Negotiation Skills:

Negotiation is the most important learning for Sales and Marketing Professionals. Need to develop high level of understanding and adopt critical Negotiation Skills.

Anyone can be a painter if the outcome would be a black canvas. But when the expectation is wow, then one needs to learn the tricks and acquire the skills. The same is true for negotiation but often people do not focus on it. Overconfidence makes it more damaging when people feel that they can do it well but it is not possible unless people learn the process.  They fail to realise their mistakes. As a consequence, the company is ruined, be it a frontline salesperson or top executives. The biggest myth is more experience means can do better negotiations. No, even at CEO level one may have many qualities but lack negotiation skills.  Understanding the process is most important besides other knowledge.

Let us learn what is the negotiation process, when to start, when to get engaged and when to avoid? What are the skillsets and process of orientation required? I am explaining in a storytelling mood.

Negotiation Trap:

Never ever land into a trap of negotiation unless your selling is complete. One example can make it clear. Suppose a salesperson meets a government customer for selling window air-conditioner machines, the simplest product we all use and easy to understand. The customer selects the model for which the company quotes 50k per unit. Now customer demands 40K. The salesman knows that he can go upto 44K for 20 units. So, he/she skilfully closes it at 45K thinking it is a win-win-win case. The customer was also happy that he could negotiate well. The salesman thought that it is a  win for the customer, a win for him and a win for the company. Now let us see, how the company can suffer because the salesman did a premature negotiation before closing the sales process. After price finalisation, they started discussing the supply and installation plan. Then customer opined that the machines need to be supplied in 20 different hospitals across the states. The salesman had to accept it as it is now made or mar for both as the customer has no additional budget. The delivery was mentioned as free without any condition in the offer. When the discussion progressed further it also appeared that the electricity condition in those hospitals are not good so they need stabilisers. The customer here was not demanding much, but politely put his desire to supply one stabiliser with each AC machine. Now salesman has to do it for the safety of the instrument otherwise they may spend more during the warranty period on repeated failure. Also, in some of the hospitals, it may risky to hang it outside without steel framing. I think no more explanation is required about what is the condition of the salesperson now and the case became Win-Ruin-Ruin.

So, negotiation is a process that needs to start after the sales process is over, rechecked, and reconfirmed. A salesperson should understand what is sales process as without this cannot move further to understand the negotiation process.  So let us talk that what is selling and sales process?

 Pre-Negotiation Process:

What is Selling?

Selling is the way that the salesperson helps customers to buy products and services from his/her business. He/she needs to be able to meet the needs of the customer and provide value for money solutions. At times the need may not be visible to customers or they may not have the urge and here salesperson/ organisation need to make needs visible or to create the need.

Basic Responsibilities of a salesperson

The overall responsibility of a salesperson can be explained in 8 stages. These are briefly.

Lead finding – Cold calls/ read shows, mails, website etc.

Funnelling – Qualified suspects and prospects.

Presentation – 1o1 or/and formal.

Follow-up – Remove bottleneck, keep customers engaged & gain agreement.

Negotiate – If required.

Order – Commercially clean order in hand is important.

Invoicing & Delivery – At this point sale is ensured.

AR collection – Completion of project.

Repeat/ New – Work for the next one.

These are my thought on the overall responsibility of a salesperson. It can be more or less depends on the organisation’s expectation and the nature of products but overall, these are the vital stages.

As in the above statements, a salesperson work starts by the visiting customer. Following steps can be a good guideline.

 

Preparations for the customer meeting:

 

He/she needs to have a good preparation for this. It may be important to fix an appointment and in some cases, a cold call can be ok. We need to understand the customer and take preparation for it. Preparation can be the need of some documents, references, rehearsal of what to say and what can be the counter-arguments etc. Most important is to define the goal. A goal does mean the order or final success, but every meeting should have some purpose as well as a goal to be reached. It can be as simple as making customers agree to a formal presentation.

