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Strategies and Tactics for Sales Negotiation

blog author
Written by Mike Schultz
President, RAIN Group

Whether you work on a sale for 9 hours, 9 weeks, or 9 months, when you get to the negotiation phase of the selling process, you can lose the sale in an instant.

And even for those sellers who win the sale, the negotiated outcome may not be the best.

Some sellers win sales, but lose most of their margin in negotiations. Final agreements are often subject to changes or budget restrictions at the 11th hour.

No wonder many sellers approach negotiations with trepidation. In fact, many research studies show anxiety is the most common emotion associated with negotiation, and our field work confirms that anxious negotiators don’t perform well.

To make things even more challenging, negotiation is different today than it was even just a decade ago:

  • Procurement is more involved
  • Buyers of all types have more information about you, your offerings, your competitors, and your prices
  • Third parties often sit between buyer and seller (representing and insulating buyers from sellers)
  • Procurement technologies are fast becoming the norm

This might make you, the seller, think the buyer has all the leverage.

Not so.

In fact, a Harvard Business Review negotiation article opens with the following, “In many industries the balance of power has dramatically shifted from buyers to suppliers.”

In most cases, a sales negotiation is critical to the success and failure of both the seller and buyer. To handle negotiations that result in the best possible agreements, sellers (and buyers) need to be skilled. They must use the best sales negotiation strategies, approaches, and tactics at the right time, and know how to respond to the other party regardless of what’s thrown at them.



What Sales Negotiation Research Reveals

RAIN Group’s global research on Top Performance in Sales Negotiation reveals there’s a reason you want your sales team comprised of top-performing negotiators.


Negotiation Outcome Satisfaction and Target PricingNegotiation Outcome Satisfaction and Target Pricing

The best sales negotiators are 12.5x more likely to be happy with the outcome of their negotiations and 3.1x more likely to achieve target pricing.

But before I share the strategies you can use to become a top-performing negotiator, let’s first understand what a sales negotiation is.



Notice this definition doesn’t say reaching agreement. It’s working together to achieve the best possible agreement.

If you think about negotiation as reaching agreement, you’ll put yourself at a disadvantage right from the beginning. If you have no choice—"I must make an agreement"—you have no leverage and are susceptible to being taken advantage of.

Just having the mindset that the purpose of a negotiation is reaching agreement can affect how you act and behave in conversations. You should always know you have alternatives.

The most common alternative for a seller is simply not coming to agreement, not making the sale, and moving on to the next opportunity. Taking this mindset is not only empowering, it affects sales negotiations in positive ways.


6 Sales Negotiation Strategies

When watching sellers negotiate, the easiest things to see are the mistakes. It’s more challenging to identify exactly which sales negotiation strategies sellers should proactively adopt.

That’s why, after two decades observing, researching, and analyzing sales negotiations, and training and coaching sellers to improve their negotiation skills, we distilled the common strategies used by the best sales negotiators into the 6 Essential Rules of Sales Negotiation.


Sales Negotiation Strategy #1: Always Be Willing to Walk

Always Be Willing to Walk

Why is this first? 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 the buyer that you'd look forward to working with them, but you don't need to.

Research shows that being willing to walk is the #1 strategy most separating top-performing sales negotiators from the rest, and it’s a strategy that delivers many benefits:

Benefits of Walking From a Negotiation

Remember: it's always okay to want the sale, but never okay to need it.

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.


Sales Negotiation Strategy #2: Build Value

Build Value in Negotiations

Faced with any kind of challenge or pressed on price, too many sellers are tempted to cave. However, objections—whether price, trust, urgency, competitive challenges, or anything—can be met with problem solving and new ideas.

If you focus on the objectives—and helping you and your buyers meet them—you can almost always come up with ideas to build value without lowering the price.

For example, a buyer may raise a price objection, or suggest cutting a part of the proposed solution to keep costs down. Rather than responding to a price objection with something like “Where do we need to be?” instead, focus on understanding why the buyer is pushing back.


Percentage of Sellers that Articulated Differences in Value

articulated_differences_in_value

Is it a budget or availability of funds issue? Is it that the buyer doesn't see the value? Perhaps the buyer is simply testing whether the seller will cave under pressure. Money objections come in six flavors. Unless you know what the buyer's objective is, you can't come up with a solution that will satisfy it.


Certainly not every sales negotiation is destined to be a collaborative win-win affair. Still, when faced with challenges or objections, try to build or add value. Our research shows value-driving sales organizations have higher win rates and are 2x more likely to capture maximum prices.


Price Capture and Win Rates Among Value-Driving Sales Organizations
Price Capture and Win Rates Among Value-Driving Sales Organizations


Even if you can't build value every time, you can do it sometimes. However, if you don't try at all, you do it no times.


Sales Negotiation Strategy #3: Lead the Negotiation

Lead the Negotiation

Too many sellers sit back and wait for the buyer to drive the sales negotiation. But top-performing sales negotiators are almost twice as likely to take the lead. The rest are 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, go first with offers and ideas, and go first with sharing objectives and concerns.


Sellers should also go first when sharing pricing parameters. Research shows sellers who make the opening offer are more likely to be very satisfied with the outcome of the negotiation.


