Before you close a sale, you’ll have to sit tight through the negotiation phase. In sales, negotiation is one of the real tests of whether your company can work in the long term with another company.
But how do you ensure the negotiations will bring in the business your aiming for? Here are six ways to make negotiations go more smoothly.
Set a schedule
Whether you need a series of meetings, or just one specific meeting, schedule it as soon as the opportunity arises. Nobody has time to waste in business. So you’ll find that the company you want to work with should be receptive to the idea of scheduling time for negotiations. If there is some resistance, don’t be afraid to ask what is holding them back.
Ask lots of questions, and then listen
One of the major mistakes people in sales make is not understanding the prospective client’s needs. If you don’t get all the information you can before negotiations start, then tricky questions on their side wont get the answers from you that will seal the deal. So before you even get to the negotiating table ask as many questions about what the prospective client wants from your product or service.
Sure you want to close a deal with the best outcome for your business, but don’t push so hard for concessions you scare away the prospect. Doing business is a reciprocal arrangement. You’re helping them out with a (hopefully) superior offering, they’re keeping your business going by buying that offering. Any reputable business looks for a win win scenario. This ensures a long lasting business relationship where both parties gain something worthwhile.
Know your bottom price
Everyone likes to get a good deal, but you need to know what your permitted bottom price is before walking into negotiations. The difference between knowing your bottom price and not knowing is the confidence it gives you. If you don’t know where you draw the line, that insecurity could jeopardise the deal. It also prevents you from making a deal based on a price your company cannot make a profit from.
Know your extras
When making a deal you’ll have some extras up your sleeve to sweeten the deal. Don’t go for gimmicky extras, they have to be real and add a sense of worth to the deal. These can be lower prices over a certain volume of orders, or a particular after sales service that companies normally pay for. Don’t forget to highlight how great your normal standard of customer service is. Sometimes what seems like normal to you can seal a deal – the customer may not be used to your high level of customer care.
Don’t be afraid to walk away
Of course the deal is important, but is it really worth it if you have to concede too much? Remember your bottom price? That’s the number where you are still making a reasonable profit from the deal. If the other company demands so many concessions that you exceed your bottom line, the deal isn’t good for your business. At every stage during a sales process you should be asking yourself whether the deal is worth pursuing.
Negotiating in a sales environment shouldn’t be daunting. Your job is to find a happy middle ground where both you and the customer walk away happy with the deal you’ve struck.
Is it really possible to come to an agreement where everyone wins during a negotiation? Or does it come at too high a price for one side? An experienced negotiator can walk away from the table with a much better deal than someone less experienced. There are those that speak ‘win win’, but when they jet out of Dubai back to their head office, you could find you’ve given away much more than you should have just to achieve the deal.
So how can you ensure that you will walk away from the meeting with what you wanted? A win win strategy for negotiation brings everyone around the table to a point of mutual agreement. A point where nobody will walk away feeling they have given too much away, or didn’t get very close to what they wanted.
First of all, you must understand your own goals. Without a clear idea of what you want, it’s almost impossible to achieve a settlement. If you can’t clearly define what you need, how can you expect the other side to grasp your goals?
Also, by clearly outlining what you want ahead of time, you give yourself time to look at what options are open to the other side to help you win, and what you can offer in return.
At the outset, you have to be very realistic about the negotiation. Is it really possible for both sides to win? Will one of you have to concede too much to gain their prize? What exactly are you willing to concede?
You have to have a clear understanding of the parameters of your concessions. This is called the settlement range. Don’t go so far that you give away more than the deal is actually worth to your company.
Accept that not every deal is going to be a win win. That doesn’t mean you should give up before you start, but you do need to be realistic about your resources, your abilities at negotiating, and the other party’s negotiating skills.
And don’t be afraid to ask the other party what they want out of the deal. It’s a simple question, but many are afraid to ask it, in case it makes them look weak for not knowing beforehand. If you don’t know, then ask. Asking sooner will not only look better, but will save time spent dancing around trying to figure it out.
This questioning will benefit you as well. If you know exactly what someone is looking for out of a deal, you will know whether you can provide it. And don’t forget to return the favour. Tell them what your goals are.
However, there has to be a bit of tactical thought going on. If you reveal far more than they do, where does that leave you? Well, it could leave you at a disadvantage further down the line. Better to hold a little back, than give up everything at once.
And don’t let the other side know you BATNA (Best Alternative to a Negotiated Agreement) at the outset. This will certainly put you at a real disadvantage. Keep that knowledge in your mind until you really feel it’s necessary to push for it. Then hopefully you will be standing in your Dubai office lobby shaking hands on a deal well done.
Negotiation is a dynamic, complex skill and one that is difficult to master. During a successful negotiation both parties whilst inherently in conflict with each other must reach a mutually beneficial agreement and be broadly satisfied with the outcome (Win-Win). Both sides should feel that a fair conclusion was reached, the agreement will be delivered as negotiated and importantly want to work with each other again. The adversarial element must be tempered if you are to reach a reasonable, successful outcome and a number of variables may have been traded. The variables (must haves, ideals, loss leaders) are at the heart of the negotiation and their importance to each party will be on a sliding scale, it is up to you to determine their priority through sound groundwork and optimize the trading. Be aware that minimizing a trade may not work in the Middle East. Indeed the first step,’ preparation ‘should have guided you towards any cultural context of discussions. If you are negotiating in an international setting your cultural intelligence, knowledge and cross-cultural skills will need to be developed. There are several stages in negotiation which need to be followed in order for it to be successful, it is a process.
Planning for negotiation will pave the way for smoother communication, you will be able to predict most if not all outcomes and you will have a good knowledge of all parties’ needs .Negotiation cannot be rushed , you need to first establish a rapport and be able to effectively and clearly communicate without being too jargonistic. You need to build trust with shared values, views, attitudes, experiences, and interests.
Your communication should have the right balance of empathy and yet be able to project your own ideas. Your persuasive communication skills should focus on listening more than questioning, with no perception of their position you cannot be persuasive. Make sure it is focused on helping them reach a decision; they need to explore your ideas and come to a net benefit for them. The persuasion process should mimic the stages they go through in their decision making process e.g. in exploring their concerns you should be ready to handle objections. Ultimately you need to have a commitment to act but this cannot be achieved without first exploring the stages involved in decision making. Only once agreement is reached can you move onto the final negotiation. There are many useful tactics to consider during negotiation but ultimately you should concentrate on building agreement, listening to and interpreting their language and maintain a open professional outlook that acceptably drives the negotiation to a win- win conclusion. Concessions should not be given up without extolling their benefits. Remember cost may not be the key variable you think it is after you have successfully established the true value /potential of your business partnership and ability of your product to meet their needs.