closing and agreement. Before you pop the champagne corks, you must add closure to the event.

7. Recycling, Preparing To Play Again

The recycling step is critical, yet it is most often skipped by inexperienced negotiators. Most people want to throw everything in the briefcase and get out of town. This step, when done correctly, will ensure there are no “by the ways,” remorse or gremlins that will drive the deal down.

It is important to review the proposal and have both you and the client sign off on delivering what you said you would. Once the review is acceptable to both of you, initial and date it. You then can decide who will prepare the final version, though you will volunteer for the job. After that, thank the client for all the effort and work they put forth in reaching this agreement with you.

The Deal is Done

The product is delivered. You can make your next sale and sales negotiation much easier by practicing super post-sales techniques. Make sure the client is happy and getting the results they expected. Become a resource and add value. Continue to build strong contacts throughout the client’s company. Know that the game will be played again, and you will have more information, stronger nuggets and a better understanding of the players.