The Top 10 Mistakes Salespeople Make in Negotiations
10 Minute Read
Dear friends and fellow sales professionals, it’s time to talk negotiation. Everyone seems to love negotiation as a topic – it’s mysterious, it’s fascinating, it’s something that, as humans, we have to face time and time again in our personal and professional lives. It’s always a highly requested training session (almost as much as objection handling. Almost.) Amazingly, though, there are some commonly held beliefs about negotiation by salespeople that can be problematic in practice. There are also some simple techniques that we can apply to be much better at it.
There really isn’t a magical element to negotiation, as much as intense TV dramas would tell us otherwise (looking at you, Harvey Spector). Like selling, it comes down to having great processes, a positive mindset, a desire to understand the other party, preparation, and people skills.
It’s not entirely like selling, though. Perhaps my biggest concern is that so many people confuse negotiation with selling. They’re really very different. When I’m selling, I’m working with you to empower you to make a positive change – usually by taking on a specific product or service. I want to help you make a change, influence you to act, help you find the benefits of my product to your life.
When I’m negotiating with you, that’s not the goal. We negotiate when you have already decided you want to make that change. We negotiate to find mutually satisfying terms around the enactment of this change. You are not sold because we negotiate, we negotiate because you are sold. This is the primary key that needs to be understood about negotiation. Once we understand this, we can identify the specific skills and strategies to be utilised in a negotiation setting. So on that note, take off your selling hat, put on your negotiation hat, and let’s have a look at 10 common mistakes salespeople make in negotiation – and how to fix them:
1. Negotiating before the client is sold.
You should never start negotiating before selling. If you’ve been in one of my negotiation training sessions before, you’ve heard me utter this phrase tens of times. So often, salespeople will begin a negotiation conversation before the time is right.
If your customer is not sold on the product, there is a giant power disparity between parties in the negotiation. This is because if I don’t really care if I get the product or not, I’m more likely to walk away. I’m more likely to see less value in the product, so I’ll want a cheaper price for it. It’s no skin off my nose to demand things that aren’t reasonable, because I don’t have a vested interest in the outcome.
That’s not the customer’s fault, though. That’s on the salesperson – if they choose to engage in a negotiation before they’ve actually sold the product, they’ve chosen a very hard road for the two parties involved. If you’re a salesperson and you start throwing out the concepts of discounting, offering value adds, changing delivery times or anything else, and you haven’t even clarified that the customer wants the product, what are they supposed to do? You’re running the risk of being seen as desperate, incompetent, or selling a product that simply isn’t very good.
So don’t do it. Make sure your customer is sold before you start any sort of negotiation. How do we do that?
2. Negotiating without getting commitment to negotiate.
We need initial commitment to have a successful negotiation. Trial closes are beautiful here. The magical link between selling and negotiation often lies with a single question, along the lines of ‘so if we can come to an agreement, are you happy to move forward today?’
There is no point negotiating if you do not get commitment first. Taking this step ensures that any further effort put in is taken seriously by everyone involved, and we know what our outcome is going to be. Both parties are more motivated to actually work together, because they have the same outcome in mind.
If the answer to your commitment question is no, you do not negotiate. Simple as that. You might go into objection handling, or go back to another part of your selling process – but why in the world would you offer a discount to someone when that isn’t going to have an impact on any outcome?
3. Negotiating for no reason.
Sometimes, people are happy with everything. Sometimes, there is no negotiation required because the terms of the sale are agreeable.
It’s a dangerous habit to assume that every client wants to negotiate. Sometimes it’s a part of their buying process – and that’s okay. Sometimes it’s not, or your offering shows clearly the value for the price and all the logistics work straight away.
Don’t cut yourself short. Negotiation is a last resort, not a first one.
4. Focusing only on the price.
When we think about negotiation, we often think about price. The first image that comes to my mind is my last trip to India, having some fun bargaining with different vendors for bright, printed scarves.
The reality is, though, that price is rarely the only element involved in a sales negotiation. Particularly for more complex or larger sales, there are various points that can be negotiated on. This might include delivery time, features included, warranties, implementation time, extras, ongoing service, training, colour, size, amount, and any number of other things.
You need to have a thorough understanding of your map before you start using it for directions. Understand what you have to play with, and you’ll be able to negotiate thoughtfully and efficiently. Further to that, negotiate on issues that are actually important to the client, rather than those that you think will be important to the client.
5. Giving things away without receiving anything in return.
“Ok, great news. I’ve spoken to my manager and we’re happy to give you a 10% discount. What do you think?”
What’s the problem here?
This statement offers something without any required reciprocity from the other party. In other words, you’re giving a discount away without receiving anything in return.
Hypothetical language is key with this one. “If I can do this, then will you do that”... “What if we could...”
Negotiation is a dialogue. If you’re giving something away, you should get something back. Always. Otherwise you’re not negotiating – you’re simply giving. You’re not Santa Claus.
