Buyer and seller negotiations are a fun dance. While these negotiations are usually partner-focused (win-win), buyers often use standoffish tactics to gain an advantage in the negotiation at the seller's expense. Even if you—as the seller—have a win-win mindset and approach, you need to know how to maneuver the situation when buyers throw you curveballs. You need the right negotiation skills to bolster your success.
This article was originally published in the Inside Sales Blog.
One of the biggest mistakes sellers make in a sales negotiation is letting buyers take control of the negotiation, leaving you to play defense. If you want to come to a great agreement (and you do), you need to lead the process.
In our white paper, 6 Essential Rules of Sales Negotiation, Rule #3 is: Lead the Negotiation. A key part in leading a sales negotiation is teeing up the meeting properly with an agreed to agenda ahead of time.
When you write the agenda, you can more effectively lead the conversation.
Nearly all meetings in any given negotiation are unique, so you'll need to plan for each one specifically. Start by creating an agenda to determine what information will and won't be discussed.
If you bypass this step, the meeting could start off on the wrong foot with the buyer making demands or pressuring you on price.
Reverse auctions (also called e-auctions) are a common negotiation technique used more and more frequently by large organizations. For the most part, sellers don't dislike reverse auctions—they loathe them.
The point of a reverse auction is to drive down supplier prices to their absolute lowest while driving expectations of suppliers to their highest. As the process (typically) removes human interaction from the equation, sellers often feel at a complete loss to do anything but participate in the auction or walk away.
There's a lot more to it. Below you'll find negotiation strategies you can use before and during the reverse auction process to get the best results for you and your buyer.
"Unfortunately, there seems to be far more opportunity out there than ability...
We should remember that good fortune often happens when opportunity meets with preparation."
Thomas A. Edison
Preparation is often the greatest determinant of negotiation success. Across negotiation studies and surveys, we see sellers who get the best outcomes: know what they sell, research buyer wants and needs through sources other than the buyer, have a keen understanding of the buyer's day-to-day life and concerns, and prepare for each negotiation with trades, counteroffers, and knowledge of their walk-away points.
My grandfather Sidney was raised during the great depression. Often hungry growing up, he learned the value of a dollar the hard way. It stuck with him the rest of his life. When I was in college, he never let me call him because he would say it was long-distance.
I told him that the distance was long, but the call didn't cost anything. Still, he could barely stay on the phone for 5 minutes. I could visualize the nickels clinking in his mind, making him uncomfortable with the cost of the call.
It's common advice to minimize emotions in a negotiation. For example, the reading line of the article "Emotion: The 'Enemy' of Negotiation" is "To succeed in negotiation, says one Wharton expert, one must take emotion out of the equation."
We disagree. Emotions are primary drivers of decision making in buying, and primary drivers in negotiation outcomes. Emotions shouldn't be minimized. Instead, they should be guided and managed for both buyer and seller so that the best outcome can be achieved by all.
"Leadership is the capacity to translate vision into reality."
Warren Bennis, Author, On Becoming a Leader
When it comes to sales negotiations, all too often sellers:
In our research report, The Value Driving Difference, we studied almost 500 organizations' practices regarding how focused they are on driving value for buyers. Companies that rose to the top as Value-Driving Sales Organizations had higher sales win rates, were more likely to grow revenue, had lower undesired sales staff turnover, and much more highly motivated sellers. They were also two times more likely to agree that they capture maximum prices in line with their value.
There's no question: If you want to succeed in sales, you should focus on driving value.
Negotiating a sale is never easy, and more often than not you'll be faced with price pushback, lengthy delays, excuses, purchasing nightmares, and more—even after you think you've done a solid job making your case.
According to a recent study from the RAIN Group Center for Sales Research, 55% of leaders at companies don't believe their sellers have the negotiation skills needed to consistently win new business.
Alison Brooks and Maurice Schweitzer, two researchers at the Wharton School at the University of Pennsylvania, conducted an experiment to induce varying levels of anxiety among negotiators.
One group was subjected to the not-so-melodious screeching strings from Psycho. The other group was treated to calming Water Music by Handel. After listening for a while, the groups were sent off to conduct simulated negotiations.
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.
Sales negotiation can be a nerve-wracking process. Without the right knowledge or tools at your disposal, getting to the best agreement can be elusive.
In this podcast, RAIN Group's President Mike Schultz discusses how to overcome your fears, gain confidence, and leave behind some common misconceptions about sales negotiation.
In this SlideShare presentation, RAIN Group Presidents Mike Schultz and John Doerr highlight the 5 common pieces of advice that cause sellers to say and do the wrong things in negotiations, resulting in alienated buyers, damaged relationships, and lost deals.
Last week we shared our infographic on 16 Tactics Buyers Use in Sales Negotiations. The infographic highlights the most common sales negotiation techniques that buyers use, what they look like, and how you can prepare for and respond to each so you can successfully negotiate with buyers on their terms.
Good negotiators have the ability to recognize the negotiation tactics and style of the other party.
When a buyer comes to the negotiation in partner mode, it allows you to work collaboratively to create possibilities that expand the pie and result in the best possible agreement for both sides.
You've been working on a sale for 4 months and everything's going great. Your potential customer, the decision maker, is talking as if the deal is done. But before final sign off, you must meet with the CFO.
You get to the meeting.