14 Negotiation tools and skills
When we think about negotiations, the first
thing we normally have in mind is a price negotiation, when a customer is
willing to pay less, and the salesperson is trying to get the most from her.
However, nowadays the negotiations about price rarely take place, especially in
the B2B Sales. Companies define the prices and there is only a small playroom
to negotiate price. Besides, the focus that used to be on price in the past is
shifting towards added value. There are some exceptions, and we will analyze
them in this blog post.
1- Recognize first that Price differs from value
Price is a unique value amount that can be understood and compared. However, value is completely dependent on the perception of each person. Therefore, a value cannot be understood and compared in the same way from two different individuals, especially from members of different companies.
2- First listen to understand
For the reason mentioned above, that value is completely dependent on the perception of a particular person, listening is the key. For the time being, and for many years to come (we do not see this changing in the future either) people buy from people. To be a good negotiator, the best way to add value to your deal is to listen to the other person`s needs and try to direct your concessions towards those. Sometimes what the customer is requesting does not mean a big deal for you.
3- Do not lie, clarify
In some occasions, you will have the power to solve all the points in the agenda. Even if it is the case, a good way to gain some power on the negotiation is to say that you need to check with your partners to verify if what is asked is possible to be done. This is a dangerous thing to do, since the negotiation counterpart may lose interest on discussing with you or feel that he is not talking to the right person. A good way to avoid this is to make clear from the beginning until which point you will be able to decide in the negotiation, especially if the partner has some time pressure. Time is one of the most important factors at every negotiation. When the time is running out for one of the parties in the negotiation, they tend to make many concessions that they were not even thinking at the beginning.
4-Do not ignore culture differences. There is no right or wrong, only differences
Intercultural differences are important. Depending on which side of the Atlantic Ocean you are; you may be either too active and fast, like on the American side, or too slow and conservative like in the European and Asian countries. Even though these are clichés and unfair generalizations, one thing is true and that is that intercultural negotiations are very important and should be considered.
Our advice here is for you to make sure you understand the expectations that the other part will be having. If they are used to have big negotiations with many persons involved, try to make sure to bring the right number of colleagues to the table to be taken seriously. Plan the right amount of time, in some countries like in the USA the negotiations can be done in an hour, meanwhile in others like in the Arabic countries, negotiations can take up to a week for the same deal. If you have a colleague that is more familiar with the culture where you are making the negotiations, be sure to ask for her advice, and if necessary, let her take over. In aspects like this one, Sales4Business SAS can really help with a local representative negotiating on your behalf. For more information about this, we recommend you to take a look at Erin Mayer’s content: https://erinmeyer.com/
5- Identify Outrageous requests and be prepared to walk away
Some customers will start a negotiation with an outrageous request. This can be e.g. a price that is a tenth of what you can quote, or 120 days net payment conditions, etc. If you consider this request seriously, it can put you under a very tough situation being your starting point on the negotiation already very far away from where you wanted to start. Sometimes it may not be even worth to start the conversation.
There are several ways to averse these issues. Stopping the negotiation and walking away may be one of the best ones. You may (and should) not counter back to that offer. If you do and come down towards the ridiculous request from your customer, you may not recover from that position in the negotiation and that is most likely regrettable. Many authors insist that walking away is also negotiating, however, when it is about an outrageous request, be prepared to walk away for real. If you are convinced before starting a negotiation that you would walk away under certain circumstances.
6- Use Golden Silence
The first one that talks, loses. This is a common technique that is being taught and used, not only for negotiations but also in sales and scientific discussions. They may call it differently, though, but the principle is the same, once you have made an offer or statement, it is time to shut up.
There are extreme examples in literature or in the web, where everybody remains in silence for minutes. This is not the idea here; the idea is to make a long pause before saying anything. For salespersons is very hard to stay in silence so a couple of seconds will feel like ages for most of you, but it is imperative to be passive once the offer, statement, posture has been expressed. In some cultures, as explained above, silence is not as comfortable as in others, be aware of these differences in advance.
In sales, if the customer or counterpart argues that your price is too high and that you are not even close to what they are willing to spend, never negotiate with yourself, first ask by how much are you apart. If there is a budget for the project, just find out what that budget is. There is always a budget, directly or indirectly.
7- Articulate your feelings and allow your customers to articulate their
Sometimes you are not saying the right words, and for that reason, the sales call can get very tough. In those situations, the worst thing that can be done is to try to minimize the customer`s problems by ignoring the feelings of the persons involved. One of the most important things to do at that moment when the negotiation gets frustrating and does not seem to move forward is to talk about feelings with the customer.
The feelings can be towards the price, a particular aspect in the negotiation that is not acceptable or simply the overall situation. Asking the customers how they feel about the current situation and try to show some empathy towards those feelings, is a good strategy. As mentioned above, people buy from people, so it is important to ease up the conversation by showing a great deal of humanity at whole times. The customer is not the enemy and if the job is done properly there are only winners and no losers.
8- Select the right background for the conversation
If the negotiation is taking place at the customer`s site, they will consciously or subconsciously feel in a position of power at the negotiation. Besides, they will tend to be more formal and keep the conversation at what they think it is a very high level of professionality.
However, if there is a chance to take them out of their office, and buy them lunch or a few drinks, that will make the conversation more fluent, and the power will be more balanced. If the customers are tough negotiators, they will still be very neutral to the fact that an expensive lunch was offered for free but still will be more honest and will appreciate the fact the salesperson took the time to go through all that effort to meet with them.
