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The Secret to Negotiating in Sales

Written by: John Brennan

Article Overview: There's no mystery to negotiating. Good negotiators are not born; they are made! All it takes to be agood negotiator is some upfront preparation and some confidence. And nothing builds confidence like preparation.

The Secret to Negotiating in Sales

1. First, sell your customer on the value of your proposal.
When customers are hard-nosed about getting a lower price, 80% of the time it is because they do not appreciate the value of your product and have not made a commitment to buy. Take a step back and sell benefits and solutions again;
Customer; “You’ve got to do better than that on the price”.
Sales Person: “I’m glad you mentioned price, Ms.Customer, let’s take another look at how our product is going to (save you money/make you money/increase productivity).”
Get a clear agreement from your customer that your solution works before getting into price.
Customer; “ OK, let’s talk price.”
Sales Person: “ Sure. Just so that I’m clear before we move on – we are in agreement that our product – with the modifications we discussed - is exactly what you are looking for, right?”
Customer; “Well, I don’t know about that, I’ve still got to run this by my boss…”

2. Calculate the cost-benefit for the customer.
Never take for granted that customers understand how much money your solution saves them, or what return they can expect on their investment.
Customer: “I need at least a 20% discount”.
Sales person: “Why 20%?”
Customer: “There’s no way this is worth the price you are estimating.”
Sales Person: “That depends on what return you expect from the investment. What do usually consider a good return – 3 times, 10 times? …..Earlier we estimated that you could get an additional 10% more business from your customers with our product. I figured that translates into an additional $5 million, and that’s just on your major accounts. Not a bad return on a $100,000 investment don’t you think?”


3. Know your bottom-line
Obviously you know the limits of your ability to discount. But do you also know how much room you have to maneuver with delivery schedules, product quantities or quality, and payment terms? If you don’t know the bottom line on all these variables, you might lose the deal, or get the deal but lose the profit margin. Knowing your bottom line also gives you more power, and more confidence in negotiating.

4. Determine what you want from this negotiation.
It is not always the same objective. Sometimes I may want to “buy” my way into the account by delivering at cost, because it is a cornerstone customer. Other times, I might want to demonstrate to the buyer that the days of “off the rate-card pricing” are over. Or because there is a large backlog of orders, I must hold the line on delivery times, but can give a little on payment terms.

5. Calculate the most likely outcome.
Know the answers to these questions. What is my customer’s position (Vs. real need)?
What negotiating tactics might my customer use?
How has my customer negotiated in the past?

6. Identify your “deal sweeteners”.
These are one-time-only incentives. They are not standard discounts, “ rush” services or other negotiables. They are “perks’ or incentives that you use to close the deal NOW. You bring them out at the last minute and only if the deal is at risk. Do not include them as part of a “package”. Do not offer them if the deal is going to close anyway.
Customer; “I appreciate your flexibility on delivery, and the extended warranty, too – I’ll think it over this weekend and let you know Monday.”
Sales Person: “I’d really like to wrap this up before then; I’ll tell you what, you give me the go-ahead now, and I’ll throw in a couple of tickets to the Bills game Sunday for you and your family. How about it?”
Customer; “Can I take a rain check on the Sunday game? Actually, can you guys get your hands on a couple of tickets to the ballet next month?

7. Be fully aware of any resource, time, or money constraints your company may be under.
Maybe production is slow, you have a surplus of product, and deliveries are running behind, cash flow is critical, it’s the end of the month and you need just one more order. This information is critical in putting together an attractive package for the customer, and one that helps solve a problem on your side.

Sample Negotiables



Discounts
Payment terms
Payment methods
Financing
Bonuses
Cancellation penalties
Resources
Quality/performance standards
Information
Warranties
Access to experts
Additional customer support
Seminars/Workshops
Presentations
Training
Delivery timetable
Delivery destination
Delivery method
Packaging
Insurance
Licenses
Customization
Private label

Related Articles
  Negotiate Your Commercial Lease by Dale R Willerton
  Negociate with Confidence
  Negotiating for the Successful Entrepreneur. How Do You Do It And Still Get What You Want?
  ESCALATION AS A NEGOTIATION STRATEGY
  Brilliant Negotiating For Entrepreneurs

Article Tags: confidence, negotiating, negotiator, negotiators



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