Hint: Focus on identifying what means the most to the person with whom you’re trying to strike a deal.
Every once in a blue moon, I have a sale that ends like this. “That sounds like a fair deal. Let’s move ahead.”
For every one of those, however, I have 99 others that end in some form of negotiation. It’s not a bad thing and it’s not a sign that my customer or I are too stubborn for our own good. It’s just the way of the world.
Because of that truth, you’d think that salespeople would be really good at negotiation. And yet, not so much.
How do they get better?
With one big change and three simple, straightforward principles that I can tell you, from personal experience, can lead to higher margins, more satisfied customers and more closed deals.
Let’s address that big change first.
Like so much of what I write about, the ability to be a better negotiator starts not with some new tactic, but with a shift in mindset: thinking win-win.
Over the years I’ve asked many salespeople to tell me what the win is for their customer. To identify what’s most important to them. Almost without fail, they don’t know.
Part of the reason for that baffling explanation is that they never bother to ask. Yet they wouldn’t need to if they had that shift in mindset. If they thought win-win from the start, identifying what meant the most to their customers would come a lot more easily because it would be their first priority.
Now onto the actual principles.
1) Deploy your anchor wisely. Anchoring is a solid strategy when entering into a negotiation. This sounds like common sense, as will the next two principles. And they are common sense, just not common practice. The question isn’t if you know it, it’s if you can apply that common sense to your own situation.
When anchoring, set an aggressive but realistic target. A price and set of terms that would be ideal for you as a seller, reasonable in the marketable, justified by the value the customer is receiving and something you can confidently put on the table as your starting point.
Most salespeople know, or should know at this point, that the anchoring terms will likely not end up being the final terms. That’s OK. But you must know what an acceptable anchor for you is and what represents the point at which you walk away. Somewhere in between you have your win.
2) Yellow lights. In every sales cycle, there are likely to be challenges. Objections or push backs or, in the parlance I prefer, yellow lights.
The key thing about yellow lights is that they’re predictable. You can see them coming.
Each will change depending on the situation, but they will often arrive in some form you can probably see far down the road.
What might you find? A client objecting that you cost substantially more than your competition. Or that they had a bad experience with your organization in the past. Or that a proposed contract has critical terms they’re unable or unwilling to meet.
Whatever the yellow lights, work to anticipate them. Prepare in advance – and know what your response will be – to avoid getting caught flat-footed.
3) Exchanging value. In every negotiation, there’s a give and take. Like anticipating your customer’s yellow lights, this too is a process worth preparing for.
Unfortunately, what often happens in negotiations is that sellers eager to close a deal give away margin at the last minute that they otherwise would’ve been able to hold on to. By assuming a negotiation is coming, sellers can ready themselves with a list of trade-off’s (exchanges) and drastically reduce their chances of giving away value without getting anything in return.
Say a customer won’t do a deal unless there’s a 15% discount. That may be fine, but only if they agree to longer contract terms, prepayment or whatever is necessary for the deal to make more sense for you.
Again, the principle is simple: never give away something for nothing. All it requires is some critical thinking in advance. And the assumption that, like nearly all deals, at some point there will be a negotiation.
Read the full article here