Percentage of Sellers that Took the Lead in Negotiations

Percentage of Sellers that Took the Lead in Negotiations

Indeed, too many sellers ask for budget when they should be sharing pricing proactively.

Selling means having a vision. You know what you're trying to achieve, and you work hard to achieve it. When you lead the sales negotiation you put yourself in the best position to turn that vision into reality.

One of our strongest and best sales negotiation tips is to take the lead.


Sales Negotiation Strategy #4: Effect Emotions

Effect Emotions in Negotiations

Effect (verb): To bring about.

Sales negotiations are emotional affairs. They often come with anxiety, wariness, anger, and frustration. But there's also satisfaction, fulfillment, and relief.

The best sales negotiators bring about, or effect, the emotions of buyers deliberately. In fact, research shows Top Performers are 2.2x more likely to be prepared to manage emotions in negotiations.


Percentage of Sellers Prepared to Manage Emotions

Percentage of Sellers Prepared to Manage Emotions

These sellers make buyers feel respected and valued. They build rapport and make buyers feel connected to each other, building trust and negotiating in good faith. And they make buyers feel engaged in the process, so they're invested in coming to a successful agreement.

The best negotiators also control their own emotions. They manage any anger and frustration and bring about calm so they can focus. If they’re anxious or worried, they smooth themselves out so they can do what they must without fear of loss or conflict.


Sales Negotiation Strategy #5: Trade, Don't Cave

Trade, Don't Cave in Negotiations

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’re willing to simply drop your price, you tell buyers this is what you do. They’ll always expect concessions and 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. And they’re 2.6x more likely to be prepared to trade.


Percentage of Sellers Prepared with Ideas to Trade

Percentage of Sellers Prepared with Ideas in Negotiation



At its core, trading is about reciprocity. Mutual give and take.

Think of it this way: if you don't trade, anything the buyer asks for that you’re willing to concede must not have value. If it doesn't have value to you, don't expect the buyer to value it.

Instead of allowing the pie to shrink, the act of trading can increase value for both sides. The classic trade is where both sides concede something of lesser value to them in return for something of greater value.

This mutual gain is at the heart of collaborative negotiations. For example: 

"I can offer the customer more regular deliveries to off-set their warehouse space problem which is no problem as their facility is in the same industrial park as another customer. In return, they lengthen the contract to coincide with their planned factory refit."

Sellers who plan for trades, and have them ready when it's time, create better agreements and reach agreement more often.


Sales Negotiation Strategy #6: Plan to Win

Plan to Win in Negotiations

Preparation is a major factor in sales negotiation success. 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.

Knowledge is a source of power. Lack of knowledge introduces doubt on both sides of the negotiation, which can lead to fizzled negotiations and lost sales. You can anticipate so many aspects of negotiation if you do your research and planning beforehand.


Percentage of Sellers Prepared for Negotiation

Percentage of Sellers Prepared for Negotiation


Negotiation is not an arena for improvisation. You can end up caving to buyer demands or accepting an offer not in your interest. You can end up giving the buyer pause when they question your preparedness, skill, and overall competence, casting doubt on their desire to buy from you.

With the right plan you can expand the pie, build confidence, handle challenges and issues that come up along the way, and lead the way to successful agreements for both you and the buyer.


Sales Negotiation Tips


Sales Negotiation Training

Do you need sales negotiation training to be a good negotiator?

In our research, we found top-performing sales negotiators are 9.3x more likely to have received extremely effective training.

Outcomes of Negotiation TrainingOutcomes of Negotiation Training

And 78% of sellers who participate in extremely effective training are very satisfied with the outcome of their negotiations.

Meanwhile, buyers are 1.5x more likely to have received extremely effective negotiation training compared to sellers—meaning you and your team could be negotiating at a disadvantage.

This is a big deal when you consider that the effectiveness of negotiation training positively correlates with buyers receiving price concessions and discounts, achieving pricing targets, and satisfactory outcomes.

It’s a wake-up call for sellers to boost their training effectiveness to the same level—or better—than buyers.


Sales Negotiation Skills

What skills do you need to be a top-performing sales negotiator?

You must be able to:

  • Reach the best win-win solutions for your company and your customers
  • Lead a masterful sales negotiation process that results in win-win solutions when possible
  • Deal with common buyer tactics that drive down margins
  • Strengthen relationships with customers and enhance the opportunity for future work

6 Essential Rules of Sales Negotiation

The first letter in each rule creates the acronym ABLE To Prevail. Remembering ABLE To Prevail will help you commit the 6 Essential Rules of Sales Negotiation to memory.

Using the 6 Essential Rules of Sales Negotiation, beginner sales negotiators can learn core concepts and skills they can apply immediately to increase their negotiation confidence and success. At the same time, experienced sellers and negotiators can use the model as a framework for honing their skills to improve their mastery.


How to Master Sales Negotiation

Ultimately, negotiation is a massive topic, and some of it is out of your control. The buyer and the skills, training, and collaborative spirit they bring to the table can make a big difference on the outcome. But, like most things, the 80/20 rule applies: 80% of your success comes from just 20% of your input—as long as it’s the right input.

Learn the 6 Essential Rules of Sales Negotiation, and practice their application, and you’ll be on your way to mastering sales negotiation.

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Topics: Sales Negotiation