The Ten Commandments of Negotiations
By Daniel Adams
Imagine for a moment that you are
preparing for a heated final negotiation to secure a very important
deal for your company. What
will you do if your customer asks you to: “lower your price by X
dollars in return for the deal?”
Should you bring in your manager to assist?
What will prevent your customer taking your negotiated offer
and sitting on it forever? Or
worse, what if your customer allows the expiration date of the offer
to expire but still requires the negotiated deal?
The following 10 commandments of negotiations will help you
close the sale and still give your customer all that they are looking
Who You Are Dealing With:
Do your homework; know your customer; know your competition.
Make sure you investigate the personalities of all the players.
Learn who your customers and competitors are as professionals.
What is their negotiation history? What has been your
competitor’s sales strategy? What
solutions have they offered?
Only with Decision Makers:
Sometimes an apparent decision maker is merely a ‘gate keeper’ in
disguise. Ask probing
questions to discover who is really in charge.
One such question to ask is: ‘Who has sign-off authority for
an investment of this size? Refuse
to negotiate with people who do not have the ultimate decision-making
Do not negotiate if your customer is not ready to buy. Make sure your
deal is fully baked! If
you negotiate too early you will end up negotiating two, three, four,
or more times. If you drop
the price any time before the final negotiation, you will end up
competing against yourself –
Preparation - Review All Possible Scenarios: Know all possible moves that the
customer may make. Plan your move in advance in each instance.
Be prepared to eliminate yourself from the negotiation, if
necessary. Review the
circumstances under which it would be necessary to walk away from the
situation in order to secure long-term relationships and to protect
your company’s resources.
Lone Ranger Is Dead:
After you compile the trade matrix, review it in detail with your
manager long before the negotiations begin. A superstar never conducts
a major final negotiation alone. There are many reasons for this:
Customers do not believe that a sales rep has the
authority to produce a great deal. They think that unless a manager is
involved they will not get a bottom-line deal.
Two sets of eyes and ears can better pick up the
all-important nonverbal cues coming from the customer.
The negotiations can get heated. By allowing the
manager, at times, to take on the bad-guy role, the superstar can keep
his relationship with the customer untarnished (“I wish I could give
that to you, but my management won’t allow it”).
Your Contribution Margin – Don’t Drop Price! As
a superstar you should never drop the price; instead, offer
additional products or services that equal or exceed the requested
discount. The impact of a price drop on your net income would be
substantial, whereas providing a product or service decreases your net
income only by the wholesale or internal cost (not the retail price)
of that extra product or service. When choosing which products or
services to offer in a negotiation, choose those with high
contribution margins such as software, maintenance, and warranty.
Slowly and Reluctantly:
During final negotiations, whenever you offer a price concession, do
not make major reductions. Any major shift in price or position
signals to customers that much greater concessions could be had for
the asking. And believe me, they will ask.
Insist that the buyer put all the issues onto the table before
addressing any of them. That
way, one can assess what’s at stake and fashion an offer, which
balances the totality of the requests with what the seller is able to
concede. If the buyer presses, an effective reply is, “I may be able
to ask my manager to make some small concessions, but until I can
entertain all of your outstanding issues I will be forced to say
“No” to each of your requests. Certainly you can understand my
Humble – Be an Advocate!
Avoid flaunting your superstar status during the negotiations. If you
let slip the fact that you are a veteran negotiator who has been
through this a million times, you will feel a brick wall rising up
between you and the customer. Present
yourself as a non-expert (only with regard to the negotiation
process, not to your product or service expertise). You will be
astonished at how much the customer wants to help you. The negotiation
instantly takes on win-win feel when the customer does not feel
vulnerable. Remind him
that you are in this process together, working toward a mutually
beneficial solution. Assure
him that you will advocate for the best solution your company can
The Agreement: It would be a major mistake to make an offer to your customer and let
him “think about it” for an indefinite amount of time.
Each offer must have a mutually determined expiration date.
Further, your offer must be all-inclusive.
You must specify that any additional items not included in the
offer will be available only at an additional investment.
This way, you avoid piecemeal negotiation mentioned above, as
well as negotiation after the fact.
These commandments will help you meet all the
customers needs without loosing money or the sale.
By following these 10 best practice steps, you will be well on
your way to sales superstardom. Good
luck to you, and remember, “Close
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about Daniel J. Adams.
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