Negotiation Skills, Techniques
Careful What You Cut!
Read in 10 min. Enhance your negotiation skills to keep afloat in tough times
A Business Trainer from
Woking, United Kingdom
Graham is available for projects both virtually and in-person.
Pressure on sellers comes from various sources. Whether part of a sales team or a business owner you will have some form of target to achieve. This does not go away and many prospects are aware of this and use it to get better deals. Other creators of pressure can be bosses or other stakeholders. Sometimes they can be a negative influence in the way they transmit the pressure to generate business. As sellers, you have to learn to deal with this in a positive way so that it does not hamper your performance. Customers will be a constant source of pressure too, for reasons mentioned earlier. They will let you know that they have choice – and past loyalty may not hold up for the future! Competitors can provide pressure too. Their approach to the marketplace, their strategy for winning or retaining business and their attitude to pricing will impact on your sales.
How can you prevent these pressures from eroding your turnover and profitability? On a purely pragmatic basis, you can’t prevent it totally. What you can do is minimise their impact. A key part of prevention is to invest time and effort into your planning and preparation. Claims that you are too busy do not stand up, especially if you want to find and keep profitable business. There are a number of elements to cover in your planning and preparation, only a few of which we look at here. Examine your current customer base and prospect list. Are you putting too many eggs into the one basket, either with existing business or on what you hope might happen? Remember, your customers and prospects are under pressure too – and they may have to cut their spending or even stop! Ensure you are looking to find new business as well as spending time on managing the relationships with existing customers. Before making sales visits qualify the organisation and the person or people you will be seeing. Is the organisation using your products or services? Can they benefit from doing so? How is their business performing? (Will they be able to pay you?) Where is your contact within the DMU? (Decision Making Unit) Can they make a decision or do they influence it? Who else do you need to meet or develop relationships with? In these difficult economic times, many organisations are pushing decisions up the line to more senior managers. When you have a clearer understanding of the organisation and the people, think about assessing "The Balance of Power". Remember, the other party has pressures on them as well, you are not alone!
If you do this, you will find that the lists are remarkably similar – and the "buyer" often has more pressures on their side. Yet, how do they act in a sales or negotiation meeting? Do this exercise and you will realise that you do have power in these meetings. Understanding this, and the pressures the other side may be under, can help you recognise where you might have "leverage". This can work wonders for your confidence!
How well do you know what you have available to trade with? What are the variables you can use during the negotiation, the things you might be able to offer or the items you can ask for from the other side? (Variables, tradables, currencies – whatever name works for you.) These are critical for effective negotiations. The better you know these, the stronger your defence of your price. When preparing before meetings, check your list and put together your "package". Within your package, look to include as many options as you can. What is your "best deal" and what is your "worst deal"? Your best deal is your ideal price and gives away as little as possible. The worst deal is the lowest price you will go to and a list of the variables you will give – plus a list of the variables you want from the other party. You have to be clear about this range before going to any meeting!
In case you do get tempted to move to the "worst deal" position and beyond plan a warming sign for yourself! In the heat of the moment it is too easy to give that extra bit! Remember, what you are giving is coming out of your margin! Some of you might have heard about knowing your BATNA – or Best Alternative to a Negotiated Agreement. If you cannot reach a deal what are your options? My view is that your best BATNA is to have more prospects in your pipeline and not allowing a few to become too powerful in their contribution to your business.
When you have done your preparation you are ready for the face to face phase. You can now feel confident as you approach it. This is important. Managing your own mindset can make a huge difference to the final outcome. Giving signs of under-confidence or doubt about your position can provide an experienced negotiator with just the opening they want! In the early stage, as you are developing rapport and moving towards the "real" business conversation a degree of "signalling" will occur. Some of this might be deliberate and some accidental.
"Signals" are clues or hints. Make sure you are listening closely to pick up any which are offered, eg "We’re under pressure to make a decision.", or "We have to get this underway by the end of next month". More worryingly – "The new manager needs to approve everything.", or "The new manager wants us to look at a couple of other suppliers." Do take care about what you say too! Not only your full statements, beware the "little" words which might slip in! "We’re under pressure to get business" is not helpful to your cause. Nor is, "I’m finding it tough at the moment" or "We’ve had a couple of clients go down owing us money"!!
As you move through the early stages and through the sharing of aims and outcomes you get closer to what most think of as real negotiation – bargaining time.
Bargain: To exchange, to arrive at an agreement. (C14 from Old French bargaignier to trade)
Your attitude to this will strongly influence your approach and ability to deal with it positively and to achieve the outcomes you want. If your preparation has been thorough and you have identified the variables you can use and ask for, you will be able to be flexible yet firm. Keep a couple of thoughts clear in your mind:
* Be proud of your price! (If you don’t believe in it, why should anyone else?)
