Sales negotiation is a crucial skill for any sales professional. It involves reaching a mutually beneficial agreement with your prospects and customers, while also protecting your own interests and value.
However, sales negotiation can also be challenging and stressful, especially when you face tough competition, high expectations, and complex deals.
Sales Negotiation Tips and Techniques
How can you master the art of sales negotiation and close more deals? Here are some tips from the experts that can help you improve your sales negotiation skills and techniques.
1. Come prepared
You never want to go into a negotiation blind — these aren’t the kinds of discussions you can wing. You need to do your homework and research your prospects, their needs, their pain points, their budget, their decision-making process, their alternatives, and their goals.
You also need to know your own product or service, its value proposition, its strengths and weaknesses, its pricing and discounts, and its competitive edge.
By coming prepared, you can anticipate the possible objections, questions, and demands that your prospects may have, and prepare your responses accordingly. You can also identify the areas where you have leverage and where you may need to compromise.
Preparation will help you build confidence, credibility, and rapport with your prospects, and show them that you understand their situation and can offer them a solution.
One of the best ways to come prepared for a sales negotiation is to have a steady flow of qualified leads.
Whether you do it through automating your lead generation or using other methods, you want to find prospects who are ready to buy from you and match your ideal customer profile. This way, you can avoid wasting time and resources on unqualified leads who may not be interested in your offer or able to afford it.
You can also use data and analytics to segment your leads based on their behavior, preferences, and needs, and tailor your offer accordingly.
2. Clearly define concessions
Concessions are inevitable in any negotiation. You may have to lower your price, offer a discount, extend a warranty, or add some extra features or services to seal the deal.
However, you don’t want to give away too much or too soon, as that may erode your profit margin, your value perception, and your bargaining power.
That’s why you need to clearly define your concessions before entering a negotiation. You need to know what is your best-case scenario, what is your worst-case scenario, and what is your walk-away point. You also need to know what are the trade-offs that you are willing to make, and what are the conditions that you will attach to them.
For example, if you agree to lower your price by 10%, you may ask for a longer contract term, a larger order volume, or a faster payment in return. You may also make it clear that this is a one-time offer or a limited-time offer that expires soon.
By defining your concessions clearly, you can avoid making impulsive or desperate decisions that may harm your interests or reputation.
3. Speak second
When it comes to making the first offer in a negotiation, there are different opinions on whether it is better to speak first or second. Some experts argue that speaking first can give you an advantage by anchoring the discussion around your desired outcome. Others suggest that speaking second can help you gather more information and adjust your offer accordingly.
However, speaking second may have another benefit: it can help you reframe the discussion and counter the other party’s offer with a strong rationale. According to a study by researchers Alice J. Lee of Columbia Business School and Daniel R. Ames of Columbia University, sellers were significantly more swayed by buyers’ constraint rationales than by their disparagement rationales.
A constraint rationale focuses on what’s holding you back from accepting the other party’s offer, such as not being able to afford what they’re asking. A disparagement rationale critiques what the other party is offering — for example, by suggesting the quality is low.
The researchers found that sellers were more likely to lower their price when buyers explained their financial constraints than when they tried to diminish the value of what was being sold.
The reason is that sellers may view the criticism in a disparagement rationale as inaccurate and rude, and react by standing firm on price. On the other hand, when buyers describe their financial constraints, sellers may take them at their word when they say they can’t afford the deal on the table.
Thus, when responding to a seller’s offer, a buyer is likely to get a better deal if he accompanies his counteroffer with information about his financial constraints than if he tries to disparage what’s being sold.
Similarly, though this hasn’t been tested, a seller facing a buyer’s first offer may get a better deal if she says she can’t afford to go lower than if she disparages the buyer’s alternative options.
4. Highlight losses rather than gains
People are more motivated to avoid losses than they are to achieve gains, according to research by psychologists Amos Tversky and Daniel Kahneman. This phenomenon, known as loss aversion, can have a significant impact on how people make decisions and evaluate options.
You can use this insight to your advantage in sales negotiation by framing your offer in terms of what your prospects may lose if they don’t accept it, rather than what they may gain if they do.
For example, instead of saying “You will save 20% on your energy bill if you switch to our solar panels”, you can say “You are losing 20% on your energy bill every month by not switching to our solar panels”.
By highlighting the losses rather than the gains, you can create a sense of urgency and fear of missing out in your prospects, and persuade them to act quickly and favorably on your offer.
5. Write terms at the right time
One of the most important steps in sales negotiation is to write down the terms and conditions of the agreement and get them signed by both parties. This can help you avoid misunderstandings, disputes, and reneging later on. However, when is the right time to write down the terms?
According to a study by researchers David D. Loschelder of Leuphana University of Lüneburg, Malte Friese of Saarland University, and Adam D. Galinsky of Columbia Business School, writing down the terms at different stages of the negotiation can have different effects on the outcome.
The researchers found that writing down the terms before making a final offer can increase the persuasiveness of the offer, as it signals confidence, commitment, and credibility. However, writing down the terms after making a final offer can decrease the persuasiveness of the offer, as it signals rigidity, inflexibility, and arrogance.
Therefore, depending on your situation and goals, you may want to choose the right timing for writing down the terms. If you want to make a strong impression and convince your prospects that your offer is fair and reasonable, you may want to write down the terms before making your final offer.
If you want to leave some room for further negotiation and show some willingness to compromise, you may want to write down the terms after making your final offer.
Conclusion
Sales negotiation is a vital skill for any sales professional who wants to close more deals and build lasting relationships with customers. By following these tips from the experts, you can improve your sales negotiation skills and techniques, and achieve win-win outcomes for both parties.