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HOME » NEWSLETTER & ARTICLES » Negotiating During a Business Downturn
Negotiating During a Business Downturn
By Bill McCormick
President
Sales Training And Results, Inc. (STAR)
Negotiation skills have always been crucial for sales professionals, but have become increasingly more essential in today’s economy and turbulent business environment. The prevailing bottom-line climate forces a constant pressure to reduce costs. Salespeople are pushed more and more by customers who squeeze suppliers for deeper concessions. Sales professionals and sales managers claim, now more than ever, that this prevailing competitive culture makes negotiation skills savvy a top priority.
Negotiating with key accounts and prospects often culminates in a signed contract, and tends to be a longer and more formal negotiation process. Since contract negotiations are inherently more complex, particularly in the current business climate, it is common for average sales professionals to make several mistakes during a contract negotiation. Listed below are four critical success factors for negotiation and some corresponding mistakes made by average sales professionals. Those who avoid these common mistakes will win and retain more business.
Four Critical Success Factors for Sales Negotiators
1. Contract negotiations are more complex and preparation is imperative. Many sales negotiations are fairly straightforward and only have one or two critical issues, but contract negotiation almost always involves multiple issues. As such, you must analyze the customer’s multiple issues and consider questions such as:
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Which of their issues are most crucial (their “must haves”)?
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Why is this issue important to them?
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What are some alternative ways that we could address that issue?
The answers to these and similar questions will help you to brainstorm some alternatives and improve your ability to give and get concessions. The most common mistake that sales managers cite about their salespeople is that “…they concede too much, too soon”.
2. Always assess the alternatives for both sides. The acronym BATNA (“Best Alternative To a Negotiated Agreement”) was first popularized in the book Getting To Yes by Fisher and Ury, and is especially relevant during difficult negotiations. Before you start each negotiation, you need to answer these two questions:
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First, if we don’t reach an agreement with this customer, what other alternatives do we have?
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Second, if the other side doesn’t reach a deal with us, what other alternatives do they have?
The answers to these two questions determine who has the power in a negotiation, and affect your overall strategy and approach. Average sellers make the mistake of underestimating their power. In today’s business climate, a customer may increasingly threaten to go to a competitor. You can’t ignore these threats, but you also shouldn’t be intimidated. The BATNA assessment is an effective way to gauge how seriously to take these threats, and to decide in advance what other alternatives you have.
3. Be prepared for customers to use more adversarial negotiation tactics in today’s business climate. There are many adversarial tactics such as “change the negotiator”, “last & final offer”, and “good guy/bad guy”. For example, the good guy/bad guy tactic can occur in a team negotiation when one person acts tough and unreasonable and their partner acts more conciliatory. Remember, if the other side is using this on you, neither side is really the good guy. You can react by walking out, protesting, ignoring the bad guy, or using your own bad guy. Humor can sometimes work ("Hey, I know what you're doing...I saw it on TV.").
Average salespeople don’t react well to adversarial tactics, and make mistakes such as conceding too much or becoming flustered. By contrast, the best sales professionals can identify and respond effectively to adversarial tactics.
4. Team negotiations are more likely to be relevant when negotiating with key accounts. Team negotiation presents some additional opportunities and challenges. A well prepared and functioning negotiation team will always do a better job of negotiation than a single individual. However, it requires greater skill and effort to form and negotiate effectively as a team. Important questions include:
· Who should be on your team?
· Who will lead the team, during both the planning and execution stages?
· Overall, how can you take advantage of each person’s strengths?
A group of people thrown together is not a team. Average sellers fail to utilize and build successful negotiating teams, whereas the best sales people have learned that negotiating is definitely a team sport.
Achieving a successful win/win outcome in today’s economy requires the use of effective negotiation planning strategies. Thorough preparation is the key to walking away with a better agreement, particularly during an economic downturn. Dealing with the additional obstacles of adversarial tactics and team negotiation is difficult, but when handled well can help retain and win customers.
STAR has many resources to help salespeople become better at improving their negotiation skills and responding to adversarial tactics, notably our Sales Negotiation Skills Workshop, 1-on-1 negotiation Coaching service, and a pre-recorded free webinar entitled 25 Most Difficult Negotiation Tactics.
About the Author and STAR
Bill McCormick is the founder and president of Sales Training And Results, Inc. (STAR). He has owned and operated his own sales training company since 1990. Prior to founding STAR, he worked for more than 10 years in sales, sales management, and marketing for a Fortune 25 corporation, after which he joined an international consulting firm as Vice President of Marketing for five years. He specializes in the design, delivery, and reinforcement of sales and management training workshops, including one-on-one coaching of sales professionals and managers.
Sales Training And Results, Inc. (STAR) provides a broad range of sales training, consulting and coaching services. STAR has helped thousands of salespeople increase sales, improve customer retention, and gain measurable results.
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