I often get requests by sales managers for negotiation skills training for their sales people when in fact upon further investigation their people usually need consultative selling skills training first.
You cannot negotiate effectively if you cannot sell effectively first. Both are processes which need to be learned and applied in the correct order. However, over 90% of sales people follow no logical process when selling or negotiating, leaving their sales at risk.
Negotiation is a process and a skill that can be developed
Negotiation can be described as a process that involves two or more people dealing with each other with the intention of forming an agreement and a commitment to a course of action. In a sales environment, negotiation often involves a series of communications between two parties to form an agreement about the details of a sales solution.
In many cases, it is possible for a proposal to be generated that satisfies the needs of both parties. However, sometimes one or more parties may have to accept less than they had hoped for when they entered the negotiation process. And finally, in other situations, the fulfillment of one party’s wishes may come entirely at the expense of the others.
Therefore, negotiation is the process of navigating your way through each of these alternatives, ideally aiming to come to an agreement that is complimentary to both parties’ needs.
There are five possible outcomes of negotiation:
- Compete = win:lose
- Avoid = lose:lose
- Accommodate = lose:win
- Compromise = neutral
- Collaborate = win:win
In my experience when I negotiate I aim for #5 and get either #5 or #4. I know that I do not want outcome’s 1-3 to happen. However too often I see sales people end up with outcome 2 or 3. This is no good for anyone and can train clients to expect things they do not deserve, (e.g unnecessary discounts).
Rule of thumb for negotiation in sales:
- Unless you have the power or authority to change or modify terms or create new product solutions, you cannot negotiate.
- Negotiation should never be a substitute for selling. You need to be able to sell well first and foremost.
- Negotiation is an effective strategic tool that you use ONLY when you need it.
- The earlier you give away concessions in the sales process the less impact they will have.
- Be aware of giving sales people the authority to discount. All too often this is a licence to give away your margins too soon and too often. We see this when people ‘cave in’ on price too soon for fear of having to deal with potential conflict which usually doesn’t eventuate if the sale is done effectively. However, they never let the sale run its course to find out.
- Discounting is a negotiation tool that should only be applied as a last resort and should have a trade-off in it for your business so can you benefit from the deal as well. This is different from volume pricing which rewards people for buying bulk from you.
- If you postpone tough negotiations you will miss learning about new things, getting new ideas, new ways of pulling your offer together as well as creating potential conflict down the track.
You sell when you:
- Identify clients’ real needs and priorities. Create viable solutions that are of value to the client and outweigh the cost of purchase and gain agreement to move forward to close the deal and do the work.
- Can’t vary the terms. If you can’t vary terms and negotiate and the client won’t agree to move forward with you on the current plan then it is a ‘no sale’. Move on rather than give it away. Giving it away is not negotiating it is just giving something of value away which costs you.
You negotiate when:
- Both parties can vary the terms
- Resources are scarce
- Agreement and conflict exit simultaneously
Value versus Cost
To help you avoid unnecessary negotiations when selling first of all find out what people really value and what is most important to them.
If you and your sales people are having trouble doing this then you need to improve the ability to have quality business discussions with clients and prospects. In particular, their ability to thoroughly understand their customers priorities and business needs and how your products and service can be crafted into relevant solutions that will address specific requirements and create value for the client.
This would include developing their questioning, creative problem solving, up selling/cross selling and solution selling skills.
Effective negotiation in a sales situation requires people being able to:
- Be assertive
- Challenge every assertion
- Get the real facts before offering up anything
- Uncover real needs and issues
- Negotiate late and negotiate little
- Manage conflict and not take it personally
- Analyse the situation and the demands and weigh them up appropriately
- Keep the customers’ needs in mind at all times as well as your own
- Aim high
- Respond to demands for concession
- Develop a proposal with guide-lines and trade-offs (if necessary)
- Prevent the customer from ‘fragmenting’ your proposal
- Present a total proposal that ‘adds up’ to a win/win solution
- Focus on achieving satisfaction for both parties
- Don’t make the 1st move
- Don’t accept the 1st offer
- Are willing to walk away
- Use all their most effective communication skills (listening, paraphrasing, questioning, problem solving, etc.)
- Apply a process
- Don’t avoid negotiations
- Have a ‘negotiation consciousness’
When do you need to negotiate instead of sell?
- When a client demands an arrangement which is different from what you are able to offer
- When you are dealing with a tough client who wants to ‘win’
- When you disagree with a client on some aspect of the proposal
- When the client will not agree to your initial offer. (Find out why because some people just like to win and want to bargain as part of the process. This is quite common is some cultures as part of the ritual of the sale)
- When we are unable to reach agreement, even after many discussions
- When you can’t move forward unless you change your approach some way
- When you can’t deliver from your current suite of resources or you need to step outside of what you normally do to win the business (take care as this can be very costly)
I hope this helps put some perspective to selling and negotiation.
Remember everybody lives by selling something.
Sue Barrett endorses the proposition that ‘everybody lives by selling something’ and people buy from people they trust. Sue is founder and managing director of BARRETT, and specialises in 21st century sales training, sales coaching, sales leadership, sales capability and sales culture transformation. Sue is one of the few prominent female voices commenting on sales today. You don’t have to be a sales person to benefit from her knowledge and insight. If you have an idea, capability, product, service or opportunity that you want to take to market then Sue says you need to be able to sell – ethically, honourably and effectively. Sue practices as a coach, advisor, speaker, facilitator, consultant and writer and works across all market segments with her skillful team at BARRETT. Sue and her team take the guess-work out of selling and help people from many different careers become aware of their sales capabilities and enable them to take the steps to becoming effective, and productive when it comes to selling, sales coaching or sales leadership. To hone your sales skills or learn how to sell, go to [http://www.barrett.com.au]
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