Sales negotiation is a delicate art. The dreaded email that begins, “I’d like to chat about some of the intricacies of this contract before I sign,” may arrive after you quote a price, send a contract, assume you’ve won the business, and start celebrating.
The contract may still require negotiating even if you have properly qualified the prospect and managed their expectations throughout the sales process. Because of this, it is essential for every salesperson to be an expert negotiator.
Here, in this RisePath post, we’ll discuss what a sales negotiation is, why they’re significant in the sales process, and the key abilities every salesperson needs to have when negotiating.
How do sales negotiations work?
A conversation (or series of conversations) between a buyer and a seller with the goal of reaching a transaction is typically referred to as a “sales negotiation.” In ordinary negotiations, there is some back-and-forth, with each party coming to the table prepared to make concessions.
One of the most demanding and possibly anxiety-inducing aspects of sales is sales negotiation. Each one requires intensive planning, sensitivity, insight, and a strategic readiness to compromise.
In order to bring back a contract that is profitable, you must strike a balance between appeasing your prospect and doing so. That is a precarious path to walk. Finding a win-win solution is much easier said than done, especially in a time when consumers are more powerful and knowledgeable than ever.
Understanding how to negotiate is both necessary and, at times, frustrating due to the fact that it is a fundamental part of the sales process. Let’s examine in more detail why negotiating is so crucial in sales.
Why is negotiation crucial in sales?
There are many benefits to negotiating in sales. For starters, and perhaps most crucially, it aids in the negotiation of fair transactions between buyers and sellers. Without it, negotiations about fair rates and mutually beneficial outcomes between salespeople and prospects are more likely to end in conflict and dissatisfaction.
Additionally, it aids salespeople in creating enduring connections with their clients. Both parties have the opportunity to communicate effectively during negotiations.
Even after their sales procedures are complete, sellers who are engaged in a negotiation can position themselves as important resources that their buyers can turn to for advice and knowledge if they can maintain their composure, consultative attitude, and compassion throughout the dialogue.
We’ve established the need for strong negotiation abilities, so let’s go through some techniques you can master to get there.
Sales Negotiating Techniques
1. Prepare yourself
You should never enter a negotiation without any preparation; these are not the kinds of conversations you can wing. You must be well-prepared and possess a firm understanding of some crucial transaction components.
For starters, you need to have a thorough understanding of your prospect’s company, their purchasing power, their problems, and any alternate options they might consider if your negotiations fail.
This last point is really important. The best alternative to a negotiated agreement, or BATNA, is the walkaway line that determines if the negotiation is worthwhile to continue. You need to have an idea of both your BATNA and your prospect’s BATNA.
You’re giving up a lot of leverage and perhaps setting yourself up for a deal that isn’t worthwhile if you don’t know where that line is for both parties. As we previously stated, you cannot enter discussions without doing your due diligence on both your own and your prospect’s conditions.
2. Specify concessions in detail
You need to be aware of your position with regard to cost because it is utilised as a negotiating success metric 12 times more often than quality, according to the RAIN Group. If not, you risk giving up too much too soon.
A 30% reduction or an extra six months of support may seem completely reasonable in the heat of the moment. You don’t know you agreed to terms you can’t or shouldn’t accept until you get back to your desk and begin drafting the contract.
Prior to meeting with your prospect, specify the parameters for price reductions, freebies, and other add-ons to make sure you reach a mutually advantageous deal.
3. Speak second
The prospect wants to negotiate the parameters of the contract you’ve presented to them, therefore you should allow them to open the lines of communication. Salespeople are frequently tempted to get in right away and provide a discount or modification in an effort to be helpful.
However, there is a difference between being understanding and being overly eager. Before making any concessions, you should give your prospect a chance to express their opinions and clarify their position.
In negotiations, it is beneficial to listen intently before speaking. If you don’t give your prospect a chance to express their opinions, you can’t know what they’re thinking. Keep your cool, ask them where they stand in the discussion, and take advantage of the quiet.
When doing talks, awkwardness isn’t always the worst thing in the world. Without embracing it, you risk losing your balance and giving up more ground than necessary.
