Negotiating With Honor

How do you negotiate honorably and successfully? By negotiating both value and price with the goal of striking the most favorable deal for both the buyer and the seller. If there is a morality problem with a negotiated sale, it’s when one party’s aim is to “win” the game at the expense of the other. If both the buyer and the seller can believe in and practice win/win negotiations, everybody’s life is easier and they can sleep better at night.

Unfortunately, too many people engage in win/lose negotiation. They believe that the only way they can gain value is by taking it away from the other person. They view every transaction as a zero-sum game. This belief is anathema to the Creative Selling System. You can’t build long term customer relationships based on taking advantage of the customer every time you sell them something. Sooner or later they’ll figure it out.

When you engage in win/lose negotiation, you create an adversarial relationship with your prospect. That lifeblood of Creative Selling, information about the prospect’s needs, is cut off at the source because the prospect soon realizes that you’re using that information to gain the upper hand in the negotiations.

That’s one of the main reasons, by the way, that the traditional consultive selling approach is so ineffective—many prospects fear that giving information to the consultive seller will just give him ammunition to use in future negotiations. So they clam up or even give misleading information to confuse the seller.

You can’t create solutions to the prospect’s needs unless you learn what those needs are. Without that information, your selling effort degenerates into a guessing game where you have to keep offering different proposals without having the feedback necessary to come up with good ones. And because your ideas don’t very accurately meet the prospect’s needs, fewer sales occur. The win/lose negotiation attitude may produce a larger single order today, but it reduces the probability of getting better orders tomorrow.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.

Negotiating In The Retail Store

Helpful negotiation tactics for retail salespeople:

● Stay cool. If a customer asks for a lower price, remember that it’s just a business transaction, not a judgmental comment on your artwork, your gallery, or you.

● Know your limits, but don’t go there right away. If the customer can talk you into two small concessions rather than one big one, they’re more likely to be satisfied with the deal.

● Ask for something in return. A customer may be willing to use cash rather than a credit card, put their name on your mailing list, or give you something else of value in return for a lower price.

● Use negotiation to close the sale. “If I give you this price, will you buy it now?” is a great way to separate buyers from lookers.

In today’s economy, you can expect more and more retail customers to test the firmness of your prices. If you keep your wits about you and exclude emotions from the process, though, you can use that trend to build your sales.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.

Taking Stress Out Of Negotiations

Negotiating has earned its reputation as an unpleasant process in large part because it is inherently stressful. Stress is produced when something or someone blocks a person from obtaining a desired goal, which just about defines the process of negotiation. Each party is blocking the other one in some way. “I won’t buy unless you give me this” is just another way of saying, “You can’t obtain your goal (to get the order) because my demand (to get the concession) is blocking your way.”

Two other stressful things happen in negotiation. The blocks generally get bigger and bigger as the easy concessions are made early and the tough ones—the big price cut or the large volume order—are left to the end. And, the closer you get to the end, the closer each person feels to achieving his or her goal. The carrot is dangled closer and closer to the donkey’s nose.

Stress, stress, stress. That’s the real reason many people feel uncomfortable when put into a negotiating role. The uncertainty of the outcome is stressful. The pressure to make multiple decisions is stressful. The fear of feeling outfoxed is very stressful. It’s certainly a lot less stressful to say, “Sorry, our prices are firm. Take it or leave it.” You get the pain over with.

Negotiation doesn’t have to be that way. I’m not saying that you’ll eliminate the uncertainty, the decision-making, or the possibility of leaving some money on the table, but you can make the process less stressful if you have the right attitude.

The better way, of course, is win/win negotiation, where both parties recognize that the value side of the equation is not finite. If you can focus on building the value of the deal, both the buyer and the seller generally win. Win/win negotiation is at the heart of the Creative Selling System because it focuses on need satisfaction.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.

Negotiating Like A Pro

Do customers in your industry pay the asking price? Or do they routinely ask for a lower price, better terms, extra merchandise, rebates, slotting fees, or extended service? If you sell business-to-business, you’ve probably never had a customer agree to pay your asking price on the first pass. It’s becoming more common in retail sales, too. What your customers are doing, of course, is practicing an art as old as commerce itself. They’re negotiating.

