I am often asked by companies to help their sales people improve their sales negotiation skills and I can’t help wondering if that’s the real problem they need to solve. In my experience I’ve never won or lost a piece of business through my skill in negotiation, I have either won or lost the opportunity way before negotiation becomes an issue. When I explore the issues that these companies face in more detail, I quite often find that any weakness in negotiation skills that their team have are a symptom of problems that they face earlier in the sales process.
One of my favourite phrases that I share with these companies and to their sales people when I’m training them is that “you can’t negotiate your way out of a poor sales process.” I’ve come to realise that I need to update this phrase and suggest instead that “you can negotiate your way out of a poor sales process, however it’s going to cost you a lot of money.” I’m not just talking about the money that it takes to train sales people in negotiation skills; I am talking about the lost opportunity in creating more financial value for both the buyer and the seller as a direct result of a dysfunctional sales process, which restricts both party’s opportunity for detailed exploration that would lead to mutual gain.
When we look at the meaning of the word negotiation, it is a discussion aimed at reaching agreement. Too often we see negotiation as somewhat adversarial, as if we are sharing a pie, how well each party negotiates determines the size of the slice each gets. It might seem slightly clichéd but what if we could create a bigger pie, where all parties are happy with the slice they get, without the need for adversarial negotiation? There are three things I’m going to share here that I know will help sales people to negotiate more effectively and will also benefit the customer. These are creativity, impact and confidence.
Creativity
Let’s look at creativity first. You cannot capture a fair share of something that hasn’t been created. The whole purpose of buying and selling is that there is some value in the exchange of products and services to both parties. Too often both parties fall into the trap of defining value through the price that is paid for the product or service and that will always lead to some form of price based negotiation. If both parties are open to the idea of mutual exploration to create more value, then the opportunity for both parties gets more interesting. Successful sales people are creative, they can help customers create new elements of value in their own organisations and if 99% of creativity is perspiration rather than inspiration, then it is crucial that a sales person does their homework and understands the customer’s business and situation in some detail. Only then can they create new levels of value and avoid price based negotiation.
Impact
All sales people will be familiar with the concept of features and benefits, over a hundred years of sales training best practice has drilled into sales people the importance of talking to customers about the features and benefits of the product and service they are selling. This approach has served buyers and sellers well in the past, to a point. The problem that I have seen is that buyers and sellers often struggle to quantify the potential benefits in a meaningful way and therefore decisions are made on the anecdotal or generalised benefits that may be accrued. We need to take the conversation up a level and explore the specific impact that the product or service will have on the buyer’s situation and to be really specific, this impact will typically have a measurable and ideally financial value. When we explore this level of value, then each value proposition is unique, unless we are in a commoditised space. Each party can then negotiate on the basis of a unique value proposition and on the positive impact it will have on the buyer’s situation. Over the years I have coached a number of sales teams on live opportunities, focusing on looking for new value that we can bring to a buyer and using a rigorous process for quantifying the impact of the features and benefits of their solution. Almost without exception, this led to a higher win rate and greater value for both parties in the negotiation.
Confidence
I have been approached recently and asked if I can help a sales team that are lacking confidence when they enter into negotiations. This is a common request and to solve this issue we need to explore where the lack of confidence stems from. Although it may be created by a lack of negotiation tools and techniques, more often it is a lack of confidence in the value proposition being positioned with a customer. As a result of this sales people feel that they have to discount to win the business and sometimes this takes the form of a blind concession ie. reducing the price before even positioning a price with the customer. A sales person’s confidence can be boosted as they enter a negotiation when they have truly taken the opportunity to be creative with a customer to find value outside of price, when they have explored the impact of their product and service on the customer’s situation and when they have belief in the unique elements of their value proposition. The confidence generated by these things will always outweigh the confidence generated by negotiation skills training.
In Summary . . .
There is a need for negotiation skills training that has the original intent of a discussion aimed at reaching agreement and to achieve that we need to go beyond some of the tips and tricks of negotiation based on price alone and really get serious about trying to create a bigger pie for both parties.