4. Stay away from ranges
Offer only a single option if the buyer wants the price of your goods reduced. You’re setting yourself up for an unduly aggressive concession if you say something like, “Well, I could definitely cut the cost by 15 or 20%.”
Who, after all, would take 15% when 20% is on the table? Always start with one precise number or figure and adjust as necessary by going higher or lower. Avoid using the phrase “between” at all costs.
5. Avoid “splitting the difference”
Offering to “split the difference” on prices may sound like a simple, straightforward way to reach an amicable agreement, but it typically has the opposite effect.
For instance, you wouldn’t want to answer with $7,500 and end the conversation if the prospect asked for a 50% discount on your $10,000 product or service. That could appear reasonable and advantageous for both parties, but these discounts are frequently hasty and excessive.
The prospect is more likely to accept if you offer a small discount while keeping the total close to the original price, and the margin is not as negatively affected.
6. Write terms where it is appropriate
The process of negotiating can be difficult and drawn out. They often involve both parties exchanging ideas and working through potential words one at a time.
There will probably be a number of suggestions, some of which will be accepted while others will be rejected. Because of this, you shouldn’t sign any documents that would be legally binding until the meeting has been completed and all parties have spoken in agreement to the agreements.
7. Convoke the decision-maker
This advice may sound straightforward, but many salespeople negotiate with the incorrect party. Several employees of a corporation could engage in negotiations without being able to make genuine business choices.
You can find yourself in a disadvantageous position in a debate with a decision-maker if you negotiate repeatedly up the chain of command. As a result, you can enter a conversation having already agreed to a price in a prior encounter, forcing you to haggle more in subsequent conversations.
8. Get for a give
Mutual respect and trust are the foundation of a successful customer-salesperson relationship. They don’t involve salespeople going above and above to accommodate customers everywhere they go.
Because of this, salespeople shouldn’t just comply with all the demands made by a prospect without putting out some of their own. Salesperson and client are kept on an equal footing by making the negotiation win-win for both parties, which establishes the foundation for a fruitful partnership.
9. Instead of money, talk more
Price is the most frequently negotiated element of a sales contract, so salespeople should be ready to bring up reductions. However, discounts aren’t the only method sellers may entice customers.
Price and value are related, and price and value are related to how customers view and feel about a product. Because of this, you might want to think about including additional add-ons or freebies in a package rather than lowering the price.
Having said that, this isn’t a set rule. Everything is situational. The greatest line of action is occasionally to provide a discount. The facts of the contract must be taken into account when making compromises; more benefits aren’t always preferable to significant financial ones.
10. Talk in an informal manner
It is normal for negotiations to become intense, but you must make every effort to avoid making them unpleasant. These discussions are intended to result in amicable, fruitful collaborations.
You don’t want there to be any animosity or resentment in your arrangement with your prospect, just like in any other relationship. The first step in preventing that kind of aggressiveness or destructive confrontation is for you to maintain a light and humorous tone throughout the conversation.
11. Be composed
When participating in negotiations, poise is essential. It might be difficult to position yourself as a valuable, amiable resource for your prospects if you become irritated or frustrated.
Keep in mind that bargaining is largely a process of developing relationships. Your prospects will be less likely to build a long-lasting, fruitful partnership with you if you lose your composure. Always maintain composure for the sake of everyone.
12. If necessary, go forward
Salespeople shouldn’t be open to any curveball that a potential customer throws their way. Don’t be scared to back out of a transaction if demands escalate or the company begins to lose money.
A client who insisted on signing only after the contract or price had been dramatically changed is sure to have issues later.
Such modifications frequently indicate that the potential customer does not recognise the value of your service. That implies that it will probably only be a matter of time before they lose interest. If it comes to that, make sure you leave; it will be in everyone’s best interests.
As we indicated at the beginning of this post, having the ability to negotiate is just as important as learning how to do so. However, you’ll position yourself to succeed in each negotiation you enter if you know how to keep your cool, lead with empathy, comprehend the utility of your product, and have a sense of how to express its value.
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