6. Discounting instead of value-adding.
A super simple example: Say I’m selling someone a notebook, and in the course of the negotiation I can see it would be a good move to make a monetary concession.
Instead of offering that person a $2 discount, I might offer them a pen that retails at $2.
Why is this? First of all, the person can physically see this additional value – this can appeal to certain demographics of client. More importantly, though, maybe my cost of the pen is $1.50. So I’m conceding $1.50 rather than $2, and the client is still getting $2 worth of value.
Simple, right? Often, if you have the opportunity, value-adding is better for you (and still of the same value to the other party) than a simple price discount.
7. Framing the negotiation as ‘me vs. them’.
When I train on negotiation, often there is lots of talk about ‘winning’. ‘I have to win’. ‘I’ve got them now!’
No.
Negotiation is not you against the client. It’s you and the client against the issues. Use language that indicates your dedication to solving the problem collaboratively. Talk about ‘we’, and ‘us’. ‘What if we could…’ ‘Based on our situation, it appears we would both benefit from…’
This inclusive language demonstrates that you are not opponents: It sends the message that you are a team, and the client should feel comfortable with you as a partner working with them.
8. Saying ‘typical negotiation’ phrases because we think they sound good.
Allow me to further extrapolate. How many times have you seen someone say ‘that’s my best price’, only to give a better one later? What about ‘that’s the best we can do’, ‘I’m not allowed to give you any more’, and so on… only to do better, or give more.
Backing yourself is important. Confidence will always be important. But sometimes I think we pick up on these phrases because we think that’s what you’re supposed to say in a negotiation. If you use a phrase like the one above, only to contradict it later on, you lose all credibility. It’s so important to watch your language, speak authentically and be transparent. Say what you mean and mean what you say. This means being very careful about your language, speaking thoughtfully and with purpose.
9. Losing sight of the value in your offering.
Anchoring is a psychological tool that is the reason behind the ‘Was $10, now $7.99!’ sign you see in grocery stores. Put simply, anchoring is about starting with a certain number or premise, that becomes the frame of reference for all future numbers or premises. For a negotiation, we are in effect setting the ‘ballpark’ for a price, time or idea.
In a sales environment, this comes down to showing the value of your product or service. It’s easy to get caught up in the little details and forget to bring back the total value. Two key points here: First, anchor the negotiation by first clarifying the total value of your offering. That is, break down each component’s worth and total them together so the client can seehow much they’re getting as a package. From there, any bargaining is going to be with reference to that total package.
Second, make sure you zoom out on the total package when required. For example, if someone is stuck on a discount for a certain area, don’t be afraid to talk it through: ‘don’t forget, we already have Feature XYZ valued at $499, and Feature ABC valued at $800 – so you’re already saving $X’.
Sometimes perspective and anchoring get sacrificed for small details in a negotiation, and this can lead to major margin losses in the long run.
10. Inviting a difficult negotiation.
I’ve saved the biggest mistake for the end.
We set the scene for a lot of things in our life. Many think about ‘karma’ as a fluffy, mystical concept. I think, though, that anyone who has been in sales and negotiation long enough can attest that you really do receive what you put out there. Our beliefs are reflected through our language, which can be very difficult if we hold beliefs that limit our processes and outcomes.
For example, if you anticipate that someone will want a really large discount, you’re more likely to frame your offer in a way that suggests this belief. We often don’t even realise the impact of our language. I’ve seen negotiations where the person has said something like ‘I can’t really discount much more than that’, with the hope that the negotiation will end there. With that statement, though, the insinuation is that the person can discount more. You’re inviting the other party to question your limits, because it hasn’t been presented with confidence and certainty.
Ultimately, delivery is one of the most important parts of negotiation. From your language to your tone, if you don’t present with confidence and certainty, you’re going to receive a lack of certainty and confidence about your offer in return. That’s karma.
So manage your emotional state and your thoughts prior to going into a negotiation. You should never prejudge negatively – that is, prejudge that someone will want a big discount, or want to take a really small contract, or want the warranty for free. It’s good to be prepared, but if you convince yourself the negotiation is going to be really tough then it will be. If you must prejudge, do so in a positive way – think about all the reasons why the person would see the value in the price and offering you’ve presented.
If you’re not sure how confident your language is, and you’re wondering if you, too, are inviting a difficult negotiation, I suggest recording your end of a phone call the next time you have a negotiation. Sometimes listening back to ourselves reveals a lot more than only thinking about it.
Anyone can be a great negotiator if they consciously work to develop their skills and mindset. What are your ‘must do’s for a successful negotiation?
Make Today the Day,
Sonia
This blog post was originally posted on my training website, Statusone.com.au, on Aug 9, 2018. I have since been moving some of my favourite blog posts from there over to here, as this is now my ‘content hub’ and I want you to have access to some of the cool stuff I’ve written about before. You can still check out the Status One site if you’re interested in corporate training if you want. Also, don’t forget to sign up for the newsletter below for updates and weekly exclusive content.