How much you sell can have a monumental impact on your career and profitability. Poor negotiation skills can lead to economic loss and missed opportunities.
Whether in discussions with buyers, suppliers, or investors, most negotiations follow the same fundamental rules. To clinch lucrative deals, here are the best negotiation training tips for sellers.
Negotiate with Real Decision Makers
In the year 193 AD, the emperor’s guards killed the emperor and offered to sell the Roman Empire to the highest bidder. Julianus’ bid was the highest. Yet after paying 250 gold pieces per guard (total around $1B in today’s currency), he was swiftly deposed. No one recognized Julianus as the new ruler.
If you’re aiming at making a legitimate deal, make sure you’re negotiating with the real decision makers. In large organizations, the decision-making unit may include different personnel from various departments. A contract with anyone else may not hold.
Set Clear Goals
If you don’t set clear goals, you’re unlikely to reach an agreement that’s favorable to your business. In his book Authentic Negotiating, author Corey Kupfer says the best negotiation training reinforces three qualities – clarity, detachment, and equilibrium. The best way to meet the three conditions is to go into talks with clear goals.
Set SMART goals – Specific, Measurable, Attainable, Relevant, and Time-bound. Prioritize your objectives, so you know what’s non-negotiable and what you can concede on. Determine the other side’s goals. Knowing what the other side wants can make it easier to find common ground and forge win-win agreements.
Knowing your goals can take the emotion out of your problem-solving and decision-making. By controlling emotions, you experience detachment, often resulting in more rational thinking.
Sell Value Before Negotiating
It’s common for buyers to want to jump right into bargaining price. As a seller, you want first to determine that there’s a business case for the deal to go through. Only then should you haggle on price and terms.
Focus on developing a compelling value proposition that aligns with your client’s priorities. Answer the question, “Does my offer fulfill my client’s requirements?” The better you position your solution, and the more you can match your products and services to your client’s wants, the more likely you’ll clinch the deal.
If you dive right into negotiations, you risk getting stuck on discussions about discounts and concessions. Taking a value-driven approach ensures your offer meets the needs of your client. Focusing on value can later on smoothen negotiations. In turn, this makes it easier to close the deal at a favorable price point.
Focus on Mutual Gains
Negotiations are the means to arriving at an agreement that satisfies all sides. A strategy aimed at mutual gains usually results in better deals. You also stand to build stronger relationships and reputations. The Mutual Gains Approach, developed by the Consensus Building Institute, occurs in four distinct stages:
Understand your interests and those of the other side. Also, estimate each side’s best alternative to a negotiated agreement (BATNA). With a viable option, you’re less susceptible to pressure to make unfavorable concessions.
Based on shared interests, find ways to create extra value. In most deals, it is possible to generate extra chances for joint gain. For example, adding the warranty period reduces the buyer’s risk, increasing the price the buyer is willing to pay while boosting the seller’s reputation.
Identify the rules for sharing value. An equitable share of benefits supports the agreement’s stability. By sharing value, you strengthen relationships while increasing the chances of the deal’s success.
Train to strengthen the agreement by protecting each side against future challenges. You can protect the deal by including provisions on handling future uncertainties and conflicts.
Make Each Trade-Off Count
In most negotiations, both sides make adjustments to their original position to accommodate the other side’s needs. It is through such value exchange that trained dealmakers arrive at win-win solutions. Yet, in an eagerness to please, some people may give in to too many concessions too early.
Negotiation training experts advise getting something of equal or higher value in return for each concession. To ensure you clinch the deal on favorable terms, create a concession strategy. Begin by creating your bargaining mix, which is a list of all areas of potential conflict. Your bargaining mix should include financial and nonfinancial issues. Rank the potential conflicts from the highest priority to the lowest.
With your ranked list, create possible solutions to please both sides. With proper preparation, you can reduce the chances of making surprise concessions. During training, attendees can practice these four concession rules:
- Never concede without asking for something of equal or higher value in return.
- Never concede too much, too early, or too fast.
- Keep score of all trade-offs.
- Offer your trade-offs in bundles, such as offering different packages.
Be Willing to Walk Away
Finally, there comes a point where you have to accept that a particular deal isn’t for you. Instead of wasting more of your time, sometimes it is better to walk away. Yet walking away can be painful and difficult. This is especially true when you had high expectations and have invested lots of time and resources.
The best time to think of walking away from a deal is before you begin negotiations. List all the possible reasons that would make you walk away. Price is often the easiest, where you can say, “I will walk away if the prospect offers less than…” Other terms and conditions may be more challenging to define, but are just as important.
Define early on what outcomes you will accept and which ones you will reject. By knowing your limits, it will be easier to walk away from unfavorable deals. Prepare alternative options, so you know you have other viable choices. Remember your values, vision, and mission. Don’t compromise who you are for one sale. With a strong reputation, you can attract more and better deals as clients see you as reliable.