Negotiating a Win-Win Outcome

For most sales people, negotiating a win-win is a challenging part of the sales process.

Negotiations often take place at the buyer’s workplace over the course of several meetings, eating into valuable time that could otherwise be spent closing more sales.

Worse, most buyers keep their options open by negotiating with multiple sellers, while many schedule negotiations to coincide with the selling company’s end of quarter or end of year – when they know that sellers will be under increased pressure to meet their targets.

Buyers also tend to be recruited for their ability to withhold their emotions and keep their cool when under pressure.

Unless the buying organisation has a desperate need for the selling organisation’s solution, the buyer is therefore likely to hold a significant advantage over the seller when it comes to negotiating the final agreement.

But negotiation need not be such a challenging task. After all, so long as the selling company offers explicit value to the buyer, the negotiation process should involve two parties working together to reach a mutually beneficial outcome (i.e. a “win win”). Since both the buyer and the seller should stand to benefit from the deal, why should the ball be in the buyer’s court?

To even the odds and achieve a win win outcome, preparation and a willingness to give something away to get something in return is crucial. A failure to do so is likely to result in one of two scenarios: a) the negotiation (and potentially the entire relationship) will break down as the buyer will feel that you have wasted their time; or b) you will be compelled to provide a discount that seriously squeezes your margins and jeopardises your ability to hit your targets.

Be Prepared

Buyers usually have a good idea of how much they are willing to pay for your solution before entering the meeting room. But most are going to make every effort to negotiate a deal that is priced below this figure.

This means that you need to come to the negotiating table prepared, with a detailed understanding of:

  • The tangible value your offer represents to the buyer and the extent to which it is unique.
  • How urgent realising that value is to the buyer and when the deadline is for that realisation.
  • What your company and the buyer must achieve from the contract over and above the price (such as terms and service levels).
  • How you will respond to the buyer’s opening position, posturing and potential strategies.

If the buyer suddenly wants a discount on a price or wants to change a condition that you thought had already been agreed earlier in the sales process, you should be prepared to question why the buyer has changed his or her position. If it’s a new demand or objection you must seek to understand the underlying motives before responding.

By probing for clarification in an assertive and calm manner, you will not only buy yourself time to consider how to respond, but you will also gain the buyer’s respect and gain more control of the proceedings. Pretending to be surprised when a demand is raised or grimacing can also show the buyer that conceding is going to be improbable.

You can counter price objections and put pressure on the buyer by asking if they would like to reduce the volume of the deal or remove service features in return for a lower price. You can also remind the buyer of the value of the deal from their own perspective, in terms of savings or meeting their objectives. Remind the buyer of any concessions you have already made and be prepared to call a timeout to consider your company’s position, even if you have to make a few calls to get second opinions.

Whatever you do, make sure you don’t respond to a request for a discount with a response such as “How much are we talking?” or “What price sounds good to you?” This will put the buyer in the driving seat, providing a clear signal that you are not in control of the negotiating process and that you are susceptible to discounting the price.

Getting and Giving Concessions

No matter how good your negotiation skills are and no matter how well you prepare, some buyers will still insist on trying to squeeze you on the terms of the contract.

In such cases you may need to consider giving the buyer a concession to move the deal forward. But this should only be considered within a predetermined limit and on the condition that you get a valuable concession in return from the buyer.

A valuable concession from the buyer may include signing the contract then and there. You might also request that you get a commitment to access additional opportunities across the buyer’s organisation or wider network in return for a price discount (but be careful to make sure this is a formal commitment – jam tomorrow should not be considered to be a sweetener for today). Alternatively, you might request that you receive a longer term commitment from the buyer in return for preferential services.

Requesting something in return for giving the buyer a concession should place you in a strong position to achieve a “win win” outcome where each party walks away with mutual benefits.

Although trading concessions can be a powerful accessory in your negotiation tool box, it should only be proposed as a last resort and only if you still expect to walk away with a valuable outcome. If this fails, the negotiation will most likely reach a deadlock, in which case you should be prepared to walk away from the meeting without signing the deal.

Politely and professionally calling the meeting to an end and agreeing to reconvene at another time sends out a message that you are not desperate. It also gives you and the buyer an opportunity to reflect on the negotiation, confer with peers, and put any unsettled issues into perspective.

Remember, it is important to stand strong and not give away too much otherwise the deal will not be seen as valuable and the buyer will see you as an easy target for a one-sided deal in the future. This will make it significantly more difficult for you to secure ‘good’ contracts (for both parties) from the client in the future.

Written by: Steve Eungblut, Managing Director of Sterling Chase