What is Sales Negotiation?
Sales negotiation is a strategic discussion between the Buyer and Seller before finalizing the terms and conditions of the deal.
The Objective of any Sales Negotiation process is to arrive at an agreement on the terms and conditions of the deal.
The best practice for a long-term relationship between Buyer and Seller is to try to cut the deal with a Win-Win for both parties. Sometimes, it may also require the parties to lead to a little bit of compromise on certain terms but ultimately helps close the deal.
Identify your Negotiation Style:
Before you move further with Sales Negotiation 101, you must know that you would have played the role of a Negotiator sometime in the past either way. So this is not Rocket Science that you cannot learn. You just need to understand where you stand and where do you need to upskill in order to make a mark in Sales Negotiation discussions.
In order to assess your current know-how, you need to know your own negotiation style. Refer to the below image. This graph represents a view on how do you put your own needs and wants versus your customer’s needs and wants.
Pause and think about a few Sales Deals you have handled in the recent past and assess where do you stand.
The 5 types of Negotiation styles are:
- Compete - I Win – You Lose
- Avoid – I Lose – You Lose
- Accommodate – You Win – I Lose
- Compromise – I win/lose some you win/lose some.
- Collaborate – I Win – You Win.
Assess yourself against your negotiation style and contrast it with the long-term goals you have for your Client. Assess if your current negotiation style is correct or would need any course correction in order to build the type of relationship you would like to build with the Customer.
Common Mistakes in Sales Negotiation
1. Lack of Preparation
Often, due to lack of time, Sales teams tend to avoid engaging in the right amount of preparation before the Sales Negotiation meeting. Lack of preparation may lead you to either compromise on the deal or on in the worst case, you also stand chance to lose the deal. Hence, ensure to always prepare before the meeting. You may not have all the time in the world to do an in-depth preparation if you are handling loads of parallel deals, however, ensure to prepare on the fundamentals such as basic research about the customer, the stakeholders, the value proposition of the products or services which you are selling, the terms and conditions of your sales deal or contract, pricing, alternate competitor pricing for the same value proposition, Non-monetary benefits comprising your value proposition, etc.
2. Not Listening or Understanding Customer pain points
Customers love the Sales professionals who take time to listen to their problems patiently and try to understand their pain points rather than those who try to push sell things without even properly listening to them. This shall take you nowhere in negotiation. If you are unaware of the pain points of the customer, you will never be able to arrive at a common agreement in the negotiation unless you solve the pain point or at least alleviate it.
3. Rigid Behavior, Ego, Putting yourself first
Some Salespeople tend to have rigid behavior and a tendency to keep their needs first. They tend to think of themselves as superior to the customer’s problems and try to force their terms and conditions onto the customer. Sometimes overachievers tend to take it as a war and tend to think that they have always won the war and should never allow others to win. This tendency pushes them to oversell and try to push hard to win the deal without a healthy negotiation.
4. Not planning how much to concede
In Sales, Conceding things are important so that it leaves you with the appropriate capacity to provide concession during sales negotiation discussion. However, during the discussions, Beginners tend to make 2 kinds of mistakes. The first is conceding too much information, too early in the discussion. The second is conceding nothing, i.e. giving away all the concessions too early during the discussions. Both the cases are detrimental to sales success. You should have a fine balance between both in order to succeed. Understand how much to concede in the beginning and gradually start giving concession over the course of discussion.
5. Lowering Expectations for the overall negotiation
Some sales professionals, tend to have a preconceived notion of associating Negotiation with Compromise. This misconception leads them to lower their expectations even before the actual negotiation takes place. This tends to automatically affect the confidence and ultimately their performance and engagement during the discussion.
6. Getting Intimidated or Confused
Beginner sales professionals sometimes tend to get intimidated by the other Client Stakeholders during the meeting and in this state of confusion, sometimes tend to sign a bad deal by compromising on many terms. Avoid getting intimidated, since sometimes buyers may also be aware of such tactics such as Bad Cop/Good cop and may use it from their perspective as well as part of their procurement negotiation.
7. Underestimating their Power
Being a Sales professional, you must never underestimate your Power. Since you have been selling your products and services, you are far more knowledgeable about your own products and services compared to the buyer. You may be well aware of your value in the market in order to confidently stand defending your deal. Have a backup in place such as the alternatives you will try out if you lose the deal. This shall help you gain more confidence.
Hope this primer helped you get an introduction to Sales Negotiation. There is a lot more to learn on Sales Negotiation to propel your sales career to the next level. Want to read some more on this topic? Comment below your thoughts and let me know.
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