* Package and price are inseparable (Any change in price has to mean a change in the package – which is where the variable are used.)
You need to make sure that every time something is going to be discussed or traded you use the "bargaining formula". "If you ….(STATE THE CONDITION YOU WANT) .. then we can/might …(CONCESSION YOU MIGHT MAKE)" It has to be this way round – reverse it and a shrewd negotiator will take what you are offering without agreeing to give you what you want. Remember, a lot of the concessions you make can be on elements other than price. Think about what is on your variables list and consider what you could offer. If you are being pressed to reduce the price, make sure that the condition you are demanding is of value to you. (Faster payments, part payment with order, increased volume or size of order are just some examples.)
When you have finished the bargaining and arrived at an agreement which is within your range summarise the details of the deal and timescales etc. Then, make sure you confirm this in writing as soon as possible. Some experienced negotiators could come back to you and try to change the deal slightly, in their favour naturally! They work on the basis that a lot of people will accept these changes rather than risk losing the deal. By acting first, you can prevent this happening. Once all is settled, record the details on your customer database so that you have the information for next time. As you do this, take a few minutes to go over the process in your mind and identify what went well and what lessons you have learned.
To avoid giving away too much in these difficult times, remember to take a few simple steps to any sales or negotiation meeting. Make time to do your planning and preparation thoroughly. This will help you to go to the face to face meeting with confidence and yet have some flexibility in your approach. Keep in mind that there are many things to talk about and not just price! If you do start cutting your price – you are cutting your profit. So, look for options for both parties and use the bargaining formula to get better deals for your business. Remember, once you have given something or cut your price – it is very difficult to get it back!
Your thoughts matter - more than you can imagine.
More Articles by Graham 23 Free | Ad-Free | Full-Text Business Papers
CoachingSome differences and grey areas where Coaching or Mentoring overlap
Personal DevelopmentNot only are there a lot of potential risks arising from the spread of stress within an organisation, it costs a great deal of money!
LeadershipHow do you prefer to "control and influence" others?
Sales - GeneralHow many sales teams suffer because their sales manager is not doing their job at the right "level"? Sales figures suffer, sales people suffer and the ...
Corporate CultureWhen a company's culture is not right with what is needed for strategic success, the culture has to be changed as rapidly as can be managed!
Change ManagementTwo key dimensions to successful, and effective, change initiatives
Success BuildingWhen you are a leader in a business you face a number of challenges at different levels. Ask yourself how much focus you put on to these...
Sales - GeneralIf you are involved with sales, how do you feel when you hear phrases such as, "Can you do anything about your price" or, "You'll have to do better than ...
Change ManagementA challenge for most managers is to initiate or implement change programmes - and lead people through them, whether in the way they work or what they do. In this, lies one of your major challenges...
Stress ManagementDecent management communication and support, plus personal development for the people can combine to help prevent a lot of the issues which lead to pressure ...
Sales - GeneralIt is not about having some new magic method for selling, it is about applying the things you have perhaps forgotten.
Stress ManagementStress and mental health are not issues which managers should ignore. They cost the organisation money, both directly and indirectly.
LeadershipToo many organisations are "over-managed and under-led" to quote Warren Bennis. There is a difference between leadership and management.
Sales - SpecialisedHow to improve the accuracy of your sales forecasts
Sales - GeneralThe benefits of having a defined sales process
Sales - GeneralAre you hitting or beating your sales target or quota? If not, are you blaming the market, the customers or your competition? If you are making your target ...
Health and FitnessIt is estimated that about 60% of GBP 23bn in lost productivity in the UK is from presenteeism!
Stress ManagementMost organisations and many managers within them are probably aware of the costs and consequences of stress and stress related problems. They may have ...
CommunicationHow many times have you said something and realised that the person, or people, on the receiving end have not fully understood what you meant or headed ...
CoachingWho tells the boss that they can improve their management or leadership? How do they look at themselves objectively and identify what areas they can improve and the benefits of doing so?
Success BuildingThe simple answer to the above is, "both"! It depends on a number of things. Perhaps the first thing to explore is your reaction to seeing those three ...
Personal DevelopmentA look at why developing greater resilience matters.
Presentation SkillsHave you had this feeling before? Rest assured you are not alone. You might be one of the many who would rate your fear of public speaking alongside or ...
More 'Negotiation Skills, Techniques' Articles
1 more Article that may interest you, too...
Negotiation Skills, Techniques
Five easy-to-use tools help negotiators in complex deals arrive at a negotiating position that is not only acceptable to them but also palatable to other parties. These practical negotiating tools are based on the same logic as game theory simulations but don't require an elaborate computer model.