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6 Essential Rules of Sales Negotiation

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Written by Mike Schultz
President, RAIN Group

When watching sellers negotiate, perhaps the easiest things to see are the mistakes. Having now spent two decades studying sales negotiation, observing negotiations, and coaching and training sellers to improve their negotiation skills, we've distilled the common areas that the best sales negotiators consistently get right.

Here are the six essential rules of sales negotiation:

  1. Always Be Willing to Walk. You can want, but you can't need. Know when to walk. Walk when you should.

    Why is this first? Why this before "Build Value" or "Plan to Win"? Your mindset is critically important when it comes to negotiating. If a buyer knows you need a sale, they have leverage. Well, not just leverage, they have you over a barrel, and thus can squeeze you until there's very little—if any—value in a sale for you.

    But if you're willing to walk, and a buyer knows it, you start on a more level playing field. Remind yourself you have alternatives. Your time is important. If you're getting pressed, communicate to a buyer that you'd look forward to working with them, but you don't need to. It's always okay to want, but never okay to need.

    You also need to know when to walk. Many sellers don't analyze their reservation price or BATNA (best alternative to a negotiated agreement), so they end up accepting pricing and agreements that hurt them. If you know when to walk, you can walk when you should.

  2. Build Value. Expand the pie. Think objectives over objections. Brainstorm new possibilities for coming to agreement.

    Faced with any kind of challenge or pressed on price, too many sellers have the temptation to cave. However, objections—whether they be price, trust, urgency, competitive challenges, or anything—can be met with problem solving and new ideas. If you focus on the objectives, and helping buyers and yourself meet them, you can almost always come up with ideas to do so without lowering the price.

    Certainly, however, not every sales negotiation is destined to be a collaborative win-win affair. Again, when faced with challenges or objections, try to build or add value. Even if you can't do it every time, you can do it sometimes. If, however, you don't try at all, you do it no times.

  3. Lead the Negotiation. Set the agenda. Go first. Don't let the other party take control.

    Too many sellers sit back and wait for the buyer to drive the sales negotiation. Then they're often playing catch up, and reacting instead of leading the negotiation to a successful conclusion. Sellers should lead. They should set the agenda for meetings. They should go first with offers and ideas. Go first with sharing objectives and concerns. And go first when sharing pricing parameters. Indeed, too many sellers ask for budget when they should be sharing pricing proactively.

  4. Effect Emotions. Inspire theirs. Control yours.

    Effect (verb): To bring about.

    Sales negotiations are emotional affairs. There's anxiety, wariness, anger, frustration. But there's also satisfaction, fulfillment, and relief. The best sales negotiators bring about, or effect, emotions of buyers deliberately. These sellers make buyers feel respected and valued. They build rapport and make them feel connected to each other, building trust and negotiating in good faith. And they make them feel engaged in the process so buyers are invested in coming to a successful agreement.

    Sellers also control their own emotions. If buyers are trying to rile them up (or even if they're not trying—buyers tend to rile up sellers regardless), they swallow their anger and frustration and bring about calm so they can focus. If they are anxious or worried, they smooth themselves out so they can do what they must without fear of loss or conflict.

  5. Trade. Don't Cave. Always trade for value. Don't drop price in a vacuum. Don't get bullied.

    Buyers will often test a seller's cave tolerance. They'll ask for a lower price, and they'll often get it. When faced with the question, "Can we do it for less?" too many sellers will say, "Where do we need to be?" and drop their price.

    If you are willing to simply drop your price, you tell buyers this is what you do. They will always expect concessions, and always be wary of negotiating with you because of the pricing games they believe you play. The best sales negotiators are willing to explore new possibilities, change scope, or make a trade that could change the price. Sellers that plan for trades, and have them ready when it's time, create better agreements and reach them more often.

  6. Plan to Win. 90% of negotiation can be anticipated. Know what you want. Plan for tactics you might face.

    Preparation is often cited as the greatest determinant of negotiation success. Sales negotiation is no different. If you know what you want, work to understand what the buyers want, plan your strategy, and plan for any tactics you might face, you'll create great agreements consistently, and win maximum sales at favorable terms and pricing.

Succeeding in sales negotiations takes experience and a strong foundation of core negotiation skills, but if you are able to do all six of these things—and do them well—you will be ABLE To Prevail.

Learn more about each of the 6 Essential Rules of Sales Negotiation:

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RECOMMENDED READING >> The #1 Way to Decrease Anxiety and Gain Leverage in  Sales Negotiations


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Topics: Sales Negotiation