Negotiation Tips to Close More Sales

I had an experience in my career that made me realize the importance of negotiation. The president of the company I worked for decided to hire a dinner speaker on the subject of negotiation. She called him up, asked him to speak, and he agreed.

A few days before the session she asked her secretary to confirm the engagement. The dinner was on Monday, the secretary left messages on the previous Wednesday, Thursday and Friday. When the president of our company returned on Monday, she learned that the final arrangements hadn’t been made. She finally got through to the speaker and he reminded her to bring his honorarium check for $500. She became very flustered since there was no money for speakers, but ultimately agreed to pay him the money out of her own account.

That evening, the speaker began by relating the story and pointing out my boss’s mistakes. First, she assumed he would speak for free because they didn’t discuss money. Second, she waited so long to get in touch that he had time on his side, knowing she would have no other alternative. Third, when he mentioned the fee, she became angry but didn’t get off the phone to gain composure and devise a strategy. The speaker ended his preamble by tearing up the check.

This was a very important lesson for me. There are many factors that enter into negotiations and two main processes to a professional negotiation: preparation and strategy.

Preparation

Salespeople don’t always realize how important negotiation is in the sales process. The fact is, it’s a major part of the job. When you think of being in a situation of negotiation or “assertive asking,” think about what comes up for you and what may come up for the others involved. A variety of emotions from anger to anxiety to fear may arise. The way to handle these emotions is through preparation which consists of five steps:

1. Know your needs and wants. What do you want from the negotiation and why do you want it? Brainstorm, make a list and prioritize it – you may not get everything you want so make sure that you know what’s most important.

What is at stake? Your job? Money, a new client, a modified schedule? How much risk are you willing to take? Will you be conservative or are you willing to play poker? What’s your bottom line? At what point will the compromises not be worth the effort?

What is your time frame? How soon do you need to have a decision and how will that affect your strategy? What alternatives do you have that could ultimately get you the same result?

What are your emotional needs? There are ways you can prepare yourself for a negotiation, such as self-hypnosis, visualization, and actualization, where you rehearse the whole scene in your mind as you would like it to go.

2. Know the other person’s needs, wants and goals. Ask questions of the person or other people so you can find out some of their needs and goals. Put yourself in the other person’s shoes and think the negotiation through from their point of view. What’s in it for them? What’s their bottom line? How soon do they have to make a decision? Try to imagine what their first offer might be, or how they might react to yours. What do you think they’ll object to, and what offer do you think they’ll accept?

Think about the psychological needs of the other person. How will it make them look if they accept your offer? How do they need to feel after the negotiation? Do they need to appear fair? Look good with the company?

3. Decide who should negotiate. Just because you have an interest in a situation, you may not be the appropriate one to negotiate. Perhaps you need more expertise. Maybe you’re too emotionally involved. Will you be outnumbered in the negotiation? If so, maybe you’d be more comfortable if you brought along a colleague.

4. Determine the best time and place. Most standard books recommend negotiating on your turf, but that’s not always best, particularly if you don’t want to intimidate the other person. If that’s the case, their turf or neutral turf might be the best choice. Don’t feel you must accept the physical situation. For example, if you go to someone’s office and he or she is sitting in a huge chair behind a huge desk, and you are expected to sit on a much lower seat, you may feel at a psychological disadvantage. Suggest moving to a conference table or coffee table if it’s available.

Timing can be very important. Often when other changes are in the offering, it’s a good time to negotiate. You may want to approach a boss after you’ve done something very successfully. But be careful with timing. I knew of an accountant who insisted on a raise during the height of tax season. His boss was over the barrel and had no choice. But guess what happened to the accountant’s job on April 16th.

5. Develop a step-by-step strategy. Have a plan A and plans B, C and D. Your first strategy might not work with a particular person. Negotiation can be very creative. Don’t bank on your original idea being the one they’ll respond to.

