Negotiation is a part of life. This method of discussion can help accomplish personal and professional goals set for yourself. You can negotiate a job offer to achieve a higher salary, a promotion for advancement within your organization, or a better vehicle price at the dealership.
The ultimate goal of negotiation is to have both sides mutually agree upon a deal or contract. In some of these situations that may sound almost impossible, right?
There are numerous situations, involving negotiation, making it a highly valuable skill to acquire, especially in sales. But, without effective negotiating skills, you won’t get far.
Anyone can master the art of negotiation with practice, reasoning, and with the tips listed below. Let us explore some skills and strategies to help you learn how to effectively negotiate like a pro.
1. Think Strategically Beforehand
Marty Latz is a Negotiator Expert and author. Latz suggests to novice negotiators to have a “control agenda” before starting the negotiation process. The “control agenda” is a list of issues or questions that will be discussed throughout the negotiation process.
An effective negotiator will determine and prioritize the issues or questions throughout the discussion. Each “control agenda” should be customized for each prospect, as each one has its own unique organizational goals and budget.
Sales reps should conduct their own research beforehand. At this stage, you may already have some initial information about your prospect, but it can be beneficial to gather more info. Strategize and evaluate possible options that will fit with the prospects’ needs, wants, and budget.
Most importantly, a successful negotiator will know the lowest price that he or she will settle the offer for before starting the negotiation.
2. Begin with the Initial Offer Before the Prospect Does
The start of the negotiation process can be filled with doubt and insecurity. It’s common for sales representatives to hesitate with making the first offer. However, according to research from the Harvard Business School, making the offer first has promising results known as the “Anchoring Effect”. This research suggests that the first offer value will create an “anchoring effect” with any proceeding value that follows.
Adam. D. Galinsky, Chair of Management Division at Columbia Business School explains, “Because they pull judgments toward themselves, these numerical values are known as anchors…first offers have a strong anchoring effect – they exert a strong pull throughout the rest of the negotiation…by making the first offer, you will anchor the negotiation in your favor”.
3. Don’t Hesitate to Start off with a “High Anchor” Approach
With the same HSB research, it implies that a “high anchor” tends to have a better outcome when starting a negotiation. Galinsky explains, “high anchors selectively direct our attention toward an item’s positive attributes; low anchors direct our attention to its flaws”.
Moreover, Galinsky’s advises that the first offer should be aggressive, but not unreasonable. He says that negotiators tend to be not aggressive enough. By starting off the negotiation with an aggressive offer you’re more likely to have a positive result for both parties involved.
As Galinsky explains that “by making an aggressive first offer and giving your opponent the opportunity to extract concessions from you, you’ll not only get a better outcome, but you’ll also increase the other side’s satisfaction”.
4. Avoid Giving Your Prospect an Ultimatum
Salespeople should avoid giving their prospects an ultimatum. You want to be aggressive with the “high-anchor” offer, but avoid ending the negotiation process with demands to the prospect. Avoid using ‘Deal or No Deal’ or ‘Final Offer’ statements. It is important to be stern, but be sensible.
This power move can be off-putting and reflect that you are inflexible. Part of the negotiation process is two have both sides coming to an agreement instead of eliminating it. At this stage, the prospect is very interested in your product or solution so this final demand could result in no contract.
5. Take the Time to Mutually Agree
Latz recommends a negotiator to be patient and not to move too quickly with the negotiation process. Instead, he advises that “These deals take time, yet many of us just want to get these deals done. Pushing too fast, though, can be counterproductive. So show patience, whether you feel it or not”.
The time frame of closing a deal can be daunting. You may assume that you have lost the prospects’ interest in your product or solution. This is not necessarily the case.
The prospect could be assessing the value of your product, which will ultimately be better off for both parties involved. It’s better than having to deal with them closing their account within the next month because it was not the right fit for them.
Time to Practice
With these tips and strategies in mind, it’s time for practicing and coaching. Evaluate and explore negotiation tips and techniques from your sales team and manager. Learn what works and does not work for you and your industry.
Remember, the art of negotiation takes practice, reasoning, and patience to master.
Learn how to improve sales coaching in this free eBook: How to Build Coaching Into Your Sales Process