Meeting :

The next step is meeting. Better to define a timeline and agenda, in the beginning, to make the customer comfortable with clarity. Appropriate probing with a combination of close and open questions is necessary. We need to avoid asking any sensitive information which can jeopardise the entire process. In the end, ask for agreement even if it is a baby step achiever and fix the next meeting/action agenda.

 

Conditional Agreements:

In this way, a stage will come when the salesperson and the customers come to an agreement on some points, which may include a disagreement on some points. If the salesperson and customer agree on all points then there is no need for negotiation and the lead reaches maturity. However, often it does not happen. So, we need to address the points which are not agreed upon, which means need to negotiate.

 

Recheck and reconfirm:

However, it is most important to review with the customer jointly with full clarity which are the points both sides agreed on and which are the points disagreed. The best practice is to capture those in a mail or letter and then go for negotiation.

Negotiation- Start Point:

When reconfirmation is over, one needs to start negotiation on the points which are not mutually agreed upon.  When we say negotiation, what spontaneously comes to our mind is price negotiation. However, negotiation can mean anything that the two parties disagreed upon. It can be terms and conditions, deliverables, configuration and price. Here, remember not to jump into the price unless deliverables, terms etc can be agreed upon, which you must have seen in the example at the beginning of this article.

 

Negotiate Deliverables:

Let us see a little more in depth what deliverables can be disagreed upon. It can be the quality of the products, volume/quantity of supply, after-sales services etc.

 

Negotiate Terms & Conditions:

Terms and conditions can be the Payment term, Legal clauses, return policy etc.

 

Negotiate Price:

Price is also not simply the currency but anything which costs the sales organisation like the basic price of the products, price of services, rental or outright, other charges, tax etc.

Negotiation – Does and Don’ts:

When one goes into a negotiation, a few things need to kept in mind. These are to create a friendly environment and not that one is trying to twist the arm of other. Understand difficulties or limitations of the other side and if this is not considered, the result can fail to reach a common understanding and the order may be lost. Both sides need to focus on closing and when both sides reach a common agreement the thing one needs to keep in mind is not to discuss anything further as it can spoil a mature case. Keep fooling in mind.

• Establishing a friendly and mutually respectful environment
• Listen first carefully and giving full attention (note vital points)
• Speak with confidence
• Put polite pressure with alternative suggestions
• Make customer to think even his mindset is non-aligned with you
• Concession as possible and remind pride/ quality
• Focus on closing
• Do not linger once deal is closed

 

 

Negotiation Key Factors:

Timing

As I stated above, to check and recheck that the sales process is completed. Do both parties have agreement and disagreement with full clarity. If the answers are ‘yes’, only then it is the right time to negotiate.

Insight

Who are the people in the negotiation meeting? Who is/are KOLs? What is their mindset and style of negotiation? How flexible or rigid they are?

Strategy

First recapture the differences and agree again. Instead of one solution for each issue, give alternatives. Define minimally acceptable things and what maximum can be achieved.

 

Final Point of Negotiation- negotiation Styles:

Now come to the most critical points which can make the deal win-win-win. That is, what are the different styles of negotiation. It can be that one style that works better in one case and other styles for other cases.

Make concession:  

Accept what the customer asking if it is permitted. The advantage is, it helps to close the case fast. Sometimes it may so happen that after a long negotiation the salesperson may need to give more than this.

Split the differences :

Accept part of customer demand. It may limit the satisfaction of the customer but is important to protect the company’s interest. It also helps to achieve quick resolution

Add enhancement:

This is a bit tricky. Instead of giving what the customer wants, give something which the customer values more, but your cost can be lower than giving what the customer demands. It may incur some extra cost to sales organisation but saves bigger losses. For example, the customer wants 10k discount for a printer but instead of giving this 10K discount salesman negotiated for 12k paper free of cost supply. It can be beneficial for the customer as in any case they need to buy the paper but good for the company as the 12k paper may cost the company 7K only.