Negotiation Strategies

Once you’ve adequately prepared for the negotiation, it’s time to implement a strategy. The following procedure will help you.

Look for areas of mutual benefit. When you begin, look for areas of agreement and for shared interest. This will establish a feeling of goodwill on your part, so that when areas of dispute arise they are less likely to sabotage the resolution. Sell the benefits of your proposal: How will it work for them?

Separate the people from the problem. A rule of thumb here is to be very hard on the problem and very soft on the person. The best way to do this is to focus on the problem. If a client who usually makes good on orders suddenly begins to bounce checks, you may want to approach it by saying, “I’ve always enjoyed doing business with you, Mr. Jones, but these bad checks are very annoying and we must handle it immediately.”

Listen to what is and isn’t being said. What’s going on in the negotiation that isn’t being talked about? Often if you are able to read between the lines, you’ll realize there is a hidden agenda in the meeting. This can be very detrimental to the negotiation since it interferes with the specific issue and, in essence, creates a situation where you are not in agreement on the subject. Be sure you are both clear on what the real issue is.

Be willing to see their point of view. Here is where your people reading skills come into play. Be aware of the kind of person you are dealing with, and always pay attention to how they are responding. Are your proposals making them withdraw or become resistant? Put yourself in their shoes. It will help you come up with alternatives.

Use techniques to keep control. There are many tactics to use here. Remember, the person who has the agenda has control. You don’t have to use an intimidating log of facts and figures. A piece of paper with a few notes scrawled on it might do the trick as long as you cover all your points.

You can guide a discussion by asking questions, but don’t feel compelled to answer every question posed to you. Sometimes knowing when to be quiet is more important than speaking. If you feel stymied, don’t hesitate to say, “I’d like to give the matter more thought. Let’s talk more later. ” Remember what happened to the company president and the dinner speaker.

Be careful of the information you divulge. For example, you may not want to tell a client that you need one more sale to be the top biller that month. You would then give him or her a decided advantage.

Don’t hesitate to put the negotiation in writing. If a contract needs to be written, write it. If a summary is necessary, do it. If nothing else, the other people can read it and say “That’s not what I meant, ” or “Yes, I agree. That’s what we said.”

Watch out for tactics. One of the most popular tactics is “good guy/bad guy.” Two new prospects meet with a salesperson. One rants and raves maniacally. Finally, the “good guy” says to his or her colleague, “Listen, why don’t you go get some air or a cup of coffee and settle down.” The salesperson, relieved that the raver has gone, may let down his or her guard as the good guy says, “I’m sorry, my partner gets very upset. Now we can talk comfortably.” The fact is, the two had planned this strategy long in advance, and the…good guy” is actually the tougher negotiator of the two.

Another tactic is the “knee jerk.” Here, the client tends to overreact and reject any offer with the “That costs too much” response. It’s important in a situation like this to know what your bottom line is and not to be intimidated. In fact, be skeptical of any emotional outburst. Often people will use anger or disappointment as devices. If you ask your boss for a raise and he or she comes back with, “Well, you know I’ve been very disappointed with you lately,” it may not be completely true. Try to remain realistic and objective.

If a client retaliates with a burst of anger, realize that it could be an act to throw you off. In either case, say something like, “I’m really sorry you feel that way.” Try to step back and discern if the emotion is genuine. Acknowledge the person’s feelings but don’t get hooked into someone else’s emotions, real or feigned. Spot it for a tactic, if that’s what it is.

Try these techniques in any of your negotiations, from clients to colleagues to friends to family. The step-by-step process could lead you to a mutually beneficial resolution if you remember that you don’t want to win the point and lose the game. A successful negotiation occurs when neither party feels they have been manipulated, bullied or duped; and both come out feeling like winners.

Helen Berman is president of H. Berman and Associates, a sales and marketing consulting firm in Los Angeles. For more information, write: 12021 Wiltshire Blvd., Ste. 177, Los Angeles, CA 90025 or call 213/820-7312.