7 Critical Negotiation Skills For Salespeople

February 26, 2016 Geoffrey Walters

'Everything is negotiable,' the actress Carrie Fisher once said. 'Whether or not the negotiation is easy is another thing.'

In a YouGov survey conducted in 2012 in the United Kingdom with a sample of 1,000 companies, 750 of which were classified as small- and medium-sized enterprises (SMEs), just under half of respondents said that they acted largely or always on impulse when negotiating, rather than planning out a strategy in advance.

In terms of priorities, negotiation skills training came in sixth. Respondents said they were less important than cutting costs, product development and developing new markets. Yet, as every salesperson knows, negotiation is the key to sales - and sales is the engine that drives business success. No sales, no business. Why do so many firms - and so many sales teams - just wing something that important?

In his critical assessment of the survey responses, international dealmaker Clive Rich—who, appropriately enough, launched the negotiation training app Close My Deal—said that negotiation has never been more important. He’s brokered nearly $14 million worth of deals on behalf of or in conjunction with brands like Sony, Yahoo, Apple and Napster, so it’s a safe bet Rich knows what he’s talking about.

Where are we going wrong?

Rich says that too many sales people 'pick up negotiation skills informally from their boss or their peers of from watching or reading about business celebrities like Donald Trump.' He says that people negotiate off the cuff and too often fail to analyze outcomes in terms of how they got there. 'So when it works, they don’t know why it worked, and when it doesn’t work, they don’t know why that is either.'

That sounds like a perfect description of how to make learning impossible!

Some people are born negotiators but for others, the skill can be difficult—even unpleasant—to master. Yet if you’re going to shy away from negotiations, you’re going to have no choice but to quit at ‘no’- every objection handling technique is a form of negotiation, and skillful negotiation has turned many a ‘no’ into a ‘yes’ and clinched the sale. The good news for those of you nodding along here is that all is not lost. 'Negotiation can be learned,' says Rich, 'and can be improved radically with practice.'

'Let us never negotiate out of fear,' said John F. Kennedy, 'but let us never fear to negotiate.' In that spirit, check out these seven essential skills that can help rid you of your negotiation nerves—enabling you to exceed quota time and again.

1. Focus On The Buyer

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As the YouGov survey showed, too many salespeople act on impulse when trying to close a deal, rather than thinking each case over in advance. They neglect to do any research into the customer to find out what makes their business different. Instead, they employ a cookie-cutter approach that causes potential clients to walk away when they feel they are not being listened to.

Analysis of the YouGov survey data by the Centre for Economics and Business Research showed that UK businesses lose £9 million ($15m) per hour through poor negotiating. Not per day; per hour. That’s a big revenue leak. Surely there’s something we can do about it?

'Find out the other party’s agenda and embrace it,' says Cliff Oxford of Forbes. 'It is imperative to understand the point of view of the person you will be negotiating with by asking yourself these questions: What represents a successful result for her? What will constitute a win for her in a negotiation session? You don’t get to enjoy a victory lap in negotiations until you have walked a mile in the other person’s shoes.' Sales people are all abuzz with buyer-centric approaches right now, but negotiation has to be buyer centric from the start.

For Oxford’s Forbes colleague Peter Hiddema, it’s a matter of meeting needs rather than selling a product. 'If you want to sell the product, make sure you know what need it fills. You may have the most intriguing product on the planet, but if it doesn’t meet the prospect’s need, good luck.'

The message from both of these experts is simple: find out what makes the lead tick and you’ll have a far better chance of closing a deal. If the lead feels like you don’t understand their business, that’s when you lose them.

2. Define Your Parameters In Advance

Again, before negotiations even begin you should know your target price and any concessions you’re willing to accept. Define your ‘walkaway price’ — the lowest price at which you will deal. A 25% discount sometimes doesn’t sound a lot when you’re in the middle of a conversation and the pressure is on to cut a deal, but you really want to avoid that feeling you get in the pit of your stomach when you work out the figures afterwards and realize the deal isn’t workable. And sales where you offer big discounts to get that signature are more likely to be ‘junk’ sales anyway, with low CLV, low revenue and a bad fit with client needs. Customers who buy on price and aggressively seek discounts seldom get what they want, any more than sales reps who push low prices get good clients.

Northwestern University professor Adam Galinsky calls the walkaway price 'the reservation price.' It’s a helpful image, as it gives us the idea of putting an item on sale at auction and not being willing to sell it below a certain amount. 'Now you’ll be prepared to accept any agreement that exceeds your reservation price and reject any value that falls below it,' says Galinsky.

It’s all about simplifying the deal for you by giving you clear parameters beyond which you will not go. Try to get your first offer as close to the target price as you can to give you room for maneuver later.

3. Remember: You Can Always Walk Away

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You need leads; you don’t need this lead. Do put in the work to keep the lead interested, but maintain a healthy sense of self-respect when it comes to your own bargaining position. A lead who feels they can mess you around is one who lacks respect for you and may also prove difficult to handle down the line. It’s more common to keep sales people waiting forever - the infamous ‘long yes’ - than to try to push them around on price, but it’s far from unheard-of.