Make a Trade-off:

 Salesperson agreed to give what customer demanded but in return got something valuable for him/her.

This can be the best way if permissible.  Here the customer and the salesperson both get the benefits.

For example, the customer wants 10% discount. The salesperson agreed but negotiated for a higher volume.

Power & Pressure:

What defines the success of a negotiation most? It is the quality of a salesperson to understand the power and pressure game which is an inherent part of any negotiation. The power and pressure are not only on the salesperson but on the customer also. Let me to explain with an example.

If it is at the end of the financial year. The salesperson knows that the customer has no other alternative at this point and the budget can lapse. It is pressure on the customer and power to the salesperson. Now if this order is very big and can be a big loss for the organisation and the salesperson/ organisation may fail to hit the budget then it is pressure on the salesperson also. On the contrary, if the deal does not happen it is not a big issue for the customer, as they can use the fund for something else, which can be a power for the customer. Examples can be unlimited and we may find them from our experience. In such cases, the inside information plays a major role.

Let me to hail a practical example – it was in one of the IITs and the value of the deal was about 1cr 30 lakh. The customer was pushing for 1cr which I could have easily accepted. But I had the information that they have the budget and they decided to go for it based on my long term relationship and work with the actual user of the machine as a trusted partner. The committee told me, either accept 1cr or the case will be dropped. So, I had to pretend, which is required sometimes, to prevent such adverse situations. I asked for a little time to go out and discuss it with my boss.  They agreed. I went out and did nothing and come back after a few minutes and said, ‘My boss did not agree as we have already given a rock-bottom offer. However, if they can release the order before I return, I can provide 5L discount and can convince my boss when the order is in hand’. They not only agreed but were happy as they could bring the benefit of 5L for the institute, which I could see on their faces.  Not only I closed the case in our favour, but got the order in the shortest time. It is also important not to accept the customer’s demand easily even it is within the salesperson’s capacity, which surely creates doubt in the customer’s mind that they could have got a better price or terms. Some amount of drama is good.

Deal with Different Mindsets:

Also, salesperson need to be ready to deal with a different mindset. For example  –

One or few team members of the negotiation team –

Can go for a personal attack.

Unrealistic proposals and threat like ‘take it or leave it’.

Raise new demands post-agreement.

Provide abuse information. Lie.

In all these cases salesperson should use intellect and not emotion. The need is to focus on the solutions.  To take utmost care so that there will be no slip of the tongue or any wrong word used. Also, instead of getting angry or puzzled, we need to think that bad people are basically fools, less logical, less intelligent (subject knowledge is not intellect) and easy to convince (read defeat) if one can refrain from landing in their core area of arrogance.  Talk logical.

 

Lost Order:

Now comes the hardest part. Order lost!  Is it a big failure? Surely, because the salesperson worked on it possibly for months, spent company money and now it is lost.  This is a common feeling but is not necessarily a bad thing. If one can do expert negotiation and then lose an order it can be good for the company and may be good for him/her also. This means the order could have been damaged more either initially or in long term.

Walkaway:

A walkaway can be a good option. When? When no alternative works either for customer or salesperson.

Should the salesman show dissatisfaction during the walkaway?  Yes, and it should be in a diplomatic way. Never show anger or frustration. Never close the door and sometimes a lost case comes back in a sweeter way. Never damage a relationship. However, expressing regret and showing disappointment is good as we are all human beings. It shows a genuine nature as well as makes the customer sympathetic.  Explain the decision nicely as to why the salesperson wants to walk away. Also, one needs to show that he/she is interested to work together in future.

I tried to capture the vital information though this is my two days training program and it is not possible to explain it in short. I shall be happy to conduct the training for the benefit of the youngsters not expecting much own benefit. If you feel you can contact me.

However, I believe budding salespeople can get immense benefit going through this article.