Negotiation is sometimes thought of as a competition between two opposing parties -- a process that’s not entirely antagonistic, but also couldn’t exactly be called collaborative.
This mindset is particularly understandable -- and dangerous -- in sales. During a tough month or quarter, it’s all too easy to slip into the mindset that your buyer is just a roadblock to hitting your quota, and that attitude lends itself to a combative approach to negotiation.
But this approach is treacherous. If you try to suck every last cent from your buyer and don’t work with them to come to a mutually agreeable settlement, chances are you’ll lose more deals than you win. Avoid these four negotiation mistakes to keep your negotiations productive and beneficial to both parties.
4 Fatal Sales Negotiation Mistakes
1) The “left at the altar” strategy
This strategy calls on one party to back out of a deal just before you’re about to come to an agreement with the end goal of pushing the other to make last-minute concessions.
It’s not difficult to see why this is a terrible negotiation tactic. Not only does it treat the buyer as disposable, it destroys trust that’s taken you time to build. You should always keep your prospect at the center of your sales strategy, and that means being open and honest. Don’t use a slimy sales tactic to try and scare or pressure your prospect into buying.
2) Giving a discount to win the business
This isn’t to say that discounts have no place in sales. They absolutely do, and giving strategic discounts is helpful in getting deals across the finish line when a prospect simply can’t afford your asking price or is still locked into a contract with a competitor.
However, a discount shouldn’t be offered as part of your attempt to convince the prospect to buy. Discounts should come at the end of pricing negotiations when your prospect already sees the product’s value. If your best argument for why your prospect should buy is, “I’ll give it to you for 50% off,” you’ve already lost the battle.
Instead, sell value. You should be transparent about price throughout (see #7), but cost should never be your go-to concession. Bring price down only once your prospect believes they need the product.
3) Not making the first offer
A commonly-heard piece of negotiation advice is to avoid making the first offer so you don’t “anchor” your prospect to a price that might be too high or too low. But in the era of modern sales, this is just silly. Your prices are probably listed on your website, and if they’re not, prospects can easily discover that information through reviews or asking their peers in the space.
Furthermore, price shouldn’t ever be a secret. Budgetary considerations and objections are just as real as objections rooted in functionality or product value, and should be discussed in just as straightforward a manner. While outright asking, “Do you have the budget for this?” early in the process is obnoxious, always be open so your buyer knows whether they’re even in your ballpark. If you’ve been transparent throughout the sales process, the first offer shouldn’t be some big reveal -- it should be the natural outcome of a conversation that’s been ongoing since day one.
4) Giving a “take-it-or-leave-it” ultimatum
There’s nothing wrong with putting a time limit on an offer. If you’re going to do something for your prospect -- say, offer a discount, or throw in a little extra something to sweeten the pot -- they should be prepared to commit to something in return.
The rationale behind this kind of ultimatum is that its inherent time-sensitiveness will overcome the prospect’s objection and compel a purchase. The problem is that it puts an unnecessary burden on the buyer -- buy now or lose your opportunity to buy under these conditions, forever. You can’t force a buyer onto your timeline.
You also can’t let deals drag on forever. But ultimatums fail to uncover underlying issues that are at the real root of a buyer’s hesitation, so while you might sometimes get the “yes” you’re looking for, you’re more likely to discover the crux of your prospect’s objection by asking: “What’s stopping you from pulling the trigger today/this week/this month?”
Their answer will tell you whether you’re dealing with a cashflow issue, a request for information, or a true blocker. And that’s the information that’ll keep your deal alive.
What negotiation tactics would you like to see fall by the wayside? Let us know in the comments below.
Originally published Apr 26, 2016 7:30:00 AM, updated February 01 2017