Let’s face it. Sales negotiation is tough and incredibly stressful no matter how well-prepared you are. You are representing your business and need to know it in and out to close a deal successfully. Often, sales representatives take their losses personally and feel their skills are not enough when they fail to close a deal.
Furthermore, they tend to take the business’s success on their shoulders as the growth and financial stability that the business requires is achieved by the sales team. There are some common mistakes you can avoid in order to get what you want without making the customer feel compromised. At the same time, you must be wary to not make a deal against your business and compromise on your ideal budget to satisfy the client.
Successful negotiations rely on the use of key negotiation strategies and at the same time understanding what an optimal outcome would look like. Success always starts with laying a foundation and being aware of the potential traps to avoid along the way. Keep reading to understand why negotiation is a valuable skill and three things you must avoid during a sales negotiation.
Why is negotiating a valuable skill to possess?
It is not about the money. Organisations today aim to forge lasting relationships with their prospects, and they wish to become lifetime partners. In such cases, it makes no sense to begin discussions with pricing and try to clear out the budget first. The focus must be on creating an emotional bank account with the client and understanding their pain points.
You can then connect your organisations’ services or products to the customer’s unique needs and close a deal. Negotiating is a key life skill, as you use negotiation almost every day in life irrespective of your field. It affects both your business and personal life – be it to bargain at a fruit stall, negotiate with your manager for a salary hike, or convince a client to invest in your business.
“I was once at a sales meeting where the salesperson was trying to persuade me to make a deal. The conversation started quite well, and we were discussing my business and how the product would benefit me. He then asked me what budget would suit my business and neither of us were okay with each other’s ideal budget quotation. After that point, he no longer cared about me and my business. Till then he was pretending to be a friend who cared about my business goals and how to achieve them. When the budget arose, the change was drastic, and he was only waiting to wind up and leave! This attitude should be avoided as the customer will feel like they are not valued and only the money matters,” said Nayana, a consultant at a SaaS marketing agency in Trichy.
Don’t try to ‘wing it’
You might have heard stories where people show off how they were unprepared but managed to ‘wing it’ at the meeting. Don’t go by this technique and fail to prepare for your sales negotiation. A popular phrase goes – ‘Failing to prepare is preparing to fail’ – and we cannot agree more. It is all about the 80/20 principle – 80 parts of preparation and 20 parts of action will help you navigate through the deal and handle multiple cross-questions. You need to know your numbers and have data about your business and details about your competitor’s strategy. What matters more is understanding your client and knowing how you can make an impact with your services or products.
Be aware of what business you are dealing with and go beyond the generic issues that your client is dealing with. For example, a large business with multiple offices will find it hard to manage all its data. Your SaaS model can help them maintain a database in one place and easily access it on the cloud. When you sell them the product, try to tie their needs and consequences to your product instead of going through a laundry list of generic benefits that the product can resolve.
Ask them if they have missed any due dates or renewal deadlines in the past – this is a serious issue that many companies face and will be looking for permanent solutions to eliminate. The point is to be prepared and make your product look like a tailor-made solution to your client’s requirements. Once they feel connected to your brand and know you have a concrete solution, it will seem like an offer they can’t refuse.
Don’t over-negotiate or settle for a bad deal
Sales professionals in the name of having productive conversations, over-communicate or get down to discussing the intricacies of the brand, services, data and numbers with the client. In this process, the negotiations get long and tiring. This does not mean you should settle for something less or get discouraged. Understand who the decision makers and key stakeholders are in the organisation, so you are wasting time talking to the wrong people.
“I was handling a negotiation with a difficult client and two hours into the negotiation, I was famished. I no longer cared about the time and energy I had invested. All I wanted to do was wrap things up and go home – any deal felt better than no deal. At the time, I lacked the clarity to know when to walk away and which deal would benefit me. Did I value this relationship and wish to pursue it further? Would the compromise I made now evolve into a better deal down the line? If I walk away, will I be able to reconnect with this prospect later to discuss further? During my current meetings, I always ask myself these questions before drawing the line,” says Vinoth, a sales representative at a digital marketing agency in Chennai.
Don’t lose control of the negotiation
It is advantageous to take the lead in a negotiation and make the first offer. Research has proved that 85% of negotiated outcomes end up aligning with the individual who goes first. You will be exercising control by setting the standard or anchor for the deal and the client will know how much you value your business. Selling yourself short will indicate a lack of confidence in your product and the customer will gain an upper hand to turn things in their favour. They could mention a competitor that offered them the same product or service at a lower price or a discount they found online.
Try to avoid setting a price range, as the customer will always choose the lower amount. For example, if you say, “I would go for a 20% to 30% discount on the quotation”, the customer will pick 30% as it benefits them. Always lock a solid price and don’t go by ranges. Throwing around such statements just to sound open-minded will make you lose control over the conversation. The customer will sense that you are not clear about what you want and take things into their hands.
What have we learnt?
A sales negotiation isn’t just about closing a deal in your favour. It is the process of arriving at a win-win situation where both the parties are satisfied and form a bond to continue a lasting relationship. The biggest takeaway would be to remain calm and confident throughout the negotiation. Try to sell value to the customer. When you offer value, the customer doesn’t view your brand as a one-time purchase. They look at it as a lifetime investment.
If you are offering a CRM package to help businesses manage their employees’ productivity, try to go the extra mile. Don’t just sell them the products in your package. Offer them a free premium membership to access updates for free, or upgrades for all their employees for the first year. The idea is to make the customer view your product as something that is useful to them in the long term, and not just an immediate solution to their problem. Also, make sure that you drive consensus in the customer decision-making process. This strategy will help you retain clients. If you wish to hone your sales negotiation skills and become an expert at having the upper hand during a deal, it is never too late to start. To kickstart your negotiation journey and become better at handling your clients, click here to learn more.