Right now, many salespeople are facing the most difficult selling environment they’ve ever encountered. Selling in a recession or a down economy can be brutal, but it can also be an incredible learning opportunity. Negotiating with prospects is only going to become more difficult, and to win deals, your sales team will need to negotiate better. Decision-makers are faced with tougher margins than ever, so expect every prospect to ask for a lower price or more favorable terms. To help prepare your sales team, here are the six tips that will make any salesperson a stronger negotiator.
1. Understand How Executives Build Leverage
Trained negotiators look to create a power differential. It’s not personal — it’s their responsibility to their business. They might flaunt their industry connections, offering future opportunities in exchange for a deal. They might relentlessly push for their terms. If you’re not prepared, you’ll quickly feel emotionally fatigued and desperate, and finally signing a contract (at a dramatically reduced rate) will feel like a relief.
However, no matter what the prospect is offering, it’s not a win if the deal is not happening on your terms, at your price, so prepare for this scenario. Don’t take it personally, and it won’t wear you down.
2. Establish and Rehearse a Walkaway Point
The walkaway point is the number at which you won’t negotiate any lower. When negotiation tactics trigger you emotionally, the fight-or-flight response takes over. Without a walkaway point, you’ll go into fight mode, playing hardball on a deal that doesn’t even add up to the bare minimum. These deals often become nightmare clients, and they refer others who expect the same discount.
When you’re afraid of losing something, you can become overly emotionally invested. Recognize that you can’t lose what you don’t have, and you’ll realize that there’s nothing to be afraid of. If the prospect isn’t willing to pay the minimum, stop negotiating. Rehearse ending the conversation, tactfully, when a negotiation hits the walkaway point. This activity will have a powerful psychological effect, infusing your negotiations with confidence, not emotion.
3. Set the Tone Early, and Stay Focused
Negotiation starts at the beginning of the sales cycle, with the business development representative (BDR). When a skilled negotiator is faced with a junior salesperson, he or she will demand pricing or ask to skip straight to a demo. A desperate BDR can kneecap the deal by giving the prospect leverage too early.
Everyone in sales should be laser-focused on sticking to the defined purpose of each conversation. When you’re looking at the finish line, you’ll trip over the hurdle that’s right in front of you. If you’re responsible for the first impression, the best way to build credibility is by staying firm while remaining friendly and empathetic. Make no mistake: This role is not easy. But it sets the tone for the rest of the deal.
4. Discover the Buying Criteria
Gaining a rock-solid understanding of your prospect’s buying criteria (and the criteria of any other decision-makers) should be your first priority. Understanding buying criteria means knowing:
- Their must-haves.
- Their deal-breakers.
- Any background on their experiences with other vendors.
Uncover the criteria of every decision-maker, including the final executive signer. When you spend time gathering this information, you are not only making sure your solution is the right fit for them; you’re also removing their leverage. Ask each decision-maker to tell you what has given them confidence in your solution so far, and take notes. Their answers will be priceless in negotiation.
5. Stop Talking and Start Asking Questions
If you’re doing all the talking, you’re not learning anything about the customer, and you’ll be left without leverage. When you wait too long to ask the tough questions, one wrong turn can end the deal. Asking difficult questions earlier leaves you with much less to discuss at the final negotiation table.
The tough questions include:
- The problem
- The investment
- The timeline
Discovering the problem is the oldest sales advice in the book, but it still needs to be said. Stop talking about your features, and focus on uncovering the prospect’s actual need. Find out how long it’s been a problem, what it’s costing them, what they’ve done to fix it and, most importantly, why they’re interested in your solution.
Discovering the investment means finding out how much the company is willing to spend in exchange for the results you’re offering. Find out what they’re paying their current vendor and if they would be willing to invest more for better results. You might not like the answer, but it’s better to know before you’re at the final negotiation table.
Discovering the timeline means setting a “go-live” date that the decision-makers are invested in. Find out why the date matters and what obstacles might get in the way, and confirm that it works for everyone. If you can uncover at least three reasons the buyer picked a specific date, you’ll be able to motivate them to close.
6. Know Your Levers
Most businesses have negotiation levers they can pull to change the price of their solution. Discuss them with your managers, and rehearse the conversation. Typically, your levers will be volume, timeline, removal and referrals. If a prospect is fixated on receiving a discount and you’ve followed all the steps above, tell them about your levers. If they can commit to a high volume, signing today, removing a line item or providing three solid referrals, it’s worth giving them a discount. This arrangement makes the deal fair for both parties — which is the result of a good negotiation.
Ask your sales reps to look at their last 10 deals and ask themselves how many of these steps they took. Where did prospects get stuck during the negotiation? How did they trip you up? Can you avoid those pitfalls next time by incorporating these tips? Continuous reflection is the key to ongoing growth. It’s important for sales professionals not just to ask customers the hard questions — they should ask themselves, too.