Most high-dollar complex sales involve messy purchase processes. You and your prospect must weight and balance many variables, such as dozens of features, price, delivery schedule, contract terms, implementation responsibilities, service life and much more. Balancing your dual role as both salesperson and buying consultant for the customer requires you to master great skill in negotiation.
Effective sales negotiation isn’t about finding a point where each party gives a little and gets a little. Rather, it is about fine-tuning the details in a way that leaves everyone highly satisfied with the final deal.
Congratulations! You just got a call from your hottest prospect. The message was, “We’ve gone through your proposal and like what we see. I think you’ve got a good answer for our needs. Why don’t you come in, and we’ll iron out some details?” Don’t pull out that cork on your bottle of champagne just yet. You’ve just been called to the final negotiation.
Whether you close the sale or not depends on your ability as a negotiator. And before you keep that appointment with your prospect, you need to check out how well you function as a master negotiator. Here are four ideas to help you be more effective when the discussion begins.
1. Internalize Agendas
The job to bring these negotiations to a successful conclusion begins well before you open the door to the meeting room. You have to have a plan that will guide you through the discussions. Your plan will be complete if you can answer these questions:
If I negotiate the best sale for my company, what details would be part of that sale? What would the ideal contract look like?
If you sell a software product, and your company finds that training on that software is a good revenue generator, then training might be on your best-outcome list. Or maybe your list includes some custom programming or extended customer support. Add all of these extras to your best-outcome list.
What is the minimum I need to get from this negotiation if I’m going to close this sale at all?
Make a second list of your minimal requirements. Perhaps your company has a policy that no discount will exceed 10%. That might be a minimum requirement. Another might be the minimal time required to install the software. Let your mind go back to other similar sales to help you build your list. And talk with others in your company to make sure your list includes their essential requirements.
What are my priorities?
Now that you have your best outcome and minimal requirements lists, go back through each list and assign a number to each item, indicating its priority: 1 for the highest priority, 2 for the next and so on.
If you take the time to answer these three questions, you will have a clear picture of your agenda for the negotiation meeting.
At this point, you’re halfway done with your negotiation meeting planning. Go through the same exercise, this time from your prospect’s point of view:
- What would your prospect get from you if he were able to negotiate the best deal from your company?
- What are your prospect’s minimum requirements to buy your product?
- What are your prospect’s priorities?
2. Apply the Principle of Alternate Currency
Let’s say you won first prize in this week’s sales contest — two tickets to Friday night’s game. But you can’t go because Friday night is your parents’ anniversary party. You have two valuable tickets, but you can’t use them. Now, your neighbor would love to go to the game, but he can’t afford those ticket prices.
Let’s also suppose that your neighbor is an expert in carpentry, and you have some antique furniture that needs repair. If you give your neighbor the tickets, and he fixes your furniture, both of you got something of value.
What I’ve described is called barter. And barter is closely related to alternate currency. In negotiation, alternate currency is giving something of perceived equal value.
For example, let’s say the maximum discount you can give a prospect is 10%, but it’s clear from your discussion that your prospect needs to get 15%. Perhaps you can satisfy your prospect with a 10% discount, plus something else that she would value.
Alternate currency is a technique for increasing the probability of a successful outcome to your negotiation. You know what your minimum requirements are and you know (or can find out) your prospect’s minimal requirements. If there is a difference between these two, you can often span the discrepancy with alternate currency. For example:
- Your prospect wants onsite training for all her employees, but perhaps she will accept onsite training for just key employees, plus a “train the trainer” session to enable her company to train the rest.
- Your prospect needs to have a custom enhancement to your system, but you don’t have the available talent. Instead, you offer your prospect additional support.
There are two important factors to making alternate currency work for you:
- You have to offer something your prospect values, which means you have to know enough about your prospect to know what she values.
- The alternate currency must be perceived to be worth as much as the initial request; otherwise, the prospect will perceive that she has lost.
3. Pay Attention to the Details of the Negotiation
Positions evolve during a negotiation. As people talk, they exchange ideas and information, open up new avenues of discussion and solidify their own requirements. This means you must be prepared to identify these changes, many of which can be subtle.
You can best track these changes during negotiations by asking questions of your prospect. As you go through each item of your negotiation, ask your prospect to explain his position. Ask questions such as:
“Can you tell me why that is important?”
“What will be the impact on your goals?”
“Can you explain how that might work?”
As your prospect begins to answer your questions, pay attention (and record if possible) the key words he uses. These will give you significant insight into:
- Your prospect’s minimal requirements for ending this negotiation successfully
- Alternate currency he might value
- Any remaining issues, barriers or objections that might have to be resolved during this negotiation
4. Say No Nicely
It’s said that the definition of tact is telling someone to go to hell and having her look forward to the trip. Well, negotiation isn’t a time for telling your prospect where to go, but it is a time when you might have to deliver a negative message. After all, a prospect may ask for something beyond your minimum requirements, and you just can’t say yes.
Expert negotiators learn to say no nicely. When a prospect asks for something beyond the negotiator’s ability to say yes, the expert:
- Expresses positive understanding
- Identifies the points of agreement
- Then poses a question of collaboration
It works like this. Suppose a prospect says, “I need to have those systems installed over the weekend.” However, your company prefers weekday installation because better testing is available then. You could say:
“I understand. We both want this installation to take place with the minimum disruption to your operation. Let’s come up with some ways we can accomplish your objective.”
In this way, an expert negotiator dismisses the weekend-only installation and says no, while maintaining a positive environment to the negotiation.