Be a Shrewd Negotiator

Whether you call it relationship selling, customer-driven selling,

value-added selling or some other newly coined phrase, the current trend in sales is to satisfy the customer at almost any cost. Any business that wants to stay in business wants to make its customers happy, but without sacrificing all of a sale’s profits to add value or cut price. When customer demands lower the sale’s profitability, shrewd negotiation can ensure that the sale benefits both company and customer. To keep customer satisfaction and profits high, follow these guidelines for negotiations.

Many factors may influence a negotiation’s outcome. One is the salesperson’s compensation plan. Compensation based only on the number of units sold rather than on profitability may tempt salespeople to take the course of least resistance, especially when price is an issue. When the pressure’s on to close, the salesperson may negotiate for a signed order instead of a profitable sale.

When negotiating with high-profile, experienced companies, your company’s profits may fall prey to the customer’s superior negotiating savvy. After decades of interacting with suppliers, many companies’ negotiators know exactly how to push the right buttons to get what they want. In the interest of good customer service, inexperienced salespeople may acquiesce to all customer demands – at substantial cost to the company. Based on the idea that negotiating strength is composed of power, time and information, salespeople can take the following measures to offset such disadvantages and tip the negotiating scales in their favor.

1. Use time spent on needs analysis to gather valuable information surrounding the circumstances of the sale. Determine how to meet customer needs but also gather information that may give you some leverage at the bargaining table. Be conversational with your customers. The more you can get them to talk, the more valuable information you may take from your meeting.

2. When you spend a lot of time – especially leisure time – with your prospects or customers, you may feel too friendly toward them to negotiate firmly. During negotiations, separate personal feelings from business needs. If you remain polite and amicable throughout the meeting, you should be able to negotiate shrewdly without inviting hostility from your customers.

3. To avoid negotiating surprises, try to predict client requests and how you’ll respond. Assess how much you’re willing to sacrifice to appease the customer. Examine the negotiation from different perspectives and ask yourself what you’d want from the negotiation if you were the customer. To avoid costly mistakes, decide in advance how far you’ll go to please your customers without completely sacrificing company profits.

4. Be aware of your customer’s negotiating history. Try to speak with salespeople who have negotiated with your customer before. Your customers may repeat behaviors that earned them a favorable outcome at previous negotiations. The knowledge that your customer has mastered the art of bluffing, for example, could prove very helpful at the bargaining table.

5. Don’t be afraid to say no. Reasonable customers will respect your efforts to negotiate an arrangement that benefits both companies and probably won’t expect to have all of their requests granted. Your firmness may also earn you your customer’s respect for your good business sense – something all companies want in the salesperson who’s watching out for them and their businesses.

6. Make sure you have some degree of decision-making leeway before the negotiation. Negotiation always involves some risk, so make sure your manager understands that fact. Know exactly how generous you’re permitted to be during the negotiation, and what kind of outcome your manager expects.

A standard premise of negotiation is that both parties have something to gain from reaching an agreement. As a shrewd negotiator, you can help maintain customer happiness and the profit margin. As competition intensifies between companies with similar products and prices, salespeople can’t afford to sacrifice customer satisfaction or profits with each sale. Fortunately, good negotiation skills can help ensure that you don’t have to.