Sales Negotiation Techniques
"You have to do better than that."
"Everyone is discounting off their published rates."
"We always get free shipping on our orders.”
Most sales people and business owners encounter comments like this every day.
The sad reality is many business people react by reducing their prices or
providing concessions without obtaining anything in return.
Here are five strategies that will result in better outcomes from your
negotiations:
1. Recognize tactics.
Negotiation tactics are heard every day. Young children whine. Teenagers cry,
“Everyone’s going!” Spouses say, “If you loved me you’d...”
One key to successful negotiations is to recognize these tactics so they can
not be used as tools to gain unnecessary concessions.
James A. Bakersays, “A tactic perceived is no tactic at all!”
2. Never give a concession unless you get a concession.
A concession is something of value to the other party. In every negotiation,
the involved parties have things they want and things they are willing to
sacrifice. A teenager wants to use the family car to go to the Friday night
football game. The parent wants the lawn mowed on Saturday. The parent can give
the teenager the car (a concession) without any strings attached. This is an
example of giving a concession without getting a concession. However, if the
parent offers to let the teenager use the car only if the teenager mows the yard
the next day, the parent is getting a concession (lawn mowed) in return for
giving a concession (use of family car). This would be a successful negotiation.
3. Never negotiate when you are unprepared.
You should never negotiate when you are unprepared. In the business world,
you might receive a phone call from a client who says, “We need a ten percent
reduction in the price for this recent order, or we will be forced to give the
business to your competitor.” Will you be prepared for such a call? How will
you react? Most likely, the client has rehearsed this line and is ready for any
objections you may have.
When a client or vendor calls you unexpectedly and wants to negotiate,
politely tell them their business and this issue is very important, but you are
unable to negotiate at this time. Set up a time for the two of you to get back
together, even if it is only five minutes later. This will give you time to
prepare for a successful negotiation.
4. Make sure you know your range for making a deal.
The range is the area between your ideal outcome and the point in which you
will walk away from the negotiation. This is also called the “contract zone.”
Prior to any negotiations, sit down and determine what your contract zone is. If
you are buying a car, what is the ideal outcome? What is the most you will pay?
It is important to recognize that the other parties also have their own contract
zone. For example, you may want to pay between $2000 (ideal world) and $2500
(walk away price) for a used car. The seller may be asking $3000 for his car but
be willing to accept a price somewhere between $2400 and $3000. Therefore, a
successful negotiation will be between $2400 and $2500.
5. Focus on negotiations of mutual gain.
The key to successful negotiations is to focus on areas of mutual gain.
Focusing solely on price will not result in an outcome that is mutually
beneficial. There will either be one winner and one loser, or both parties will
lose. The key to successful negotiation is to uncover concessions that are
valued by one party at little cost to the other. An immediate delivery date may
be very important to the supplier but irrelevant to the buyer. The buyer may
need extra time for payment while the supplier has plenty of money. Try to focus
on areas of mutual gain so that all parties involved in the negotiation will be
happy with the results.
Author: James A. (Jim) Baker
James A. Baker is the Chairman and Founder of Baker
Communications. Baker is a sales training and
development company specializing in helping client
companies increase their sales and profits. He can
be reached at 713-627-7700 or
jim.baker@bakercommunications.com.
