Today’s post is by Jose Palomino, CEO of Spyglass Selling.
Since every negotiation is a give-and-take, it’s never really a surprise when a sales professional quotes their best price and the client replies by asking for an even better one. That’s why top-performing sales teams have a knack for uncovering and framing tradeoffs based on true value to the customer rather than price alone.
These salespeople have what I call a “negotiating mindset.” They understand the basic principles involved to avoid conceding on price or head off extraordinary requests that would be too costly to deliver.
The negotiating mindset is one of seven key characteristics of top-performing sales teams. The others are prospecting, product knowledge, sales acumen, account management, business acumen, and marketplace awareness. All of these are leading indicators that your team is thinking the right way to drive sales success.
When they have a negotiating mindset, sales professionals are able to shape deals without depending on unreasonable concessions on price or other matters. Even before they begin formal negotiations, they’ve thought about what they might offer – and what they might request – to shape a win-win agreement.
Sales professionals with this mindset understand that their discussions have to be framed at the beginning of the relationship, and not at the “closing table.” Almost always, they propose options that are of lower cost to their company but of higher value to the customer.
For example, they might offer to help develop a go-to-market strategy – or give the customer regional exclusivity for a limited time. Neither impacts their product’s price, but each certainly increases its value to the client.
Some say that sales negotiation is a form of game playing. The truth is that there is game theory at play. But the goal in B2B (long-term relationship) selling should always be to create value for both your company and your customer – not to employ “Jedi mind tricks” to win a round. That’s just a shortcut to avoid thinking of solutions that can increase your true value to your customer.
This means really listening to all of your customer’s needs – from the first meeting until the contract is signed. For example, a customer’s team may find your new product to represent a headache to install. By offering real installation training, the salesperson neatly addresses a need that’s not about pricing, but makes working with their company much more attractive…and profitable for all.
Assessing Your Team’s Negotiating Mindset
As a sales manager, how can you tell if your team has a negotiating mindset? Start by looking at how many of its requests focus on price concessions. If it’s a significant number, you’ve got work to do.
But that’s just the first step. Also ask yourself these questions:
- Does my sales team align customer interests with our products and services?
- Do they create win-win solutions with trade-offs that don’t involve price?
- Can they identify client motivations and limitations?
- Are they able to articulate our company’s value to overcome client objections?
- Can they recognize the client’s main ROI considerations?
If the answer to any of these is “no,” you need to strengthen your team’s negotiating skills. Among the most effective ways to do this is to question every salesperson who argues that a major price break is needed to close a deal. Ask them:
- “What else can we do for this customer?”
- “What are the customer’s three biggest challenges?” The answer may offer hints of needs the salesperson hasn’t identified.
- “If, instead of a price concession, you had to inform the customer of a price increase, how would you defend it?”
When your team knows they’ll be challenged on every price concession with questions like these, you’ll influence the sales culture to think more proactively about creating value beyond price.
Sales leaders should shape deals to increase revenue and margin … and value to the customer. By taking action to ingrain the negotiating mindset, you’ll have more opportunities to raise profit margins and actually develop happier customers.