Today's post is by Norman Behar, Managing Partner, Sales Readiness Group, Inc., a leading professional sales training company that develops customized sales and sales management programs for business-to-business sales organizations.
Much of the advice on how to conduct effective sales negotiations counsels you to use a collaborative sales negotiation style to achieve a "win-win" outcome. And you do want to be thought of as a good person, right? Someone who is not out only for your own gain? Someone who doesn't exploit other people's weaknesses?
There are many times when you work hard to achieve a win-win outcome from your sales negotiations, but there are situations where you are better off to be competitive or even adversarial in your negotiating style.
Collaborative vs. Competitive
Before we get into the question of when to be competitive or collaborative when you negotiate, let's define the outcomes of the two negotiations.
Collaborative negotiating, or achieving a win-win outcome, in sales negotiations generally means an agreement in which both parties get something of value AND they are happy with the outcome. If you arrive at an agreement through a competitive or adversarial process, each party will have gotten something of value (otherwise they shouldn't have agreed), but only one party is happy with the outcome. The other one feels like a schmuck. (Just think of your last auto purchase.)
When should you use a competitive negotiating style? First of all, the issue can't be very important or doesn't have long-term consequences. Second, you either have to get to an agreement quickly or you can postpone the issue. Third, you either don't really need or want the item or issue you are negotiating for, or there are many other suppliers for the item. Fourth, there is a single issue or only a couple issues to negotiate. But key to all of this is that you have no plans to do business with the person or company again.
Let's turn this around and look at when it is in our best interest to use collaborative negotiating. The most important reason that you will use collaborative negotiation is that you want to preserve or enhance your relationship with the customer. You plan on doing business again or continue to enjoy an ongoing relationship that benefits both of you. There are multiple issues on the table. You have sold the customer on the value and superiority of your product or service over other suppliers. You have convinced the customer that he/she needs to act now to achieve his/her goal and you have time to work out the terms of the agreement. And lastly, you will be negotiating issues that are important and have long-term consequences. Because there are long term consequences, at the end of the negotiation, both parties have committed to support the terms of the agreement and make it work.
Techniques that Help Ensure a Win-Win Solution
First of all, both you and the customer want to come to an agreement that helps both of you achieve your individual and mutual goals. If you have done a good job of identifying the customer's priorities, relating and reinforcing the benefits of your product/service that align to those priorities, you probably already have a good idea of the customer's position and the interests behind the position. Often in a large sales negotiation you will have additional stakeholders add other issues (for example, procurement or a CxO), so if you can get prior information on the nature of those issues from your supporter in the company, you can be prepared.
As you offer a trade, you always reinforce the value of that trade by relating the benefit to the customer based on his or her priority. You have to be patient and allow the issues to unfold. You will be holding some of your offers back as will the customer. If you have done effective questioning, research and planning, you can be prepared with what you can trade for the customer's requests for additional consideration. You will not only be patient but also persistent, using the negotiation process to gather additional information on why the customer wants or desires something from you. This is especially important if additional stakeholders with new demands show up after you think you have gotten all the issues identified and perhaps agreed to.
As when you are selling, as you negotiate, you will paint the picture of what it will be like in the future when the customer achieves his or her important goal (and it will be great!). When negotiating you will relate the value of what you trade to the customer, you will let him or her know the total value of what you trade and how that value will be there for a long period of time.
If you can identify multiple issues, you will have a greater ability to provide a creative solution that will benefit the customer than if you negotiate on a single issue such as price. Issues are either tangible or intangible. Tangible issues are easily identified costs, such as cost of goods. Intangible issues can be competitive advantage, time to market or enhanced image. Intangible issues are harder to value, but it offers you the creativity and flexibility to trade something that is of low cost to you (such as consulting hours), but of high value to the customer (improved productivity). Here is a Harvard Gazette article on being open-minded in negotiation to provide creative solutions.
Besides building a stronger relationship and the increased probability of future business, when you use collaborative negotiating, you have an equal partner in supporting the solution. Your customer is as invested as you are in seeing the solution implemented and effective. And as they say, a satisfied customer is a repeat customer.
To answer the question, should you always use a collaborative sales negotiating style? No, only if you want a customer for life.