The #1 essential rule of sales negotiation is Always Be Willing to Walk Away.
You know when you should walk when you know your BATNA, or best alternative to a negotiated agreement.
When you’re feeling calm, clear-headed, and confident, you’re more likely to be a successful sales negotiator. Yet, anxiety is the most common emotion associated with negotiations, and anxious negotiators don’t perform well.
So how do you decrease anxiety and increase success? Be indifferent to the result of the sales negotiation. This doesn’t mean you don’t want the sale. You can want the sale, but you can never need it—or be perceived to need it.
This is something top-performing sales negotiators know: they’re twice as likely as the rest to be willing to walk away from the deal.
Factors Related to Willingness to Walk
Source: Top Performance in Sales Negotiation, RAIN Group Center for Sales Research
Being willing to walk is an incredibly freeing feeling. If the sale doesn’t happen—or it can’t happen at terms that are favorable to you—then no big deal. In fact, the faster you learn this the better, because then you can free your time to focus on more fruitful sales activities.
Being willing to walk and knowing when you should walk gives you a sense of control, which is critical for your ability to negotiate a favorable outcome.
Always being willing to walk will help curb your anxiety and get you in the right frame of mind to succeed.
How to Find Your BATNA
When it comes to a sales negotiation, you might have several alternatives to the agreement. But there's only one that's the best: your BATNA. Think of it like your Plan B.
What Is a BATNA?
BATNA = Best Alternative To A Negotiated Agreement
You want to figure out what your Plan B is before negotiating to avoid making or taking an offer that’s worse than your BATNA—or rejecting an offer that’s better than your BATNA.
To estimate a BATNA, analyze the value of the alternative as specifically as possible.
Here's an example:
Management consultant “A” was negotiating with a potential client for a month-long engagement. The solution had been agreed upon and she knew it would take her full-time effort for the month.
She also knew she was unlikely to have any other work that month. Her normal monthly fee was $30,000 USD. If she didn’t take this work, she’d get nothing. The buyer offered her $10,000 USD and wouldn't budge higher. Believing something is better than nothing, the consultant took the work.
$30,000 seller fee - $10,000 buyer offer = $20,000 loss
Another consultant, “B,” was in the exact same situation. Fortunately, she determined that her best alternative was to focus the full month on sales activities. She knew if she could set up 15 meetings, she’d usually win at least two new clients worth $120,000 USD, plus she'd open up conversations for months to come.
She also analyzed the risk of accepting a client at a significantly lower fee, ruining her chance for repeat business at good rates.
Her BATNA was $25,000 USD, $5,000 USD less than her typical fee. She offered this to the buyer, but with a trade of a named case study if she met the success criteria.
The buyer declined.
$30,000 seller fee $25,000 plus named case study - buyer decline = $0 loss
Which outcome would you prefer? The $20,000 loss or $0 loss?
Here’s a three-step process you can use to determine your BATNA.
1. Identify alternatives.Brainstorm what your alternatives will be if the negotiation doesn't result in an agreement. As a seller, your alternatives might include pursuing a different opportunity, working on prospecting activities, or developing new work for existing customers. Consider what will help you reach your goals in the long-term.
2. Select the best alternative.After brainstorming, identify which alternative best meets your high-priority objectives. That's assuming you know what your priorities are. Reference your Goal Setting Worksheet and determine the activities that will help you achieve them.
3. Improve your BATNA if possible.Research the alternative and see whether there’s anything you can do to strengthen it. For example, if you walk away from one sale and you think you can close two other opportunities for a certain dollar amount, is it possible you could close three instead? Or increase the average size of the sale?
Don’t just analyze your BATNA; consider the buyer’s as well. Seeing the negotiation from the buyer’s perspective can increase your sense of control and confidence. While it’s unlikely you’ll know their BATNA with certainty, you can make some educated guesses based on your conversations and analysis.
You may also be able change the buyer’s perception of their BATNA. For example, if you share ideas the buyer isn’t aware of, you can potentially reduce the value of their BATNA and increase their desire to reach an agreement with you.
After you assess both your BATNA and that of the buyer, you’ll know when you should walk. If the value of agreement is greater than the value of no agreement for both of you, you’ll move forward. If the value of no agreement is greater for either of you, you won’t.
When Should You Walk?
Value of agreement > Value of no agreement to each party
Value of no agreement > Value of agreement for either party
Get the analysis right, and you’ll:
- Feel more confident and calm about negotiations
- Create and accept only good agreements for you and buyers
- Achieve better outcomes all around
Know your BATNA. Write it out and keep it handy. Review it before major conversations to reinforce the fact that you’re actively choosing to continue the negotiation process.