Successful Negotiation Tips: how to win negotiations and avoid common mistakes.
Every stage of your sales process presents its challenges. By the time you reach the negotiation phase, it can feel like completing a marathon; however, there is still work to be done. Securing agreeable terms that align with your interests is a delicate and often frustrating process that can quickly turn unfavorable. Ending up on the wrong side of a biased deal or missing out on a potential agreement are risks in every negotiation, and it is crucial to avoid such outcomes. Whether it is inadequate preparation or relinquishing control to the buyer, there are numerous ways to stumble just before reaching the finish line. In the spirit of highlighting what not to do, we have compiled a comprehensive action plan for avoiding negotiation pitfalls.
What is better to avoid in negotiations?
Commencing negotiations prematurely can have its drawbacks
Suppose the topic of price arises relatively early in the sales process. It is not uncommon for prospects to inquire about costs, contract lengths, and potential discounts during the initial or subsequent calls. While it is important not to avoid their questions (as this may hinder building trust), exercise caution to avoid getting entangled in a negotiation until you are adequately prepared.
Offer the buyer an estimate of the price to ensure it aligns with their budget. If they attempt to engage in back-and-forth discussions, consider using one of the following responses:
- “I would be glad to explore our options together, but I believe it would be more beneficial to have that conversation once I have a deeper understanding of your needs and have demonstrated how our product can assist you.”
- “This discussion may be premature. Let us focus on determining if you are a suitable fit before delving into detailed pricing discussions.”
- “Could we postpone this conversation for a moment? Once I have gained more insights into your pain points, we can determine the best [features, tier, package], which will ultimately have the greatest impact on pricing.”
Don’t prepare
Entering into a negotiation unprepared is a guaranteed path to securing a poor agreement. When you find yourself in the hot seat, clear thinking becomes challenging. Without a well-defined strategy, you may find yourself agreeing to unfavorable terms or even losing the deal. First and foremost, it is crucial to understand your goals. Distinguish between what you truly need and what you simply desire. Identify areas where you are willing to compromise and determine your limits, beyond which you must walk away.
Additionally, it is essential to put yourself in the shoes of the other party. Anticipate their objectives, identify areas where they may display flexibility, and pinpoint areas where they are less likely to budge. This understanding will facilitate proposing an agreement that they are likely to accept. Furthermore, you should develop strategies to overcome any objections they may have. For instance, if you anticipate that the buyer will request a monthly contract, and you prefer quarterly payment terms, it is beneficial to prepare several reasons why this arrangement is advantageous for the prospect. Having these reasons at hand during the negotiation will make the persuasion process less challenging.
Begin the task promptly and efficiently
Negotiations often evoke tension among participants, prompting some to swiftly steer towards essential details. However, establishing rapport before delving into specifics is paramount. Skilled negotiators engage in conversations with their counterparts, increasing the likelihood of compromise, and information sharing, and avoiding deadlocks or ultimatums. In essence, small talk holds significant sway in negotiation outcomes.
non-verbal cues
When it comes to effective communication, it’s not just about what you say, but how your body language and vocal cues align with your words. Failure to synchronize these elements can put you at a disadvantage. During in-person negotiations, pay close attention to your hand and foot movements. Twisting your hands, touching your face, and bouncing or shuffling your feet are all common indicators of anxiety. By avoiding fidgeting, you will appear more composed and in control.
Additionally, remember to keep your arms and legs uncrossed. While you may simply be feeling cold, folding your arms can convey defensiveness and closed-off body language.
To establish rapport and build trust, consider mirroring the other person’s behavior. This technique can be applied whether you are sitting at the same table or having a phone conversation. If you can observe their actions, subtly imitate their posture and gestures. If you only have their voice to rely on, try to mirror their tone, intonation, and speaking pace.
engaging discussions
In negotiations, there is power in saying less. Excessive talking can betray nervousness, prompting the buyer to be more aggressive. In contrast, maintaining a calm and composed demeanor allows for greater control.
Moreover, verbose negotiators may inadvertently make unnecessary concessions. By listening more than speaking, it becomes more challenging to unintentionally offer concessions or reduce prices. Another advantage is that allowing the prospect to express their thoughts provides valuable insights. Pay close attention to their focus and the speed at which they address certain items. Utilize this information when requesting compromises.
Refuse to compromise
Agreeing to the buyer’s demands may be perceived as a sign of weakness, but this is a misconception. Negotiations often require concessions from both parties involved. If an agreement could be reached without any back-and-forth, it would have already been finalized.
It is not only important to be prepared to give up or modify certain terms but also to proactively include some “wins” for the prospect. Renowned sales executive, Jeff Hoffman, explains that no one wants to feel like they have lost in a negotiation, especially a buyer. By creating opportunities where saying “yes” makes the prospect feel like they have gained something, you can foster a sense of satisfaction.
For example, if the prospect expresses concerns about data migration to your platform, you can offer free implementation support as a way to “win” this point during the negotiation. This gesture will not only please the prospect but also make them more receptive to your requests. Above all, it is crucial to view the buyer as your partner, rather than your adversary. Adopting a cooperative mindset, rather than a competitive one, makes it much easier to find mutually beneficial solutions.
Anticipate the buyer to proceed with the next actions
Once an agreement has been reached, it is important to establish a streamlined system for promptly signing and completing the payment for the contract. Time is of the essence, as the deal is currently at its peak momentum. Delaying the finalization of the details increases the likelihood of the buyer reconsidering the exact terms.
