Negotiating with a customer you can’t afford to lose? Learn how to negotiate a sales contract and win more deals with these sales strategies.
Sales negotiations can be intimidating for any sales rep starting out in a B2B company. If you haven’t had much experience with the negotiating phase of the sales process it can be much more difficult for you to see the sales deal to the end.
Terms, length, renewals, “the sales talk” can be tricky and unpleasant. But reading some of the best practices, techniques, and strategies when negotiating sales, can help you better navigate your approach in this uncharted territory.
Let’s dive in.
Sales professionals come to the negotiation table prepared with relevant insights that reflect their well-informed knowledge of industry-specific challenges. But top-performers have all the relevant information on the target account with whom they are negotiating, as well.
Coming prepared is important for two main reasons:
- It increases your confidence;
- Helps you leave a long-lasting impression on your future customers.
When you’re well informed, you’re better able to listen and recognize the hints your potential customers are giving away about their current pain points vs. their goals and objectives (what they want to achieve). You understand the market, the industry, their competitors, their obstacles. Therefore, you can better address their needs and align them to your solution or services. Also, it builds confidence in your sales discussion skills.
Sharing a personal experience with your buyers helps you build trust and paves the way for a long-lasting business relationship. Building rapport with your prospects also lays the groundwork for the sales negotiating techniques we will discuss below. Such as the priming technique.
Priming is one of the best sales negotiations techniques that you can use to your advantage. It has to do with how you compose your sentences. Priming is the technique of placing the right words in the right order to lead the negotiation discussions in the direction of your plan and goals.
Words influence emotions and it’s all about how you make your buyers feel when you’re negotiating a sales deal. There are two main principles for successful priming:
- Use great descriptive words that bring out the emotion you want from your prospects;
- Lead off with the more powerful words.
You can see priming as leaving a great “first impression.” Because what we hear and visualize first, sets the tone for everything that follows. Effective opening starts are used to anchor the standard to which the discussion will unfold.
If your customer is considering an option because it is pricy, start off your product description by saying,
“Our software has the best dollar-for-dollar value on the market, offering the highest ROI to our customers across all competitors in the industry."
This is an example of an effective opening start we use here at Sales.Rocks for our successful negotiations. Because that’s the one we can back up with proof. You can read more about it here:
The negotiation phase is all about building trust by using a value-based sales approach for positive business outcomes on both sides. This also means you have to stand behind everything you say or promise (with a piece of hard evidence) when you’re offering value to your future clients.
Learn how to apply this effective priming principle to your own, unique sales pitch and watch your sales closing process improve.
At the heart of your sales negotiation strategy should be YOU leading the sales negotiation process. Too many sales professionals sit back in doubt and wait for the buyer to drive the sales negotiation. But the top-performing sales negotiator will always take the lead.
Don’t play catch-up and “yes, aha, ok” with your buyers. Instead, take the lead of the negotiation and steer the ship to a successful conclusion. You can’t afford a situation where your buyer has come better prepared than you. Effective sales negotiation is a result of following your plan and framework. Therefore, you should be the one to set the agenda for the meeting and be the first to position the offer. Go first with providing ideas too, and be the one to introduce and set the mutual objectives and concerns.
Your buyer may dictate the tempo, but you get to set the tone.
Research conducted at Northwestern University shows that
“there is virtually no research that supports the claim that letting the other party open first is advantageous. In fact, it can backfire—and lead to a worse outcome than you imagined.“
When sellers lead the process and make the first offer in sales negotiations, they create a center of gravity for the sales conversations, and can therefore influence the outcome of the negotiation by executing their plan.
Give your buyer a complete offer tailored to their current needs and exact expectations for achieving their goals and objectives by using your product or services. Demonstrate how every feature comes to aid their pain points and state your price range. Throwing offers piece by piece (here and there) will prolong the already complex sales cycle and frustrate the client.