As we covered in a previous blog, a lead who is constantly flirting with the idea of doing business but never committing to a deal can have a hugely negative effect on the seller. These are the inexplicable leads that sit in pipeline for double or triple the usual timespan, like the CRM equivalent of limescale. With these folks, you’re wasting time on a lead who is unlikely ever to commit. That’s a fault in the lead - they won’t get off the fence and tell you what they want - but it can drain the salesperson’s confidence, which can affect deals with other customers; and the business is receiving precisely no money while this fruitless chase is taking place.

Take the advice given to sales consultant Phil Bernstein when he was confronted with such a maybe-client: get rid of them. Just because you are salesperson providing a service doesn’t mean people should be allowed to take you for a ride.

4. Aim High - And Do Your Own Aiming

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It’s the classic haggling technique that stretches all the way from bustling Middle Eastern bazaars to boardrooms across the world: you say a number, the customer says a number, and you go with the one in the middle. Then everyone’s happy, aren’t they?

Well, yes and no. The customer is happy because they’ve got a discount, and you’re reasonably happy because you’ve closed the sale, but the technique you’ve used could have cost you more than you needed to give away. You got ‘talked down’ on price, when you really didn’t have to.

According to Art Sobczak of the Business Know-how website, you should shy away from splitting the difference in favor of offering a less generous discount. If your price is $50, says Sobczak, and they offer you $30, you should 'come back with a pained tone of voice [and say], “I might be able to do $46 or $47.”' That way, you’re more likely to end up closer to your desired margins.

I’d even take slight issue with the last part of Sobczak’s statement. Don’t offer '$46 or $47'—offer $47. Why would anyone agree to pay $47 when $46 has been offered? As Emma Snider puts it on her HubSpot sales blog, 'Always quote one specific number or figure and then go higher or lower as necessary. The word “between” should be avoided at all costs.'

5. Listen Actively

'Listen more than you speak,' said Richard Branson. 'Nobody learned anything by hearing themselves speak.'

If you as a salesperson are unable to match your prospect’s focus and address their questions, you will rightly be perceived as disrespectful and disinterested—not the best position from which to close a sale.

In face-to-face meetings, you should ideally meet the lead in a room free of distractions: no computer screens to draw your eye, no paperwork littered about that might tempt your gaze. Create an atmosphere of calm by talking slowly and use open, welcoming body language to put the customer at ease.

Ask the lead open questions that invite long, detailed responses—and let them finish. When they have finished, allow a brief moment of silence to make sure they’ve nothing more to say and then evaluate what they’ve said to you. This will let the lead know that you are truly interested in what they have to say.

If you’re doing business over the phone, this advice isn’t redundant—we can still 'hear' emotions and body language over the phone. If you don’t believe that you can hear a person smile, fidget or frown over the phone, call a friend and try it. It’s eerily accurate - and that’s what your leads hear when you call them. So stick to the same guidelines - talking slowly, listening actively and offering brief recaps of what has been said to make sure each new part of the conversation starts with an agreement. This way, an atmosphere of calm and trust can also be built over the phone. 

6. Make the First Offer

This piece of advice sounds counter-intuitive. It feels like showing your hand in poker—surely you want to find out as much about the other party as you can before laying your cards on the table?

Yet research by Wharton professor Adam Grant and Galinsky, who we met earlier, bears this theory out. The reason, they’ve found, is to do with 'anchoring,' a psychological principle whereby people automatically start to work around the first number they are presented with.

As Kristi Hedges of Forbes notes, there are other psychological advantages to making a high first offer, too: it’s all to do with our perceptions of high-priced items and low-priced items.

'Higher prices make the buyer focus on the positives, while lower ones invite focus on the downsides. In other words, we find data that supports this anchor. (Consider real estate: a high-priced home makes us look at all the desirable qualities, while a below-market offering brings up a bad location or needed repairs.)' 

In other words, the fastest way to take your lead’s thoughts off the price is to quote a high one.

Where to pitch your first offer? Galinksy says that it should be just outside the customer’s reservation price, but not so far out that it scares them off—though that’s unlikely to happen. In fact, Galinsky’s research shows that most customers aren’t likely to disengage after the first offer—and that most salespersons’ first offers aren’t aggressive enough. It's not exactly ‘think of a number and double it’ - but you can probably afford to think of a number and go with it confidently.

7. Let Your Record Do The Selling

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Let leads visualize their business’s future success by citing examples of how your company has benefited other customers. It makes your job as a salesperson easier: instead of having to rely on floral language and force of personality to clinch a sale—tactics that rarely work in any case—you can simply point to satisfied customers and say, 'Look. We can make a difference, and here are the statistics to back that up.' Case studies are hugely psychologically convincing.

Rob Ciampa, the CMO of Pixability, is an advocate of this approach. 'Let the data speak for themselves,' he says. 'The best negotiation tactic is not to negotiate. If a company is transparent about its operations, quantifies its results, and has a track record of data-driven benchmarks, then the numbers will speak for themselves. You will achieve the outcome you want for your company.'

Throw in some references from satisfied customers or encourage the prospect to contact your other clients themselves to get testimonials from the horse’s mouth. All of this engenders a feeling of transparency, meaning the customer will trust you more—and is far more likely to commit to a deal.

As Carrie Fisher said, everything is negotiable—and if Princess Leia says it, it must be true. Try using some of these tips to hone your technique before speaking to a customer and you’ll soon find the negotiating force is with you.

*Featured Image Source

About the Author

Geoffrey Walters

A serial entrepreneur and digital nomad, Geoffrey has been running his own marketing consultancy for the past year.

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