- Negotiations are discussions that can be win-win situations for both you and your customer.
- There are six stages of the negotiation process from preparation to deciding on a course of action.
- There are three skills necessary to be a successful negotiator: Attitude, Knowledge, Interpersonal Skills
- Negotiations are important and beneficial for your business and improve revenue and results.
- There are seven powerful tactical skills that will help you to win negotiations. Learn and then implement them to grow your business.
Sales negotiation examples in business
It is a kind of discussion generally used to:
- Settle disputes
- To arrive at an agreement between two parties
- Every party has to let go of some benefits to reach an agreement
Some people think of this as making compromises, and that is not the right approach. When you look upon it as a win-win model, then you begin to see what you can let go so that both parties make gains and profits. If both parties do this, then immediately, a negative situation becomes a positive and powerful situation.
1: What are Negotiations?
Negotiations are possible only when there are relations between two parties.
Negotiations can be of different types such as between you and:
- Customers
- Employees
- Business Partners
- Investors
- Children
One holds negotiations with everyone. Here is an example of Steve Jobs, the founder of Apple Inc. When he returned to his company after being sacked, he came on his own terms and conditions. When he resumed, he let some people go after handing them a severance package.
This is an example of negotiation. He had said that he will return, but these people will have to go. He had said that he would not do any legal case on them, but respectfully ask them to leave. Steve Jobs won because he was looking not at his own personal interests, but had vowed to take Apple to new heights and to a new position. It was a win-win situation in his own eco-system.
Many people complain of difficulties in negotiations. They say:
- They are not strong enough and cannot negotiate.
- They are not tactical enough.
After read this article, you will all become champions in sales. In business, sales negotiations are a critical part.
2: Six Stages of Sales Negotiations
You can implement these six stages in your sales negotiations:
- Preparation
- Discussion
- Clarification of Goals
- Negotiate towards a win-win outcome
- Agreement
- Implementation of a Course of Action
1. Preparation: This points to how prepared you are for a meeting.
2. Discussion: This includes:
- Questioning: Question thoroughly
- Listening: Listen with intent
- Clarifying: Don’t justify, but clarify the entire situation for all stakeholders
3. Clarification of Goals: Define:
- End Goals of the negotiation
- Customer Goal
- Your Goal
- Overall Goal: Define the overall big goal.
4. Negotiate towards a win-win outcome: Everyone should win.
5. Agreement: This is the ultimate outcome of any negotiation. As you agree on each of these steps, you will finally reach your goal.
6. Implementation of a Course of Action: This is the actual action plan. The negotiations are over, so list out the action steps each party is going to take. For example, the negotiation between a vendor and customer is simple. The customer gives the check and the vendor starts the services.
Sales Negotiations are of two types:
- Formal Negotiation
- Informal Negotiation
Many times, informal negotiations are more powerful than the formal ones. When things are formal whether in a personal capacity or in a sales negotiation, many things are left unsaid. But an informal negotiation over dinner or on a round table is more relaxed. Many things can be spoken, and stronger relationships are made that leads to better outcomes.
3: Skills Needed to be a Successful Negotiator
Sales negotiation skills are dependent on your:
- Attitude
- Knowledge
- Interpersonal Skills
If you learn more about these three factors, negotiations will always go in your favour.
Read Also : Lead qualification example in sales:Types of Leads, Method and Strategies
4: Stage 2: Importance of Negotiations
You will understand the importance of understanding the skills of negotiations here. That’s because it is:
- Beneficial for Business
- Win-Win: Your thinking becomes win-win by default. If you learn negotiation skills, you will create a positive mindset
- Improves final result: Results improve for the entire eco-system
- Builds Respect: If you are a good negotiator and have a win-win mindset, even the customer will be full of respect for you.
5: Tactics in a Negotiation
Base your negotiations on these following 7 powerful tactical skills:
- False Authority
- Emotional Outbursts
- Non-Negotiable Demands
- Deadline Pressure
- Good Guy Or Bad Guy
- Blanketing
- Nibble/Final Hook
1. False Authority: Here, the other side is always trying to mislead you. For example, a customer may tell you that he has lots of money and is ready to buy your products. Then he never turns up again.
Your Sales Team goes after him because your team thinks he has lots of money, and this could even lead to a drop in sales, because you drop everything else and chase only him thinking that you can meet your entire year’s target through just one sale. In reality, the customer had created a sense of false authority; try and understand this scenario.