With a complete offer, you will be able to deliver a concise solution without leaving much space for the sales discussion to dissolve into a conflict of interest.
*Buyers will often test the seller’s tolerance. *
They’ll ask you to lower your price with a simple question: “Can we do it for less?” and if you don’t have a sound comeback, they’ll get it. Knowing how to stand your ground is an important negotiation skill.
Effective trading consists of Win-Win outcomes on both sides. Giving away price concessions or a price discount on your professional services shrinks the deal size on your end. A skilled negotiator will never agree on a bad deal, instead, he or she will look for other ideas to meet the customer halfway while holding the ground for the initial price range. Once you’ve made the offer, it is important to control, or protect, the position.
Maybe you can add extra value to your offer by offering free access to a new feature of your software which is in the beta stage. Or you can provide them with free access to your academy.
When you protect the value of your product or services, you teach your future customer to recognize and appreciate the value they will receive from your solution as well.
A fully informed trading strategy includes having:
- BATNA – the best alternative to a negotiated agreement, and
- Reservation Price (the least favorable point at which you will accept a negotiated agreement).
If not, after offering a trade you may leave your customer coming back to ask for more.
Savvy sales negotiation tactics include having a collaborative approach bent towards building beneficial relationships – in the long term.
Another technique for an effective negotiation is evaluating the customer gains together, step by step, with the decision-makers. Make a comparative analysis on their current solution and their outcome so far in relation to the budget they’ve spent and want to spend further on similar products.
This comes down to breaking up their thoughts and figuring out the positive sides of the product you’re negotiating about. It has much to do with leading the buyer to answer their own dilemmas and come to the conclusion themselves that with such a purchase, most of their current challenges will be easily overcome.
Maybe they are overpaying a competitor’s product for the same needs that your solution can tend to. Or they are missing out on a feature that might fit perfectly in their workflow and ease their business processes.
As a sales expert, help your buyer to realize the benefits of the product and evaluate the solutions right away.
The key to successfully nailing a deal is always planning beforehand. So, the first step is to prepare yourself. Try to acquire as much information as possible about the other side, get to know their strengths and weakness, their position, and their character. This will help you take control of the negotiation and lead the dance.
Here is a checklist of things you need to do before starting any sales negotiation.
1. Make a plan
Negotiation is never an improvisation. Spend as much time as possible doing research on the potential buyer, know exactly what they are looking for, and have a clear vision about how can you present your solutions to them. Be prepared to have an answer to anything. Set your goals firmly, develop a strategy on how will you lead the discussion, and determine possible accepted outcomes.
2. Develop shopping lists
Write down the things that your customer is looking for, and also write down the things where your solution fits those needs. Make sure the objectives of both parties are clear and precise. Identify what you both have in common and how can you help each other. Know what you can offer, but also know what do you need to feel satisfied with the outcome.
3.Understand the source of power and leverage
Identify the source of power and who has it. What kind of leverage do you have over the customer and how can you use it? What can you offer and what kind of issue will it solve for the buyer. Position yourself as a necessity, and demonstrate how you differentiate from the competition.
What is your plan of action? Usually, you can be one of three types of negotiation strategists: Assertive (aggressive), Accommodator (relationship-oriented), and Analyst (conflict avoidant). If you manage to combine all three when needed, then you are already halfway there.
Determine how will you respond to the buyer’s strategies and what kind of position will you take.
5. Negotiation Variables
Clearly set your boundaries, determine what is acceptable and to which point can you go, what can you compensate, and how. Know your BATNA (best alternative to a negotiated agreement) and Reservation Price (the least favorable point at which you will accept a negotiated agreement).
Know the point where you win, and know the point where you should leave.
Closing the deal is not always winning the negotiation. Learning how to say ‘no’ is also a triumph.
Bad deals are a loss of time, loss of resources, and you must always know and respect your product or service’s value, so set your boundaries in order to avoid them.
Link to the original article on sales negotiations.