Before we enter a negotiation we need to have a strategy. In other words, what is the outcome we want to achieve? I’d like to refer back to my friend Robert Menard who is the author of You’re the Buyer-You Negotiate it!
Robert brings up three very relevant points you need to consider:
1. Where are you now? What is your position of power and what are your costs? As Robert mentions the favorite saying of a client- “We will get the lowest price no matter what it costs!”
2. Where are you going? What is the outcome you expect from the negotiation? As the rabbit asks Alice in “Alice in Wonderland”, where do you want to go? Alice replied, “I don’t know,” to which the rabbit responds, “Then any road will take you there.” Develop the road map that will help you get where you want to be.
3. How are we going to get there? Robert says, this controls your negotiation strategy. This is the approach which in a way is similar to the game of “Ping Pong”, known as demand and concession in negotiation terms.
As we approach the negotiation with the client we need to know beforehand those items of product, service, warranty and price that we can concede to and those points which are non-negotiable. I’d like to cover three recommendations that will help move the negotiation down a smoother path to success.
Recommendation #1- Set expectations up front with the client. What are the aspects of your solution that you are not willing to move on? Where does the majority of your profit come from and how will you protect it. This needs to be communicated up front.
It’s like going to the Toyota dealership to buy a Prius when gas was $4.00 a gallon. With the Prius getting 45 miles per gallon and a three month wait for delivery, it was justifiable for the dealership to say “Our price is non-negotiable”. You would expect that with short supply and high demand. This is an upfront exclusion from the negotiation. You’re saying this point is not up for discussion. It’s like telling you fiance before you set the wedding date, by the way “I don’t do windows”. Properly setting the client’s expectations will save time and narrow down those points that can be negotiated.
Recommendation #2- Know what elements of your proposal you can concede to the client and those that would be more painful to give into. What have you experienced with other clients in a similar situation? Will the client perceive what you concede as value and will it bring you closer to an agreement? Try to put yourself in the client’s position. Do they see your concessions providing tangible benefits that would impact their business in a positive way?
Recommendation #3- If you concede, always do so by showing some pain. The client wants to see that you’ve made a sacrifice which is of value. We also want to give the reason and logic behind what we concede so it doesn’t come across like we’re giving away the farm. Once you give a concession you need to tie it to a counter demand which is asking the client to concede to what you’re asking in return. For instance, if the client demands a 5% discount and an extra 90 days on the warranty, you can acquiesce to this by saying you will agree if they will provide the purchase order by Friday and that there are no more demands. It’s a matter of give and take to gain a mutual agreement where both parties view the agreement as a Win-Win.
Setting expectations, know what you can and cannot concede, and when you do concede show some pain and tie it to a counter demand. These recommendations will help shorten your sales cycle and increase you chance of success for both you and the customer. Good selling!