Mediocre sales people are notoriously bad planners. It can be said that they habitually "play" more than they "practice". Going into most sales interactions unprepared, thinking they can "wing it" and negotiating "off the cuff". Top negotiators know differently. Top performers know that in order to successfully negotiate with clients they must plan carefully or risk being left vulnerable. Without proper strategy, your opponents will use your lack of preparedness to their advantage. In other words, you are likely to give up more than you intended because you didn't have a plan.
Here are 9 areas of planning to consider before you start a negotiation with a client:
1) Determine your goals.
Negotiation is the art and science of reaching an agreement that meets your and your client's goals. Your strategic goals create the measure you judge yourself by at the end of the processes and need to be set before the negotiation begins. Your goals also will act as your guide during the negotiation, supporting everything you say, every move you make and every agreement you reach. Carefully planning your strategy in advance will ensure you reach the goals that you and your company want to achieve. Remember that all goals should be set using the S.M.A.R.T. formula (Specific, Measurable, Attainable, Realistic and Time bound).
2) What's your BATNA?
What will happen if you do not reach an agreement with your client? One of the biggest negotiating dangers is being too committed to gaining an agreement and being unduly pessimistic about what would happen if the negotiation fails. In my experience, most sales people are overly committed to having to reach an agreement (sometimes at the expense of all profitability) when they have no other options. Do yourself a favor. Ensure you have at least 3 opportunities waiting to close (or negotiate) for everyone that you are negotiating now. These 3 other qualified opportunities are your "Best Alternative to a Negotiated Agreement (BATNA)" because they ensure you will never feel desperate to close business.
The willingness to walk away is the most powerful negotiation leverage you can have. You only will feel able to walk away, if you have something else to walk away to. Yes, you understand me correctly; prospecting is the key to negotiation success.
3) What is your position?
Specific goals for your negotiation can be called positions. Positions are simply your statement of what you need to get in order to accept the deal. You should take some time before the negotiation to document what you want to get, need to get and what would be nice to get out of the interaction. Writing down these positions will make them clear in your mind and will help you focus the discussion. While you are at it, it is good practice to guess at what the client will want and intend to get as well.
4) Hide and Seek.
As well as positions, we all have other things we want to hide from (or avoid) and seek in the negotiation. Often, these are more hidden or more political things. For example, your client may want to save face and you want to augment your reputation. You may want to avoid exposing conflict inside your own company and the client may want to avoid including certain colleagues in the process. During your preparation it's valuable to ask yourself what you and the client seek, and want to avoid. It's often the positions in step 2, combined with the needs and concerns from step 3 and the hidden political drivers that position the negotiation.
5) Find the missing link.
So, you know your goals and positions, and you have taken a smart guess at your client's goals and positions. Now is the time to find the link between the two. Linking your goals to the customer's goals is a key to effective selling. A negotiated agreement is only profitable if it satisfies all parties. The best way to accomplish this mutually profitable relationship is to focus on finding the missing link between the objectives of you and your clients. Of course it if difficult to do this accurately if you don't know what your client's goals are. Think of this as a sales challenge: the better qualified your client is, the more you know about them and understand their goals and the better prepared you will be for the negotiation. Great negotiators start preparing for the negotiation at the start of the sales cycle….and never stop!
6) What's your bottom line?
Your bottom line is the absolute, last resort and final offer on each key issue. It's your walk away point. Setting a bottom line in advance of your negotiation is important because it makes it easier to resist the temptation of agreeing to an unprofitable deal. Setting a bottom line protects you from seller's remorse and it makes it easier for others to participate in the negotiation with you because you can provide a framework for them to negotiate in. There are some downsides though. The most notable is that having a bottom line can discourage creativity and may limit your ability to capitalize on new information revealed during the negotiation discussions. Be careful not to set your bottom line too high. It's easy to over estimate the value of what you are selling - especially if it is personal - like your car or house!
7) Identify your trip wire.
The best negotiators document a trip wire for every negotiation which will indicate to them when they are close to their bottom line. Your trip line is established to ensure you do not enter into agreements that you will later regret. Establish a trip wire by identifying an outcome that is slightly better than your BATNA and bottom line, but far from perfect. When a trip wire is triggered during a negotiation, commit to taking a break and thinking about the situation before accepting the deal. The last thing you want is to be forced into a position to take a deal that is worse than your trip wire. As a last resort, accept your trip wire and an acceptable end to the negotiation, ONLY if you are able to receive something in return (see my No Free Gifts article for ideas).
8) Where are you weak?
No one likes to admit they are not perfect. Especially sales people! The truth is, no negotiation argument is perfect and yours are no exception. Everyone and every negotiation argument has at least one vulnerability. Your weakness is that spot that threatens the achievement of any one of your goals based on a real or perceived vulnerability in your argument. Don't ignore or brush off a perception. Your clients' perceptions of you are the reality in which you negotiate. When planning for a negotiation its wise to consider your weaknesses and plan for effective responses.
9) Giving concessions.
In my recent No Free Gifts article we spoke about the art of giving concessions. The first concessions you always give need to be "non monetary". In other words, something that does not sacrifice the price of the product. If the client will not accept a non monetary concession than it maybe necessary to give a price break (monetary concession). For your point of reference, a concession is the act of granting, yielding or surrendering a right, privilege or gift. Your treatment of concessions will determine your success or failure in a negotiation and long term relationship building. Always remember the cardinal rule: no free gifts! For a worksheet to help you plan your monetary and non monetary concessions click here .
Sure, it may seem daunting to prepare for a negotiation. That is because often sales people don't like the thought of getting to work! According to CSO Insights, just 10 minutes of prep can increase your effectiveness by up to 42%. Knowing that, doesn't it make sense too spend a little time thinking and planning before your next negotiation rather than simply jumping in unprepared?
Get Cutting Edge Sales Strategies Delivered Right to You
Sign-up for my sales strategy delivered weekly direct to your inbox!
Make sure you check out Colleen's latest book, Nonstop Sales Boom for powerful strategies to drive consistent sales growth quarter after quarter, year after year.
Colleen Francis, Sales Expert, is Founder and President of Engage Selling Solutions (www.EngageSelling.com). Armed with skills developed from years of experience, Colleen helps clients realize immediate results, achieve lasting success and permanently raise their bottom line.
You have permission to use the above article in your newsletter, publication or email system as long as you do not edit the content and you leave the links and resource box intact.
©2001-2018 Engage Selling Solutions. All rights reserved: All trademarks used or referred to on this site are the property of their respective owners. No materials on this site may be reproduced, altered, or further distributed without Engage's prior written permission.