What are the principles of creative sales negotiation?
Dealing with conflict and differences is hardly ever an easy task. Barriers to creative negotiation can be numerous and are often the saboteurs of a potential sale. Remember: your goal is to reach win-win-win-win settlements with competent customers. To that end, there are five principles of creative sales negotiation:
1. Attitude First
Creating an optimistic mindset involves basic attitudinal characteristics, which become the building blocks for successful negotiation. Attitudes and skills must work in harmony. Attitudinal characteristics of negotiation include self-awareness, self-belief, and openness to other viewpoints. Salespeople frequently overlook the significance of preparing themselves mentally. Attitude—how we deal with others when negotiating—drives the relationship. Develop a win-win-win-win attitude toward negotiation, and don’t be satisfied until all parties are satisfied with the solution.
2. Planning and Preparation
For many of us, planning is boring and monotonous, easily put off in favor of leaping into action quickly. However, devoting insufficient time to planning frequently results in failure to negotiate a mutually beneficial agreement, and raises feelings of antagonism and frustration.
The cornerstone to effective, imaginative negotiation is a carefully designed blueprint outlining specifically desired results for both you and your customer. The first step is to clearly articulate your position—know what your objectives are. Know the issues that are not negotiable and the issues that are negotiable. Must-have issues are predetermined prior to negotiation and are
essential to a satisfactory agreement. They are simply not negotiable. Your nice-to-have issues are negotiable. Although they would be nice to have, they are not necessary to the agreement. They are issues you are prepared to concede or use as trade-offs in the interest of concluding the agreement or maintaining the relationship.
Your window of flexibility is guided by your prearranged min-max points—min being you’re lowest acceptable point and max being your best, most ideal position. So, in the interests of creative negotiation, each of your must-have issues should be accompanied by a window of suppleness—your min-max points.
The second step in negotiation planning is to define the issues commendable of negotiation. Refer to all your notes and assemble all the issues, yours and your customer’s, into a comprehensive list. Some issues may have been resolved prior to the negotiation, which is fine, but be sure to identify any outstanding issues. It can be frustrating and expensive—in terms of time and success—if the customer calls you just prior to inking the deal with an unresolved issue. After the issues are assembled, the next step is to prioritize them. By sharing the list with your customer, you continue to build trust and confidence as you work through it together. Extract relevant information from your notes to enhance your position. A comment in your notes from six months ago may be a valuable piece of information. Salespeople frequently compensate for inadequate planning by conceding more than necessary. This shortcut can be very costly.
Sales entrepreneurs cannot manage to pay for quick and clever during the give and take of negotiation. Planning increases your negotiation success substantially and helps you achieve solutions that you never thought possible. Invest the time and energy (during janitorial hours) to prepare a strategy in line with your customer’s behavioral style. Your strategy will help you settle down, face fewer unknowns, and reduce stress.
3. Know the Lingo
The negotiation arena has a language of its own. Many negotiation sessions fail simply due to not understanding the language of negotiation. The objective here is not to provide you with an in-depth study of all the nuances of negotiation but to generate a mindset, awareness, and an overview of the logistics of creative sales negotiation.
4. Negotiate Price, Don’t Sell It
Is price the most significant aspect of the sale? No. Never has been, never will be. Customers have never based their buying decisions exclusively on price and they ever will. However, salespeople convince themselves that price is the number one motivator to purchase. Studies show that salespeople bring up price before the customer does 60% of the time. Why? I’m not sure but I suppose salespeople feel obligated to bring it up, or perhaps they have been trained to do so. It could even be lack of self-assurance or corporate self-esteem.
Many salespeople violate the sales process by introducing price too soon. Ideally, price should not be discussed until after your preliminary confirmation. During the call you need to focus on selling value and benefits to the customer. Don’t mention price unless the customer asks or you are negotiating. This concept may seem somewhat manipulative and irresponsible, but it isn’t. I have confirmed several deals without the customer or me mentioning price. It’s part of the rapport and trust issue. If a customer trusts you and feels comfortable with you, price is not an important issue. There is an implied understanding that your price will be competitive, otherwise you wouldn’t be in business.
By shifting the conversation to price previous to initial confirmation, the salesperson has invited the customer to openly challenge the price. Some salespeople are convinced the customer’s mandate is to hammer the salesperson into submission, in conclusion succumbing to a rock-bottom price. Classic tactic of a C account. How to negotiate against price and discount pressure is a common challenge among sales professionals. You’ve probably heard it before, “Your price is too high. You’ll just have to do better,” or “It’s a competitive market. Your competitors can beat that price,” or “You’ll have to show more elasticity on your discounting,” and so it goes. When salespeople concede too quickly in these situations they not only reduce profitability, but also devalue their customers’ perceptions of the product or service. Don’t respond by asking, “What’s the price they’re offering you?” or “What price do I have to beat?” This is a common mistake because it shifts the focus to pure price and discount levels. Experienced negotiators transfer the focus to value comparisons versus price comparisons.
Acknowledge the customer’s curiosity about price, but don’t get sucked into a price debate prior to preliminary confirmation.
When you ask for their business using magic words, your customers may inquire about your price. Simply say, “Yes, I’m sure we both recognize that price is important, but at this point can we agree to do business together based on the benefits discussed, as long as I can give you a competitive price?” If the customer says yes to your initial confirmation, you now have a willing party with whom to negotiate.
Consider the preliminary confirmation as a conditional sale; conditional upon working out terms and conditions supported by a competitive price. What salespeople need to realize is that if a fair price cannot be worked out then there is no deal. Final confirmation is conditional upon victorious negotiation. However, don’t negotiate all aspects of the deal and then focus separately on price. Make sure price or discount is part of the whole package, not a divide negotiation.
5. Negotiate the Issues, not the Personalities
Often, what causes you to become frustrated or annoyed in a negotiation is not the topic or issue, but your customer’s personality traits. By putting emotional distance between yourself and the negotiation you gain a tremendous advantage? Negotiations frequently unleash emotions that short-circuit rational processes. We sometimes abandon our carefully designed strategy and resort to a flight or fight response. The key to effective, win-win negotiation is to act in response unemotionally.
From time to time you may find yourself commerce with an individual you do not particularly care for. Chances are you wouldn’t invite him to go camping with you, but he may represent an A account and a sizeable business opportunity. Experienced negotiators understand that professionalism requires the ability to distance oneself from any emotional distractions. These may include biases, perceptions, values, fear of being subjugated, egos, feelings, moods, stress, and so on. Parties can get too caught up in the emotions of negotiation. They become too close to the deal and overlook important facts that may help move the deal forward. In spite of all your efforts to build a personal relationship you may find yourself commerce with just a corporate relationship. You can both still benefits by simply doing business together and nothing else. Don’t entangle relationship challenges within the negotiating process.
For most salespeople, the major barrier is simply the fear of negotiation. The very thought sends paralyzing shivers up their spines. The toughest hurdle is learning to be confident enough to stand up to the challenge. This means developing the ability to comfortably express a position without hurting anyone or being hurt. Many people find the straightforward, aggressive, business dialogue of negotiation intimidating. It’s the same challenge with confirming: the fear of rejection or perhaps sounding too aggressive. Our natural human tendencies prevail—in our adolescent years we were taught that it was polite not to ask for things and never to be confrontational.