Julie Thomas shows you how the negotiating process takes place throughout the sale and what you can do to position yourself to win.
In today's hyper-competitive markets, prospects are more risk-averse than ever. Many prospects focus on every aspect of every purchase to prove that they are getting the best possible deal. Often they have "professional purchasers" who are fully responsible to get the best deal possible. At the same time, your goal is to establish enough value to minimize the cost discussion when it is time to close the business. As a seller of goods and services, your company's profits are directly affected by your ability to meet your customers' needs while meeting your own goals.
Sales is the business of relationships, and like any relationship it requires give and take. We typically expect the give and take, also known as negotiating, to happen during proposal and contract discussions; however, in reality, we continually negotiate throughout the sales process - on everything from picking a time to meet to determining who will participate in a demo to hashing out the terms and conditions of a contract. Negotiations are most productive when conducted objectively, and at the right time.
Here are a few points to remember when negotiating with prospects:
•Understand the "need" behind your prospect's position. In any negotiating situation, your responsibility is to understand your prospect's criteria –– as well as your own –– and ethically create positive outcomes for all parties involved.
•Know your empowerment level; you could find yourself in dangerous territory with either your company or prospect if you commit to things that are outside of your span of control.
•Define what constitutes a "win" for all parties. Here, it is critical to consider what you want as well as what your prospect wants.
•Be clear on what you can negotiate and what is non-negotiable. For each of us, there are non-negotiable items that are not open for discussion or compromise. It is important that we understand those and are clear about what we are willing to negotiate on.
•Maintain composure; respond rather than react and maintain a high level of rapport every step of the way.
•Finally, know your "walk-away" position; some deals are simply not worth what you are being asked to give up.
A key to successful negotiating is to understand when to negotiate in the first place. Negotiating components of deliverables, terms or pricing before the prospect is actually "sold" on your solution will cause you credibility problems. It is important not to negotiate until you have clearly shown the prospect what his world will be like after he acquires your product or services, and established both business and personal value with the individuals you are working with. Also understand the prospect's process for purchasing so that you are not caught in a position of multiple negotiations with multiple individuals.
There are typically three things to negotiate at the end of your sales cycle:
Deliverables, Terms and Conditions, and Pricing. One thing to keep in mind is that your price is always a function of your deliverables and your terms and conditions. As you prepare for your negotiation, there are three key strategies that can help you through the process:
Strategy #1: Trade-offs
Successful negotiations are a balance of meeting both parties' needs. With trade-offs, your objective is to meet both parties' needs by trading items from one category with items from a second category. For example, you may be willing to reduce your price with a change in terms or deliverables.
How it might sound:
"If you want this product shipped to multiple locations, are you willing to accept different payment terms?"
Strategy #2: Embellishments
This strategy requires you to add incremental value in one category when you can't make a trade-off to accommodate the prospect. For instance, you may throw in deliverables that have little cost to you but are large value to the prospect.
How it might sound:
"If we expand the training class from fifteen to twenty people, are you willing to move forward today with the terms and investment we have discussed?"
Strategy #3: Compromise
Compromise involves finding the middle ground in the same category. Splitting the difference on price, payment terms or a specific deliverable could be examples.
How it might sound:
"If we can split the difference in payment terms between net 10 and net 30, can we move forward today?"
Think about a current sales cycle that is nearing the closing point. First, analyze all areas of your qualification process to confirm that you have a truly qualified prospect. If you find that you are not working with a qualified prospect, re-engage on the sales cycle rather than the negotiation.
Next, prepare for any potential negotiation by identifying both the prospect's and your own ideal position. Make a list of what is non-negotiable from your perspective, and another list of what you think your prospect might require to move forward. From these two lists, develop potential win-win negotiating strategies using the aforementioned strategies:
Negotiating for success requires planning and strong communication skills. Being prepared for the negotiation with solid ideas and strategies will put you in a position of strength!