2. Emotional Outbursts: In this, your customer or the other party gets upset and has an emotional outburst. The customer does this because he wants you to lose your cool.
- Strategies
- Tactics
never lose your cool and keep your reactive mind under control. To make you lose your cool is a strategy employed by the other party.
3. Non-Negotiable Demands: You should have a clear idea of what is non-negotiable before you begin your negotiations.
For example: If a customer asks you for an impossible discount like 50% and you know it is not possible, then clearly tell him that you can’t negotiate at this price.
4. Deadline Pressure: Your customer might want a product or your answer by a certain date and tell you that he can’t wait after this and the deal will be cancelled. Tell him that you are looking for a long-term relationship with him, not just a one-time sale. Ask him not to put this deadline pressure because you want to give a custom-built solution only for him.
The customer will understand this and will not insist on an impossible deadline.
5. Good Guy Or Bad Guy: Yes, this is similar to Good Cop, Bad Cop. Often, to win a sales deal, you will have to involve a partner. Your partner is the good guy, and you are the bad guy. In Bada Business, two people together go for negotiations and play the good guy and bad guy roles.
One is the good guy, siding with the customer, while the other is the bad guy repeatedly saying that this deal is not good for the company. This creates a certain pressure. With this tactic, chances are high that the customer will understand that while one of them is siding with me, the other guy is not and that is because they want to do good for me. This then becomes a win-win strategy.
6. Blanketing: Learn this strategy from children. Sometimes, kids demand a chocolate saying that give it to me today, but in the future, he will never ask for it. This is a blanketing statement. In business, to bargain, you often say that we want to build a long-term relationship with you and in future too, when we launch new products, we will always give you a special price.
This is a blanketing statement often made when you think the customer is ready to sign up or when the chances are very high.
7.Nibble/Final Hook: Nibble comes at the stage when to close the deal, you need to give a final hook.
In sales negotiations, one often makes:
- Big Mistakes: Conceding too much, too soon when you reveal too much, too soon in front of your customer.
- Poor Planning: You enter a meeting with poor planning, without finding out much about your client.
In this Article, you have read the following about negotiations:
- What
- Why
- Tactics
- Mistakes
You will now see how to implement whatever you have learned so far about negotiations with the help of an example:
For example:
- You can even offer to lock the price for the next three years if you receive some part payment.
With this, you will win the negotiation and will be able to increase revenue for the company.
In this example, of the seven strategies described to you, you can implement at least four of the strategies:
- Non-negotiable Demands: You can tell your customer that while buying cloth, it is okay to bargain, but that is not a good thing to do this for the growth of your company.
- Deadline Pressure: Tell the college that once these Covid times are over, prices will increase. Chances are the customer will agree to buy.
- Good Guy Or Bad Guy: You can implement this perfectly.
- Nibble/Final Hook: Ask them that if not now, then when will you decide on it?
6: Last Stage: How to Win a Sales Negotiation
There are three important points here:
- Four Important Questions
- BATNA
- Listening
The Four Important Questions:
- What do we want as the desired outcome?
- What alternatives do you have if you do not reach an agreement? Can you do anything more for the customer, or will you choose to walk away? It is okay if you do.
- What are acceptable settlement points for issues raised by the customer such as on product effectiveness, pricing, costing, etc. On each point, what can be your lowest quote? Decide on this.
- What is our Walkaway point? You can even tell the customer that you can’t discuss any more, then you can walk away.
BATNA: Best Alternative to a Negotiated Agreement
This refers to your Plan B, which may not be necessary for entrepreneurship, but is essential for negotiations. Plan your own, and try to know your customer’s Plan B as well. It will help you to address all his queries competently.
- Listening: This is of three types:
- Selective: This can be both negative or positive.
- Responsive: You are giving signals that you are deeply interested in this relationship, but haven’t yet jumped into it.
- Playback: You will follow-up with a confirming question to play with the customer. You can ask him the following: Is this what you said? Is this what you meant? Did I understand you correctly? With these questions, you are trying to draw the customer, as well as trying to assert your own point of view.
From these Sales Negotiation Tactics, try to understand at least one or a combination of a few tactics carefully. Use these tactics in your sales negotiations.
- Try to implement these in your daily sales negotiations.
- Train your team. This is very important.
- Understand your customers from the BATNA perspective.
- Map your customers through these tactics.
Note Down:
- Learn negotiation skills while talking to your customers
- Strategise and use certain tactics to finalise deals
- Learn the importance of negotiations and the skills needed to be in a win-win situation