5 Negotiation Strategies for Tough Times

It’s one of those “best of times, worst of times” scenarios. The economy may be improving, but it still has a long way to go. Everyone seems to be taking a wait-and-see stance and stalling on big decisions, but the trouble is, you still need sales in the here and now. So how do you get the most out of cash-strapped customers without alienating them completely? Here are five steps to negotiating the best possible deal, even in an environment where people are reluctant to come to the bargaining table.

STEP ONE: Don’t Come on Too Strong

“Twisting someone’s arm is never a good thing,” says Andy Zoltners, PhD, professor at the Kellogg School of Management, Northwestern University, and author of Building a Winning Sales Force: Powerful Strategies for Driving High Performance (AMACOM, 2009). “Instead of a blitz, take the point of view of a consultant who is there to help [prospects and customers] succeed. You’re available, you’re interested, and you’re acting in their best interests.”

“The key is not to focus on what’s important to you – which in this case may be the quick sale – but rather to focus on the things that matter to them,” agrees Vanessa Ruda, PhD, a partner in Ruda Cohen & Associates and an instructor of organizational change at Northwestern University. “The goal of any negotiation is a mutually beneficial agreement that provides value to both sides, and maintaining this balance is especially vital when times are hard. A good relationship will always trump a tough economy.”

Step Two: Remember That It’s All About Providing Value

“In an economy in which people are reluctant to spend money, you need to position yourself better than your competitors in terms of your value proposition,” says Alan Gillies, cofounder and managing partner of Actando (actando.com), a global company that specializes in providing learning and development solutions in multiple languages. “Customers respond to suppliers who address their needs, and in order to do that you need to take the time to understand those needs and then demonstrate how your product or service provides a solution. If you can show customers that your primary concern is addressing their problems, the dynamic shifts from selling something to offering solutions. Start framing your discussion as a way to solve problems instead of as a sales pitch, and you’ll see the difference immediately.”

Step Three: Don’t Let Them Forget How Much You’ve Done Already

In other words, if you’ve spent the last two years giving away the farm, it may be time to start taking it back.

If an effort to keep business flowing during hard times, many companies have been offering enormous discounts and ridiculously generous incentives, and customers have now come to expect them. And not only expect them, but take them for granted.

Kevin Graham, author, speaker, and managing director of Hitting the Number (hittingthenumber.com.), a sales consulting and training company, says that “when you’ve been doing a lot of things that have no perceived value, you need to start building the value back. You may discount a service from $5,000 to $4,000, but send the customer the bill for the standard $5,000, clearly marked down to $4,000 as a loyalty discount. Or if you add a bonus value to a purchase, say, ‘I’m happy to do this, but you have to realize all our customers aren’t getting this good a deal.’”

Graham calls this his quid-pro-quo strategy, which means that anytime you give up something in the sales process, that concession should be clearly noted and acknowledged and should set you up for receiving something in return, “if for no other reason than it builds value in what you’re giving up,” says Graham. “Like marking invoices with ‘customer loyalty discount’ – it implies you’re giving a discount, but in turn you’re getting [your customers’] loyalty. It’s a matter of raising their consciousness, reminding them of what you’re doing for them now and what you’ve done in the past. Otherwise, of course they get spoiled, and of course they’ll take whatever you do for granted. If they ask for a 20 percent discount and you automatically say yes, they won’t think you’re a great guy. They’ll only think, ‘Why didn’t I ask for 30?’ But if they ask for a 20 percent discount and you ask for something in return – a testimonial, a reference call with a future prospect, anything – then you’ve set the stage for a two-way relationship with give and take.”

Step Four: Figure Out a Way around the Stall

“When someone is stalling, you need to get past what is commonly called frozen language, when customers seem to have made up their minds,” says Gillies. “One method is to sympathize with their reasons for hesitating to act, but then ask, ‘When you are ready to make a decision, what are the things most important to you in placing an order?’ It frees them from the decision they claim to have made, which is the decision to wait until things are better or the situation calms down, and starts them thinking about what they will do when the time is right. Often, just moving into a discussion about what they’ll do when the time comes results in the time coming sooner than it otherwise would.”

Ruda suggests a similar approach: “You can say something similar to, ‘I understand you want to wait, but I want to make sure we’re prepared to service you when you’re ready. What can we do now to make sure all our ducks are in a row?’ This at least gets the conversation moving.”

Or you could highlight the dangers of stalling. “The best selling environment is one in which you have an impending event that forces people to take action,” says Graham, “and sometimes you can prompt a decision by helping customers see what bad things might happen if they don’t take action now. Not just approaching sales from what they might gain – which can be a hard way to motivate people in a status-quo environment – but rather saying, ‘Here’s your problem, and if we don’t fix it now, these are the problems you might experience down the road.’ People can be just as motivated by a desire to avoid a negative as they are by the desire to increase a positive.”

Step Five: Polish Up a Couple of Techniques to Help You Get the Most of Whatever Deal Is on the Table

“When you’re negotiating in a tough time, it’s especially important not to leave anything on the table,” says Graham. “Two great ways to tilt the negotiations in your favor are The Flinch and The Nibble.”

The Flinch is the response you make when the other person states his or her offer. It should be both an auditory and physical reaction along the lines of, “That’s not what I was hoping to hear.” “You don’t have to be over-the-top dramatic, rolling your eyes or falling out of your chair,” Graham says, “but you do need to sigh, frown, or demonstrate a certain amount of verbal and physical shock. It puts the other person back on his or her heels a bit.”

Graham points out the example of a person at a yard sale who falls in love with a lamp. If he or she is running around talking about how great the lamp is, the owner will certainly realize this before the negotiation begins. The owner, therefore, is unlikely to haggle and may even raise the price. If, in contrast, the same person hears the price of the lamp and responds with a grimace, “Wow, that’s a little out of my range,” the owner is far more likely to offer a deal.

The Nibble is the little extras you get after a deal is allegedly done. “I’ve gone through four corporate relocations and nibbled my way to a bigger package in each case,” Graham says. “Once the other party has gotten to a certain point in the negotiation process and made the decision to go forward, his or her guard has dropped a little. The other party is past that tough moment of making the decision and isn’t inclined to go back on the decision that’s been made. That’s the perfect time to nibble.”

When relocating, Graham nibbled like this: “This is going to be an exciting move for my family, and I’m looking forward to making a huge impact for the company. Of course, I’m going to need a short-term loan to help with my down payment…or two months’ corporate housing while my wife gets the house sold…or maybe the company can cover prepayment penalties on the lease on our car.”

Graham believes that “once the deal seems to be complete, that’s often where the real negotiations begin. If there’s something in the original negotiation that you and the other party can’t agree about, shelve it until the deal is complete and save it for The Nibble.”

Of course, you also have to defend against nibbles from the customer. “The other parties know that the same thing is true of you, that you aren’t likely to retreat from a decision that seems like a done deal,” Graham says. “So they have likely saved up some requests of their own. When they mention them, just use The Flinch.” •