Negotiation is at the heart of every sales process. It’s where the magic happens, turning potential leads into satisfied customers and fostering long-term business relationships. As sales managers and senior sales leaders, honing your negotiation skills and those of your team can be the difference between closing deals and losing opportunities. So, let’s explore some key strategies that can transform your negotiation outcomes.
1) Prepare for Negotiation
Preparation is a critical aspect of negotiation. Knowing your product, understanding the client’s business, and being aware of market conditions and competitive offerings empower you to negotiate from a position of strength. Armed with this knowledge, you can customize your proposal to address their specific needs and pain points, making your negotiation more compelling and relevant.
2) Decode Underlying Interests of the Other Party
Positions are the explicit demands or statements made during negotiation, while interests are the underlying reasons behind those positions. By delving deeper into interests, you can uncover shared goals and areas for compromise.
For instance, during a negotiation with a potential client, you might encounter resistance to the proposed pricing. Instead of seeing this as a deadlock, you inquire about their concerns and discover that their primary interest is budget predictability. Armed with this knowledge, you propose a flexible payment plan or a phased implementation, addressing their core concern while maintaining the overall value of the deal.
3) Propose Options for Mutual Gain
A common pitfall in negotiation is viewing it as a zero-sum game where one party’s gain is the other party’s loss. Think about inventing options for mutual gain, encouraging negotiators to brainstorm multiple solutions that satisfy both parties’ interests.
Consider a scenario where a client is hesitant to commit to a long-term software subscription due to uncertainty about future needs. Instead of forcing a one-size-fits-all solution, you propose a customizable package with options to scale services up or down based on their evolving requirements. This flexibility not only makes the offer more attractive but also demonstrates your willingness to accommodate their unique needs.
4) Utilize Objective Criteria
Negotiations often reach an impasse due to conflicting opinions on what constitutes a fair deal. To overcome this, insist on using objective criteria. This involves basing decisions on external standards, benchmarks, and precedents rather than subjective preferences.
For Example: In a negotiation over the price of a new product, both parties have differing views on what the product is worth. Instead of engaging in a tug-of-war, you suggest referencing industry standards, recent sales data, and competitor pricing. By grounding the discussion in objective criteria, you create a foundation for a fair and unbiased agreement.
5) Keep Calm with Difficult Negotiators
In the world of sales, you will inevitably encounter difficult negotiators. Whether they use aggressive tactics, or other tricks, it’s crucial to remain calm and focused. Consider negotiating with a client who suddenly demands an unreasonable discount, threatening to walk away if you don’t comply. Instead of reacting defensively, quickly evaluate your best alternative. You then try and ask open-ended questions to understand their underlying concerns. Redirect the conversation to explore mutual interests and brainstorm solutions that address their needs without compromising your bottom line. Remember, there is always a way out!
6) Keep Your Fallback Plan Ready
What’s your fallback plan if the negotiation fails? Knowing your and the other party’s alternatives can significantly strengthen your negotiating position. Consider you’re negotiating a major deal with a supplier. You’ve identified a strong alternative supplier who can meet your needs if the current negotiation falls through. This knowledge gives you confidence and leverage during the negotiation, allowing you to push for better terms without fear of losing out entirely.
7) Never Make it Personal
Effective negotiation begins with building strong, trust-based relationships. So, never take it personally when the negotiation reaches a deadlock. Separating the people from the problem is particularly crucial here. Focus on addressing the issue without damaging the relationship. When clients feel understood and valued, they are more likely to engage positively and consider long-term partnerships.
Imagine you are negotiating a long-term contract with a key client. Instead of being fixated on the price, you take the time to understand their business challenges and goals. Acknowledging the client’s current situation, you work out a special discount with your supervisor for the current deal, without compromising your bottom line. Showing genuine interest and empathy builds trust and demonstrates that you are invested in their success. This relationship-based approach not only helps in closing the current deal but also paves the way for more profitable future collaborations.
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