How to Avoid the Four Biggest Sales Negotiating Traps

sales negotiatingImproving your sales negotiating effectiveness may be the answer to increasing sales, profits and your income. Al­though there are no “silver bullets” for negotiation suc­cess, there are predictable mistakes that sabotage negotiation success. Knowing these mistakes in ad­vance and taking the action that top performing salespeople do to avoid them, can go a long way towards improving your sales negotiating effectiveness.

This article identifies the four most common sales negotiating mistakes and out­lines several approaches for mini­mizing or eliminating their impact on the negotiation outcome.

1. Failure to plan.

People don’t plan to fail in a negoti­a­tion, but they often fail to plan. Many sales­people walk into a negotiation virtually blindfolded. They have only a vague idea of what they want and an even vaguer idea of what the other party wants or needs.

S­o­lu­ti­on: Know where you’re going and how you’re going to get there before you start. Before each nego­ti­ation:

  • Schedule planning time.
  • Identify for yourself, the buyer (or buyers), and the competition:
  • Needs (must have)
  • Wants (like to have)
  • Currencies (things of value to the other party in the negotiation)
  • Your best case proposal
  • Options (listing alternative solu­tions that would be acceptable to both sides and what to do if no agree­ment is reached)
  • Anticipate resistance, objections, and tactics.
  • Identify internal obstacles and solu­tions.
  • Visualize success.

2. Setting low aspiration levels.

Most salespeople take one of two ap­proaches when setting their initial aspi­rations for a negotiation. Some sales­people lower their expectations in antic­ipation of buyer resistance. While oth­ers have unrealistically high expecta­tions that aren’t defensible which often leads to large conces­sions or unnec­es­sary lost sales.

Solution: You get what you expect, so expect what you deserve. Higher aspi­ration levels are generally a result of confidence and a great confidence build­er is preparation. Good prepara­tion can help salespeople discover a higher price that is realistic and defensible.

A good technique for increasing your aspiration level is to add five to ten per­cent to every proposal and then defend your price to someone (e.g., manager, another salesperson). If you can defend your price, you in­crease the chan­ces of getting some, if not all, of the five to ten percent in­crease. If you can’t de­fend your price, you’ll need to do some more home­work.

Stating your highest but defensible price establishes the upper limits of your price, but gives you the flexibility to adjust it based on the buy­er’s response and needs. Remember, it’s easier to negotiate down than to negotiate up.

3. Negotiating price before the value of the prod­uct is established.

Discussing price before you’ve estab­lished the value of your product great­ly reduces the options available to create a win/win agreement. Talking price up-front usually results in a “single curren­cy negotiation.” These negotiations are generally not in the salesperson best interest because the only thing to nego­tiate is price. The options facing sales­people in this situation is either meet the price de­mand or lose the sale.

Solution: Sell the value of your prod­uct before you negotiate price. Be­fore you discuss price, review and gain agree­ment on the buyer’s needs and buying criteria. Simply say, “Be­fore I discuss the price, I’d like to review my under­standing of your needs. To begin with, you’re interest­ed in X,Y and Z?” Be sure to get the buyer’s agreement on his/her needs before you move on to the presenta­tion and price. This can even be ac­com­plished if you don’t get an oppor­tunity to discuss your proposal with the buyer by starting your proposal with a review of the clients needs, and then presenting your solutions to the needs.

4. Not being ready to walk-away.

If you feel you “need to make a deal at all costs,” that’s usually what you’ll do. Not being ready to walk away from a win/lose negotiation, is like surrender­ing uncondition­ally to the enemy. Your plight is left to the com­passion of the buyer and most of the time, sets a bad precedent for future negotia­tion.

Solution Don’t negotiate if you’re not ready to walk away. Before you negotiate, establish your walk-away price. This is the price or set of terms and conditions that absolutely must be met in order for your needs to be met. If your needs aren’t met, it’s not a win­/win negotiation.To give yourself co­nfi­dence and prevent your­self from being painted in a no-win corner, have a viable option to a ne­gotiated agreement. In your own mind, decide what’s your best alter­native to making this deal. If you have a good alternative, (e.g., selling to another account, making up the lost revenue next week) it’s easier to walk away from a bad deal.

If you’ve tried a number of options and still feel the pro­posed solution will not work for you, simply agree to disagree. One possible ending is to say, “thanks, but I can’t make this work for us.” Then give your rationale and keep the door open for future negotiations, as well as last-minute concessions by the other party. Re­member, when you walk, the pressure to make the deal falls back on the buyer. This pressure often leads to the buyer altering their demands and creating opportu­nities for a win/win solu­tion.

Negotiating successfully takes time, preparation and discipline. Avoiding the four mistakes and properly implementing the solutions outlined will help you win more sales while increasing profits and your income.

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