Mastering the Art of Negotiation in the Sales Environment
Just as the title says, negotiation is an art. Start-up entrepreneurs tend to make many mistakes in negotiation; they tend to be very aggressive when closing a deal. This could be because of a lack of experience, or the pressure to succeed. Mastering how to handle negotiations can be the key to closing more valuable deals in the future.
How do you manage this art? These 10 rules will help you to make the negotiation process easier.
Rule 1: Focus on value
Know the value of your product/service. Sell your value, not your price. Many entrepreneurs make the mistake of focusing on the price of their product/service. Lines such as “For x amount only” should not be the main part of your vocabulary in a negotiation. The main part of your negotiation should be the value that you can bring to the other party.
Rule 2: Put your highest bid first
Go into the negotiation meeting with your lowest price in mind, however, when you put a proposal on the table put a higher price. The reason for this is that the other party has their own price in mind as well. If they refuse your highest price you can always go lower without affecting your margin.
Rule 3: Speak to emotions
Negotiation is about speaking to a need; what better way to do that than by speaking to the other party’s emotions? Speaking to emotions does not entail manipulation, but it means being intuitive to the other party’s feelings. Create a positive emotional environment in order to elicit a positive reaction to your proposal.
Rule 4: Ensure a win-win situation
It is important to not only think about yourself, but about the other party as well. A good negotiation outcome is when both parties win. When planning your negotiation strategy, always think about the benefits to both you and the other party.
Rule 5: Look at the long-term goal
Negotiation meetings can be unpredictable, you might be set on a specific price, but find that the other party is not buying it. Think further about your long-term goal – are you able to take a knock with this deal knowing that it is a sacrifice for a future long-term relationship?
Rule 6: Listen more, speak less
When you talk more during a negotiation you become nervous, end up saying too much and leave room for mistakes. Speak only when you need to speak and focus more on listening to the other party. To learn more about supercharging your listening skills, visit our previous article here.
Rule 7: Know your worth
First-time negotiators may be tempted to compromise more during a negotiation. Do not accept to be manipulated and do not give a free offer during a negotiation. When you do these things it sends a signal to other party that you are willing to compromise yourself in order to close the deal.
Rule 8: Don’t disclose your costs
Never let the other party know what your operating costs are. As soon as they are aware that it cost you “x” amount to create a product, the price you put on the table will be compromised. Do not list the price of everything that goes into your product as the other party might get another provider for a specific task and then ask you to remove a line item on your proposal.
Rule 9: Anticipate questions
Go into the meeting with answers to the commonly asked questions. The 3 main questions that you should be prepared to pitch are why you and not another provider, what’s in it for the other party and what you require from them.
Rule 10: Don’t rush to close
Negotiations can sometimes be overwhelming. Don’t push yourself to settle the deal in one sitting, sometimes you will have to allow yourself some time to think further. If you feel yourself getting overwhelmed during the negotiation process, wrap up the current meeting and request another meeting.
Those are my 10 rules to a successful negotiation process. We welcome your thoughts.