According to HubSpot Sales Director Dan Tyre, it is advisable to have a payment link or invoice readily available for the buyer to complete without delay. In certain cases, companies may require their legal teams to review the proposal. By conducting thorough discovery beforehand, you should already be aware of whether this is necessary. Approach negotiations equipped with all the necessary materials to facilitate their review process and initiate its prompt execution.
Strategies for maximizing outcomes in every negotiation
Begin with your most compelling and credible stance
When commencing a negotiation, it is advisable to initiate with what is commonly referred to as the “Maximum Plausible Position.” This entails requesting the most favorable terms that can be reasonably anticipated. If you are offering your services, aim for the highest feasible rates that can be substantiated for your business. Conversely, if you are making a purchase, strive for the lowest price that can be justified. The crucial aspect of this approach lies in the ability to substantiate your position with facts, reflecting your objectives and values. Even if this is the sole negotiation strategy you employ, it will pave the way for success. Starting at the highest feasible point allows for flexibility in compromising without compromising profitability.
Utilize the bracketing technique for enhanced effectiveness
To gain an advantage, it can be strategic to prompt the other party to disclose their position first, specifically the price they are willing to offer. This approach, known as bracketing, allows you to determine your initial counteroffer effectively.
Bracketing involves presenting an offer that maintains an equal distance from the final price you desire, as compared to the other party’s initial offer. For instance, if you intend to sell raw materials at $175 per pound and the other party offers $125, you would begin by proposing $225. Since their offer is $50 lower than your desired price, a $50 increase positions you accordingly. This approach ensures both sides have the flexibility to negotiate while still converging towards your desired price point.
It is not advisable to proactively propose a compromise
Although there is a likelihood of reaching a compromise, it is generally discouraged to be the first to suggest splitting the difference. Let’s consider an example in which you offer to split the difference against a skilled negotiator:
You: Why don’t we consider splitting the difference and agree to $150 per pound?
Them: Let me make sure I understand your proposal. You’re suggesting that your company would be willing to sell at $150 per pound instead of $175, and you expect us to do the same?
You: Yes, that’s correct.
Them: I appreciate your willingness to reduce the price to $150 per pound. However, we cannot afford to go that high. We could increase our offer to $135 per pound. Since you have already agreed to come down by $25, an additional $10 doesn’t seem significant. How does that sound to you?
You (internally): I’m in a difficult situation.
As you can see, offering to split the difference can present challenges. When negotiating with a skilled opponent, can be perceived as altering your offer without requiring a reciprocal change from the other party. Consequently, they may negotiate based on your initial suggestion, resulting in a less desirable outcome.
Carefully consider your concessions
When considering a change to your offer, it is advantageous to gradually decrease the magnitude of your concessions. This approach involves making smaller adjustments to your price each time, demonstrating a progression toward your lowest possible price. For instance, if you initially reduce your price by $1,000, followed by $500, and then $150, it creates the impression that you are nearing your bottom line.
Conversely, if you decrease your price by $500, then $1,000, and finally $150, your counterpart may believe that they can extract more significant concessions from you. By starting with a minor concession, followed by a major one, and concluding with a minor adjustment, they may anticipate another substantial concession in the future.
The key is to strategically manage your concessions, gradually reducing their magnitude while maintaining the perception of progress towards your final offer.
Do not readily accept the initial offer
It is advisable not to accept the initial offer, regardless of its attractiveness. Instead, consider requesting even a small concession. This approach serves a purpose: it allows your counterpart to feel satisfied, believing they have secured the best possible deal and achieving a sense of victory.
By accepting the first offer, the other party might think, “I could have obtained more if I had not started with such a favorable deal.” On the contrary, by negotiating for a concession, even a minor one, the other party will perceive it as the best offer they could have obtained from you, leaving the negotiation table content with the agreement.
This is crucial, especially if you anticipate a long-term business relationship with this individual, as you may encounter future negotiations. It is essential to avoid situations where they seek revenge for previous deals during future interactions.
It is advisable to refrain from posing questions that can be answered with a simple “yes” or “no”
Asking a yes or no question typically yields limited results. When you inquire, “Can you get me a better price?” it becomes effortless for the other person to respond with a simple “No.” Conversely, by posing an open-ended question such as, “What steps can you take to secure a better price?” the other party must provide a comprehensive answer. They cannot merely reply with a “No” — rather, they must provide justification or explanation. If their response lacks merit, you have the opportunity to challenge them and often obtain a more favorable deal.
Refrain from bringing your emotions
Negotiations can evoke a range of emotions, including frustration, uncertainty, and even anger. However, it is important to remember that the purpose of these conversations is to reach productive and amicable agreements. It is crucial to avoid appearing excessively hot-headed or defensive, as this can hinder the desired outcome.
Keep in mind that people generally prefer to do business with individuals they like and trust. Take the time to familiarize yourself with the person on the other side of the table or phone. Then, identify common ground that can serve as a guiding principle for these discussions.
Master the craft of trading
When faced with pressure to make concessions, some salespeople immediately give in. However, this conveys the wrong impression – if you’re too quick to concede, it might imply that your product or service lacks value.
Negotiations involve a give-and-take approach. A useful guideline is to ensure that you receive something in return each time you give up something. For example, in the case of a home buyer offering the listing price of $750,000 and requesting the furniture and washer/dryer, you could respond by saying, “If I agree to that, you must close escrow within thirty days.” Remember, don’t hesitate to walk away if the tradeoff doesn’t align with your best interests.
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