You've quoted a price and sent over the contract. All that's left for the prospect to do is sign, and the deal is done. You're riding a high during your prospecting calls and follow ups.
But then ... you get the dreaded email.
"I'd like to talk about some of the details of this contract before I sign."
The rep then needs to shift gears from consultant to negotiator in order to engineer an agreement that's a win-win for both their own and their prospect's companies.
While negotiations can go in a seemingly infinite number of directions, salespeople with the following negotiation skills will be well-equipped to roll with the punches.
Sales Negotiation Skills to Develop
The most important negotiation skills in sales are:
- Clearly defining concessions
- Speaking second
- Steering clear of ranges
- Refusing to "split the difference"
- Writing terms at the right time
- Speaking with the decision maker
- Getting for a give
- Talking more than money
- Being human
- Knowing when to walk away
Read on for a detailed explanation of each skill.
1) Define the concessions you're willing to accept in advance.
In the heat of the moment, a 30% discount or additional six months of support might seem perfectly acceptable. It's only when you get back to your desk and start drafting up the contract that you realize you agreed to terms you can't or shouldn't accept. Clearly defining the limits on price discounts, freebies, or other add-ons before you meet with your prospect will ensure you come to a mutually beneficial agreement.
2) Let the prospect go first.
You've presented the terms of the deal, and the prospect would like to negotiate them, so let them start the conversation. In the spirit of being accommodating, salespeople are often tempted to offer a discount or an adjustment before the prospect even opens their mouth. But you don't know what they're going to say! Just as in other areas of sales, it pays to listen first, and then speak.
3) Don't give a range.
If the customer would like money knocked off your product's price tag, don't say, "Well, I could probably reduce the cost by 15 or 20%." Who would accept 15% when 20% has been offered? Always quote one specific number or figure and then go higher or lower as necessary. The word "between" should be avoided at all costs.
4) Avoid splitting the difference.
According to sales expert Art Sobczak, offering to split the difference can do more harm than good. For example, if the product or service costs $100 and the prospect wants a 50% discount, the salesperson shouldn't counter with $75 although it seems logical to do so. If the salesperson offers a slight discount but still keeps the number in the neighborhood of the original price, the prospect will likely accept, and the margin takes less of a hit.
5) Don't put anything in writing until the conversation is over.
Negotiations can swing back and forth and around again. Many ideas will be proposed, and while some will be accepted, others will be shot down. A salesperson would be wise not to revise the contract until the meeting has ended, and all parties have verbally agreed to the terms.
6) Negotiate with the decision maker.
This tip might seem obvious, but according to John Holland, many salespeople make the mistake of negotiating with the wrong person. And this means that when talks begin with the true decision maker, they'll likely start at the already discounted price quoted in the first meeting. A great outcome for the prospect, but a poor outcome for the seller.
7) Get something in return for concessions.
Healthy salesperson-customer relationships are borne out of mutual respect and trust. With this in mind, salespeople shouldn't accept every single one of a prospect's demands without making some requests of their own. By keeping the negotiation a win-win for both sides, salesperson and client remain on equal footing, which lays the groundwork for a mutually beneficial relationship.
8) Expand the conversation beyond money.
The most commonly negotiated aspect of a sales deal is price, so salespeople should be prepared to talk discounts. However, since price is tied to value, and value tied to a customer's perception of and satisfaction with a product, salespeople might consider offering other add-ons or freebies in lieu of a smaller price tag. But bear in mind that this is not a hard and fast rule -- the specific concessions a salesperson can offer depends on the situation.
9) Keep the conversation light.
Although prospect and salesperson sit on opposite sides of the table during a negotiation, they will be partners if the deal is signed. Keep the talk light and jovial to avoid creating bad blood.
10) Walk away if necessary.
Salespeople shouldn't be willing to accept any curveball a prospect throws at them. If demands become unreasonable or unprofitable for the company, don't be afraid to walk away from the deal. A customer who only agreed to sign if the contract was radically amended or the price was drastically dropped is bound to cause problems down the road. And since they clearly don't see much value in the offering, it's only a matter of time before they become dissatisfied. Get out for your and your prospect's sake.
Editor's note: This post was originally published in March 2015 and has been updated for accuracy and comprehensiveness.