RAIN Group Sales Blog

In our sales negotiation research, we studied the factors separating the best negotiators from the rest. According to buyers, six out of 10 sellers cave on price at some point in negotiations. While it may be tempting to concede on price to secure a sale, a single concession can make a buyer expect more later on. Lowering the price also says a lot about the value you place on your offerings. If you don't value it, why should your buyer? Additionally, 62% of buyers agree they have the flexibility to pay more for a solution if the seller demonstrates it's worth it. There's money on the table and it's up to sellers to claim it.

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Negotiations may be more competitive than ever, but the best negotiators are still confident, able to achieve target pricing, and more satisfied with the results of negotiations. But where do these negotiators excel?

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Some buyers are conditioned to try certain tactics to lower your price. Maybe they've read about negotiation in books or were trained to use pressuring strategies.

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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.

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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.

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If you’re like most sellers, you find yourself negotiating deals with a buyer’s procurement team at least some of the time. Certainly, the frequency with which you’re dealing with procurement and purchasing professionals will vary based on industry and product category, but being skilled working with procurement is often the key to moving your deal across the finish line in a timely way. You might wonder whether there’s any need to negotiate differently when purchasing plays a role. The answer is yes—and no.

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Sales negotiation is a critical part of the sales process. It moves the deal to a close, and it's where both parties come to agree on the terms of the initiative, including the price. However, many sellers and organizations struggle with negotiating successfully. Seventy-seven percent of sellers report that negotiating with buyers virtually is challenging, and only 27% of buyers say that sellers are very effective at negotiating with them (from our Virtual Selling Skills & Challenges report). That means that less than one in three sellers does well in their virtual negotiations.

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Seller: “Based on your requirements X, Y, and Z, with setup and 90 days of consultation time, the price for the project will be $475,000.” Buyer: “Is this the best you can do? It’s more than I was expecting. While I’d prefer to go with you, [competitor] said they can do it for less.” Seller: “We are pretty confident in our pricing, but let me see what I can do and get back to you.” This is oversimplified, but it’s an all too common scenario in B2B selling.  When you’re buying something big, you likely ask for discounts. If you do, it makes sense that others do, too. If you don’t ask for discounts, guess what? You’re in the minority. 

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Win-win negotiation is the way to go…except in one situation: when the buyer has their hand in your pocket. Whether they're doing it intentionally or just out of habit, sometimes buyers try to push down seller prices just to see if they can. When they do, you should counter with value, but you also have to signal as you respond, "That won't work. I know what I'm doing." (Without, by the way, saying it like that.) You need to respond in a way that gets this message across and gets the discussion back on track.

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Preparation is often the greatest determinant of negotiation success. Across negotiation studies and surveys, 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 Prepare for each negotiation with trades, counteroffers, and knowledge of their walk-away points

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Who should go first in a negotiation when it comes to offering a price, solution, and agreement to key terms? Do you ask for a budget and then craft what you do from there? Or do you, once you know what the needs and major parameters might be, suggest a solution and a price before talking about budget? It’s a common question, one that continues to baffle many sellers. They fear that if they go first, they will leave money on the table, or risk going too high and having the buyer say, “That’s nowhere near what we were thinking,” or anything in between.

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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.

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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.

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"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: Don't plan for successful negotiated outcomes Let the buyer define the negotiation process and venue Allow the buyer to set the agenda for negotiation-focused meetings

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"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.

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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.

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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.

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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.

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What makes a great negotiator? Negotiation is a craft that can be learned by just about anyone. There are, however, certain characteristics of great negotiators that are difficult to develop through the even the most rigorous of training initiatives. They are qualities you either have or don't or that develop over years of experience, coaching, training, and self-reflection. If you have them, you're ahead of the game. If you don't, negotiation success may be elusive.

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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. But what about when your buyer takes a different approach? What if your buyer is just trying to get the price reduced, get more from you for less, or something else altogether?

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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.

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