Secrets to Improved Sales Negotiations

I’m often asked how to conduct a more effective, and profitable, negotiation. So, in one word, here’s my number one tip for negotiating: don’t! Don’t negotiate.

What that means is that you shouldn’t do what most salespeople do when they think they’re negotiating. It sounds something like this:

Customer: “Can you do a little better on the price?”

Salesperson: “Of course I can. We want your business and will be happy to work with you on price.”

While that may sound to you like negotiating it isn’t . . . it’s discounting. When I say don’t negotiate, I mean don’t discount. There’s a reason why you (or the company you work for) charges what you charge for products or services.

Discounting makes it more difficult for the company to be profitable. Not only that, when you discount, especially if you do it like the example above, you’ve pretty much told your customer, “Ya know, I could have charged you less right from the start, but I thought I’d try to get more money from you in case you were a sucker.”

That said, is there a time and place for negotiating?

There sure is; and the following five tips will help you do so more effectively:

Don’t Give Up Anything Unless You Get Something Back

When most of us think of negotiating, we think of fat, sweaty guys sitting across the table from each other, yelling about how unfair the other side is being. Take the NYC Transit strike of many years ago. Even though there were tough and professional negotiators involved, everyone knew that eventually they were going to come to an agreement. Was NYC really going to go without subways and busses for long? Of course not.

In sales negotiations, however, the outcome is not always predetermined. Salespeople tend to “give away the ranch” because they’re afraid of losing the deal. Sharp negotiators know that when you give something up, you have to get something back.

Several years ago, I received a telephone inquiry from the Sales & Marketing Executive Association of Puerto Rico. They wanted to know if I was interested in coming to Puerto Rico in March to give a three-hour presentation to several hundred of their members. You can imagine me sitting at my desk pondering whether or not I’d like to go to Puerto Rico in March!

I told the woman that I’d love to come, asked a bunch of questions, and offered some ideas on what a program would look like. Eventually, of course, she asked what I would charge, and while I don’t typically give pricing over the phone, I wasn’t going to travel to Puerto Rico for a sales call without at least letting my prospect have some idea of what I charge. When I gave her the price, you could hear the disappointment in her voice when she said that the amount was, “. . . more than we have in the budget.” Of course I asked, “How much over the budget are we,” and she answered, “$500.” Now, in the scheme of things, $500 isn’t the end of the world especially when you consider I was going to get a free trip to Puerto Rico out of the deal, but I don’t discount. I told my prospect how much I enjoy beaches in the Caribbean, and while I’ve been to many of the islands, I’d never been to Puerto Rico.

I told her that if she would take care of my hotel for the weekend (the speech was

on a Friday morning) I would be happy to take $500 off my fee. The outcome? She agreed immediately! Why? Because the hotel the conference was being held it was also a member of the association and she knew that she could get them to give me a free room for two extra days. I would most certainly have paid more than the $500 for two days at a top hotel in Puerto Rico, so as far as I was concerned, I came out a winner and so did my client.

Make Sure You Can Afford to Walk Away

It’s crucial that you always have enough business in your pipeline to make sure that one deal will not make or break you, because if you don’t, you can’t possibly negotiate effectively.

If you can’t walk away from the deal, you are going to put a lot of pressure on yourself to make certain the deal closes, and you’re likely to end up giving away more than you’d like. If you consistently prospect for new accounts and always have plenty in your pipeline, then one deal isn’t going to make or break you.

Create a Win/Win

Salespeople often try to “win” negotiations. I find it far better to find a solution that benefits everyone. Referring back to the story about my trip to Puerto Rico, I won a free vacation, and my client won the price she wanted. We both walked away extremely happy with the deal. While it is sometimes possible to crush the person you’re negotiating with and still get the

After you ‘kill’ a client in a negotiation, you may ‘win’ the battle, but you’ll lose the war. deal, it is highly unlikely that this will turn out to be a long-term client. One of the things I always look at is the lifetime value of a client. The probability of a customer using your products or services a second time after you “kill” them in a negotiation is small, so while you may win the battle, you’ll lose the war. Look for ways to make everyone come out a winner.

Take a Break

Most salespeople want to close everything today. They want the money now and, typically, the client wants the services now, but sometimes it’s extremely useful to take a break in the negotiations.

Letting your prospect know that you feel that you’ve gone as far as you can right now and telling them you would like to “finish up for today and get back together next Tuesday to continue the discussion,” not only lets the client know that you’re not desperate (even if you are) and gives you time to carefully consider your next move, but also gives the client time to think about what happens if they don’t get what you have to offer.