How many times have you heard:

• “You’ve got to drop your price by 10% or we will have no choice but to go with your competition.”
• “You will have to make an exception to your policy if you want our business.”
• “I know that you have good quality and service, but so do your competitors. What we need to focus on here is your pricing.”
• “I agree that those special services you keep bringing up would be nice, but we simply don’t have the funds to purchase them. Could you include them at no additional cost?”

Every time you hear statements like these, you’re in the middle of a difficult sales negotiation. How you handle that negotiation will determine whether or not you close the sale and how profitable that sale will be. In order to give you a real edge every time, I have listed below some key points taken from my sales negotiation training seminar.

Don’t Believe Everything You See and Hear

Part of a good salesperson’s skill is to learn to read people and situations very quickly. However, when it gets down to negotiating, you have to take everything you see and hear with a grain of salt. Buyers are good negotiators, and thus they are good actors. You may be the only person who has what she needs, but everything she does and says, from body language to the words she uses, will be designed to lead you to believe that unless she gets an extra 10% off, she’s going with the competition. Be skeptical. Be suspicious. Test, probe, and see what happens.

Don’t Offer Your Bottom Line Early in the Negotiation

How many times have you been asked to “give me your best price”? Have you ever given your best price only to discover that the buyer still wanted more? You have to play the game. It’s expected. If you could drop your price by 10%, start out with 0%, or 2%, or 4%. Leave yourself room to negotiate some more. Who knows – you may get it for a 2% reduction. You might have to go all the way to 10%, but often you won’t. A little stubbornness pays big dividends.

Get Something in Return for Your Added Value

What if you discover that the buyer wants to be able to track his expenditures for your products or services in a way that is far more detailed and complex than is standard for your industry? What if your account tracking system is set up in a way that you can provide that information at essentially no cost to you? Often the salesperson’s overwhelming temptation is to jump in and say, “Oh, we can do that. That’s no problem.” Before you do, however, think about your options. You could throw it in as part of the package and try to build good will. Or you could take a deep breath and try something like, “That’s a difficult problem that will require some effort on our part, but it’s doable.”

In the second case, without committing, you’ve told the buyer it is possible. You may not be able to get him to pay extra for it but you may be able to use it as a bargaining chip in resisting price concessions. Which way you choose to go will depend on who your customer is and on the situation. However, you do have options.

Sell and Negotiate Simultaneously

Think of selling and negotiating as two sides of the same coin. Sometimes one side is face up, and sometimes the other side, but they are always both there. This is particularly true in your earliest contacts with the buyer. The face the buyer sees is that of a salesperson demonstrating features and benefits. The hidden face is that of a negotiator probing and seeking out information that may be invaluable later should issues like price, terms, quality, delivery, etc. have to be negotiated.

Be Patient

Finally, and most important, be patient. Sales is a high energy, fast moving business. Patience is one commodity that is in relatively short supply, but if you’re impatient in a negotiation, you’ll lose your shirt. If I’m negotiating with you and I know that you’re impatient, I will hold out just a little longer, no matter how desperate I am to make a deal with you. As long as I know you’re in a hurry, I’ll wait.

So be patient. Take the time that you need, don’t rush to give in, don’t show your anxiety, stay cool and don’t panic. Negotiation is a process and a game. Use the process and play the game. You’ll be astonished at the difference that it makes!

(c) Michael Schatzki – 2004. All rights reserved.

One day, Alice was lost. She came to a fork in the road and saw a Cheshire cat in a tree. “Which road do I take?” she asked.

“Where do you want to go?” was his response.

“I don’t know.” Alice answered.

“Then,” said the cat, “it doesn’t matter.”

Alice in Wonderland

A sometimes murky question…

What constitutes “success” in a negotiation is a sometimes murky question. Despite this, in planning your negotiating strategy, it is a critically important question to ask. For a negotiation to be “successful,” you must reach your planned destination. Your negotiating strategy is about how you get there. In starting the planning for your negotiating strategy, therefore, you have to know where you are going. Like Alice, however, if you don’t know where you are going, it doesn’t matter what strategy you choose…

The planning for the negotiation and the ultimate negotiating strategy, therefore, can only begin once you and your team has agreed on the destination you want to reach — and once you have an idea of the chosen destination of the other side. Certainly, until everyone on your team agrees on that destination, coming up with an effective negotiating strategy will be difficult if not impossible. And, until you agree on your destination, you will almost certainly find yourself struggling up a quite steep and slippery slope and you will face a near certain negotiating failure.

Sometimes, “success” in a negotiation is easily quantifiable. For example, sometimes it is measured simply in terms of the price at which you are prepared to buy or sell whatever you are negotiating to buy or sell. Obviously, unless you know the target maximum purchase price you are prepared to pay — or the target minimum sales price at which you are prepared to sell, you are negotiating in the dark. In these cases, once you have set your targets, what constitutes “success” is relatively clear and you either reach your destination or you do not.

What is less clear is what constitutes “success” in more complex business negotiations that are more than a once-off transaction in which the parties may never again do business together. In these more complex cases, “success” can mean many things and is not easily quantifiable. And this presents a hidden danger: Unless you and your team have clearly defined your destination, members of your negotiating team can unwittingly sabotage the process of reaching it.

How executives and their lawyers sometimes view “success” differently…

Over the years, in my business travels around the world, I have regularly come across something that has never ceased to surprise me. I have found that some of the most successful business executives I came across seemed to have a different idea of “success” to that of their lawyers. The result was almost always interesting — and was almost never particularly good for the executives.

For example, some of these executives took a long-term view of what was “success” in negotiation. They believed that a negotiation was only successful if the deal they were negotiating created a long-term ongoing relationship that each side would value long after the agreement was signed. These executives clearly focused on the value of ongoing business and on the possibility of each side increasing business with the other. They understood that, to accomplish this, both sides would have to build and nurture relationships with the other side. As a result, these business executives understood that the success of the negotiation could sometimes only be judged years after the agreement was signed.

The lawyers representing these executives sometimes took a much shorter-term view and often adopted a scorched earth approach to the negotiations. For them, success in a negotiation was simply reflected by the signing of the document they had negotiated and drafted. For them, success occurred as the ink was still drying on the parties’ signatures. And, for them, it didn’t matter what carnage might have resulted in the process. Nor did it matter if feelings were hurt and egos were bruised along the way. All that mattered was that the document was signed…

Obviously, the problem with this scorched earth approach is that, while it certainly might result in a signed agreement, the long-term implications of this approach can be disastrous to the very relationships that are critical to the long-term success of the venture. What these professionals failed to understand was a business reality, namely, the value of an ongoing business relationship and the cost of acquiring a new business opportunity to replace the existing one.

What they also failed to realize is that a scorched earth approach can poison relationships. They fail to understand that a negotiation is a magical window through which both sides can look to see what it will be like to do future business together. My experience is that people never behave better than when they want something from you. And if they behave unreasonably, unprofessionally and without common courtesy in a negotiation, you can bet the farm this is how they will continue to treat you long after the ink has dried on your agreement. The result of this scorched earth approach is that the other side will not view the relationship as potentially a long-term one. Instead, from almost the moment the ink has dried on your agreement, they will start to look for other people or businesses to replace you. Your attorneys or other representatives are thereby doing you an enormous disservice if they use an approach that is inconsistent with your goals.

One conclusion…

So, before going into a negotiation, decide what would constitute “success” in your negotiation. And if your goal is to build both a long-term ongoing relationship and an agreement that each side will value long after the agreement is signed, be sure your team is on the same page as you. Critical to the process, therefore, is to assemble a negotiating team that is in sync with your goals.