Negotiation is that stage of the selling process that occurs after the commitment to buy is made but before the sale is actually closed. It’s when the buyer and seller come to terms on the conditions under which the product or service is provided.

Sounds imposing, doesn’t it? And it can be a complicated undertaking, which is why I suggest you approach negotiations as carefully as James Cameron approached the production of Avatar. You need to coordinate all the various components of the negotiation if you are going to produce a successfully orchestrated sale.

Negotiation is a matter of choices by both parties. One party chooses whether or not to offer something and the other one chooses whether or not to accept it. As you’ll see, it’s not always the seller who does the offering, nor is it always the buyer who does the accepting or rejecting. Nor is price the only item subject to negotiation.

When do you negotiate? If you’re a creative seller, you only negotiate the terms of your proposal after the prospect has made the commitment to buy the idea you are selling. If the prospect doesn’t like the idea, no amount of negotiation of the price or any of the other terms will make the sale happen. But once that commitment is made, you can assume that you will negotiate the sale in one way or another.

The price to value ratio is at the heart of every negotiation. Both the buyer and the seller negotiate both sides of that equation, giving gains on one side in return for gains on the other. When the needs of both the buyer and seller are met, the sale occurs.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.

Negotiation Preparation

When it comes to negotiation, knowledge is power. That goes for all types of negotiation, win/win included. When both parties have information about each other, the entire negotiation process runs much more smoothly. The research you need to conduct for negotiation is much like the research you need to develop a proposal for a prospect—and it is just as important.

Remember that they will want to know the same kinds of things about you and your position, so be prepared to offer some of that information under the right circumstances. Conventional wisdom says that you should play your cards close to the vest but conventional wisdom is often wrong. Sometimes the exchange of information can be a transaction within a transaction that takes the edge off the larger negotiation.

Here’s a partial list of common types of information you should have before you enter your negotiations:
-What are the prospect’s apparent needs?
-Do any underlying needs exist?
-What are the alternatives to your proposal?
-What are the advantages/disadvantages of the alternatives?
-How do your competitors fit into the alternatives?
-What is the prospect’s financial position?
-How big a factor is the price?
-How strongly are they committed to the proposed idea?
-Are there other decision-influencers?
-What deadlines are they facing?
-Are they negotiating to win/win or win/lose?

You have many sources of information at your disposal. The prospect himself is the best one, of course, and if you’ve been listening to him as well as talking to him, you’ll have picked up the answers to many of these questions already. Don’t overlook your company’s files, either. A given prospect may be new to you but not to your company, since the salesperson who preceded you in the territory may well have had some contact with the prospect.

I’ve also always found it useful to get to know as many of my customers’ employees as I could. You certainly want to know Mr. Big’s secretary or assistant as well as the receptionist and telephone operator (if there is one). But don’t overlook his salespeople, clerks, shipping manager, buyers, purchasing manager, bookkeeper, etc. You never know when they’re going to reveal an interesting tidbit of information that you’ll find useful during negotiation.

Mr. Big’s competitors and other vendors are also important sources of information. A caution in this area, though: Always consider the source when judging the truthfulness of any bit of information. A little knowledge can be a dangerous thing, especially when it’s exaggerated by a partially-informed employee or a competitor with their own agenda. Just as information can be helpful in negotiation, disinformation can be disastrous. Anyone who has tried to make money in the stock market by trading based on “tips” can attest to that danger. Another word of caution: You don’t want to become known as a carrier of tales or rumors. Such a reputation can have very unpleasant far-reaching consequences. Your strict policy should be to have open ears and a closed mouth at all times.

Honesty in negotiation is important in another sense. Be honest with yourself about your own position. You tend to underestimate your own strengths and weaknesses because you are more aware of them than you are of the buyer’s. Remember, the buyer probably doesn’t know that you’re just one sale away from winning that trip to the Bahamas. If you reveal that little fact, you’ll probably pay for it by suffering through a more demanding negotiation.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, hiring, firing, and motivating personnel, financial management, and business strategy.