How to Use Negotiations to Build Better Relationships

By Geoffrey James

Software sales reps hate sales negotiations because software has so much price elasticity. Both sales reps and customers are aware that it costs the software company nothing to grant extra licenses and that software support costs vary greatly according to customers’ technical sophistication. Because of this, IT customers frequently demand concessions and discounts that play havoc with a software firm’s profits.

This situation arises when the sales negotiation gets off on the wrong foot. Many software sales reps and, unfortunately, many software customers think of negotiation as a win/lose proposition, with both sides holding their cards close. Concessions by one side are viewed as a victory for the opposite side, and the emphasis is on having your side win at all costs. This puts sales reps in a quandary because winning the software sales negotiation could result in a disgruntled customer buying software that is neither wanted nor needed and at a price the customer really can’t afford.

Rather than get into a competition with customers, software sales reps should try to move negotiations away from the competitive model and toward cooperation and, even better, collaboration. The key to doing this is to link, in customers’ minds, your firm’s fortune and future with the customers’ fortune and future. You want to become committed to customers’ success and find a way to get your customers committed to your success.

Ideally you should strive to set up a collaborative relationship in which your goals and those of the customer are aligned. In this situation, the negotiation becomes a matter of you and the customer working together to devise an arrangement that moves both agendas forward. This effort forges the strong customer relationships that inevitably result in future business, referrals and increased benefits for both you and your customer.

How then, do you move from a competitive stance to a collaborative one? The only effective way to do this is to add value to the customer’s firm prior to the negotiation. One obvious way to do this is to match your product’s capabilities to the customer’s needs. Many sales reps neglect the relationship building power of having multiple contacts inside the customer’s organization. The more people you know inside a customer’s organization, the better you’ll be able to advise the customer on how to add benefits.

As a sales rep, a large portion of your value to the customer is your ability to provide perspective on the customer’s own organization, based on your experience and the perception of other employees. Therefore, long before a sale enters the negotiation stage you should have developed at least three relationships with people inside the customer’s organization. That way you’ll have a better perspective on how your product or service can make the customer’s firm and the customer more successful.

The above is based on a discussion with Randall Murphy, president of Acclivus Corporation, a performance consulting and professional development company. He can be reached at 972-385-1277 or through www.acclivus.com.