9- Avoid confrontation and seek for a third-party negotiation
A sacred rule of every negotiation is to avoid any confrontation and the so-called confrontation mode. Being confrontational on a negotiation only makes persons be personally involved, which does not help finding a win-win solution. Sometimes it makes sense to admit that the negotiation has gotten out of control and suggest a third neutral party to join the conversation. Some companies decide to withdraw the salesperson from negotiations to enter new people to the discussions, who have not gotten personally involved with the customer. Important is to consider this suggestion of renewing the team or to involve a third party, not as a failure, but for of advance for the process of solving the situation. The one who gets mad, loses.
10- Win with your customers
Sometimes one of the participants of the negotiation will feel like she won the negotiation. That may appear not to really matter once the sales was made, but it does matter to the customers. Both parties must always make sure that the other feels like she won. This is not an easy task to perform, but there are a few techniques that may be implemented. Some examples are mentioned briefly here.
Concessions that are no concessions: Many of the points on a negotiation are also predetermined by the sales team. The sales team should be prepared to concede certain points because they are normal, and the customers normally ask for the same things. However, it is important not only to start with those that easy but also to leave some of them open for leverage on the negotiation. One may think that starting with the easy points does not make sense and time should be invested to discuss the difficult ones. However, this is not true, starting with the easy ones generates momentum for the negotiation and once the rhythm is established the customer will be willing to concede on those the sales team wanted her to concede not to break the momentum. Besides as stated above, the time is a very critical thing on the negotiation and supposing that the customer is on a sense of pressure to close the deal, the more time is spent solving the “easy” topics, the better. If the time pressure is on the sales team though, the same situation applies, generating momentum is good for both sides, always remembering to look for a win-win situation.
Never splitting the difference: There is a misconception to believe that a negotiation must be fair. There is no such a thing like fairness. Therefore, many times the salesperson will be suggested to split the difference. As an example, the salesperson is quoting 1000, and the customer is prepared to pay only 500. If the customer asks to split the difference and agree on 750, the salesperson should refer to the vague partner, to discuss the new price of 750. Getting back to the customer she should say no, that 750 is too low. This way the customer will again try to split the difference between the new maximum 750 and 1000, arguing that 875 is their absolute maximum. At this point the very experienced negotiator, would suggest splitting the difference one more time and agree on 937,50. However, this is dangerous since it would make the customer feel robbed. Regardless of what the salesperson does, the most important thing is to agree on a win-win deal, and therefore once the goal of the negotiation was achieved, the salesperson should look for a “no” from the customer in order to make her feel that she won the negotiation. For more information about this, we recommend the book: Never split the difference, from Chriss Voss.
11- Replace Manipulation with long term relationships
One very important point to consider at all this process mentioned above is the pure manipulative approach. As well described in many books already, the fact of making threats, playing with the customer`s time pressure, or the fact that they already have designed the selling product into theirs and have no easy way out, is very dangerous and not loyal. This may help you for that only transaction and maybe in a few more with them in the future. However, the overall image of the selling company is being damaged, and the overall situation with that customer will be affected. Besides, many markets still work with references, and a bad reference could take many customers away. Focus on making sure to nurture and protect the relationship with your customers.
12- Waive the Last Minute nibble
Customers ask for concessions, that is their role in the negotiation. Even the smallest concession that the salesperson needs to grant in the negotiation phase is a good sign for her. The reason is that she has an advantage, and the best way to respond for that single request, regardless how small it is, is asking for something in return.Once both parts are ready to sign the contract or the customer is about to sign the PO, or has already sent a draft, it could happen that they try to get one last big thing “for free”.
This is very common, and it is using the time pressure to get the salesperson to agree on things they have denied before. It is a fact that in the process of the negotiation we take decisions and after having taken that decision the normal effect on our minds is to be happy about that decision, making us advance on the list of things we are willing to concede. This is well used by experienced negotiators to get more and more things from you. Responding to the last-minute nibble is very hard, but there are some techniques to waive it. One of them is appealing to the customer`s ego, trying to make him look like cheap or annoying but in a sympathetic and empathic way. Phrases like “come on!”, “not this again, please!” and “you have to be kidding me!” are normally used in very, very careful way and only when there is enough trust between the salesperson and the buyer. Otherwise, the salesperson may appeal to the “this will take a lot of time!”, or “I will need the approval from several departments” to make the customer re-think her position and forget about the nibble.
13- Bargaining requests
Customers ask for concessions, that is their role in the negotiation. Even the smallest concession that the salesperson needs to grant in the negotiation phase is a good sign for her. The reason is that she has an advantage, and the best way to respond for that single request, regardless how small it is, is asking for something in return.
Of course, there is no way to know how much this small request means for the negotiation partner, and therefore asking them to suggest something would be the best way to act. Asking directly for something in return is not a good idea, since it sounds like a threat or blackmailing. If the partner in the negotiation does not concede on providing anything in return, it should not be said no just for the sake of an emotional reaction. Better would be in this case to use the strategy brought up in the point above, of the vague partner.
If the selling company has something in mind that would be needed in exchange for the favor/concession they are about to make for the customer, it should be expressed in a way that it seems they can only get that concession approved by management if the customer is willing to concede on that particularity. Phrases like “it seems that I can only get them onboard with this if you agree on…” are used in these cases.
14- Contact Sales4Business to help you with your negotiations
Throughout all this extensive and intensive article, the several aspects of the negotiation were discussed and there a lot of concepts that can be only applied with a very good expertise on knowing what is being done and with careful and charismatic actions. This is not the rule and many salespersons do not have what it takes to remain calm and cold at the time of dealing with experienced buyers and negotiators. Therefore, Sales4Business makes especial focus on this kind of skills to have enough understanding of all these and many more techniques to be applied for complicated negotiations. The most important aspect of having an S4B engineer helping you at the negotiation is to have a third party that is not only not emotionally attached to the buying company, but she is also on your side and looking to guarantee you a win-win situation, based on the conditions provided by you.