Strategic Negotiations - Better Relationships - Better Deals

Are you getting the results you want from your sales organization? If not, it could be possible that your sales force's negotiation skills need sharpening.

Negotiation is part of each step of the sales process, not a one-time event. It begins prior to the first sales call and ends with customer recognition of the value your product or service brought to his business. Successful negotiating, then, requires the right mindset, the right tactics and a keen understanding of the pitfalls along the road to closing the deal.

Representing the Sales Performance Journal, business journalist Jennifer LeClaire talked with Dan Ball, a Miller Heiman Sales Consultant based in Atlanta, Ga., who works with several Fortune 500 clients in the region. Ball shed some light on his successful approach to negotiating by communicating value every step along the way.

Sales Performance Journal: What is the proper mindset going into successful negotiations?

Dan Ball: You need to go in with the mindset of trying to maximize not only the value that you get out of the relationship, but also what the customer gets. You also need to go in knowing what your desired outcome is.

SPJ: How does the salesperson break the ice, so to speak? What is the best strategy for breaking down those walls of resistance or overcoming salesperson stereotypes at the onset?

DB: Have the best interests of the customer in mind--as well as your best interests. Make sure your product or service is a good fit and meets each buyer's interest. Be sincere and remember, people buy because they believe what you've told them. As soon as you ship the product or perform the service, they consciously or subconsciously check back to see if they got what they paid for. Make sure they see the value in what you've sold.

One of the key things to remember is that negotiation is not an event in itself. It is a process made up of a series of meetings. Communicating the value of your products and services throughout the sales cycle can have a huge impact on negotiations. Negotiation actually begins prior to your first sales call, and doesn't end until the customer has realized the value of the solution that he bought from you and its positive impact on his business.

SPJ: How do you create the perception that you are working with the buyer as opposed to against the buyer?

DB: Throughout the sales cycle you are trying to uncover the interests of the customers and what they are trying to fix or accomplish, or, in some cases, avoid. You are trying to understand the buyer's personal and business drivers. The CEO is looking for something different than the production line manager. What are they tasked with? What are their goals? How are they measured? Cost will always be an issue but it certainly shouldn't be the deciding factor.

SPJ: What are a couple of common negotiation pitfalls and how do you avoid them?

DB: Not understanding the business impact your products and services can make on the customer's business. It's a mistake to continue pushing product. You need to sell the business solution.

Delta recently went through negotiations with its pilots. The airline was trying to reduce pilots' salary because it needed to cut costs to stay in business. On the other side, the pilots were looking at how pay cuts would impact not only their salary, but also their retirement package and other benefits. Both Delta and the pilots gave a little and got a little to preserve the pilots' benefits and the airline's future.

SPJ: When is positional bargaining, like haggling, appropriate and when is it a big mistake?

DB: Bargaining and haggling are pitfalls. The other party may come into an interaction with a strong demand or position. You can't negotiate a position, but if you understand the drivers behind the position you can develop solutions during the negotiation for the underlying problems that are causing people to take that position. Discovering interests behind their position leads to finding common ground on which to agree.

SPJ: What types of issues cause people to take certain positions?

DB: It comes down to what they think the solution should look like and not being willing to look at alternatives. When people are going to buy a car, for instance, they go on the Internet and do research. They find out what is the manufacturer's cost and add a margin. That's what they are willing to pay. They have made an assumption as to how much profit they will allow the dealer to make on that sale. They take a position. But if they only buy the car on price, they may be surprised when the service department is poor. So the salesperson needs to understand and communicate the value he brings and justify his price based on his impact on the business.

SPJ: How does the salesperson protect against manipulation and control?

DB: First of all, recognize it for what it is and then deal with it as the tactic, as opposed to reacting to it. If a buyer is sitting behind a nice desk and he seats you in a chair across from him that's eight inches lower than his, just tell him you are not comfortable there and move to another location so you can be eye level with him.

Then there's the tactic where the buyer has a fading memory. They make an agreement and forget what they agreed to. You have to document everything and furnish these notes to all participants after every meeting. That way you have a written trail of what agreements were reached during every negotiation session.

SPJ: What do you do when you reach a stalemate? How do you unlock the negotiations when there are no agreeable options?

DB: That's what you call your walk-away position. When you discover it is not going to be a good deal for you and the customer is not willing to consider alternatives, then just walk away from that bad business. Salespeople have a tendency to not want to lose any deal, no matter what the cost. That can cause you to write unprofitable business.

SPJ: How do you close the sale without coercion?

DB: Get in agreement on all points and simply ask for the business. We try to put together a package of options that meet the needs of both parties and get agreement on each one of those options. Get agreement on the easy things first--but make sure each individual agreement is contingent on coming to a final agreement on all the issues. Start by developing solutions to mutual interests first, and then go to the harder points. Then you can bring it home.

Miller Heiman has been a thought leader and innovator in the sales arena for almost thirty years, helping clients worldwide win high-value complex deals, protect and grow key accounts, manage talent and optimize sales strategies and operations.

With a prestigious client list that includes Fortune 500 clients, Miller Heiman helps companies in virtually every major industry to build high performance sales teams that deliver consistent sustainable results to drive revenue through consulting and sales training.