Some organizations train their buyers to negotiate more than once, each time taking more and more out of the deal. These buyers are extracting value instead of creating it. First you negotiate with your main contact. Then he brings in purchasing. Then purchasing brings in the Chief Financial Officer.
By spreading out the extraction of the value, always from your end, you give up more than you otherwise would. You get sucked in. You get emotionally invested. You’re so close! If only you could sharpen your pencil a little bit more . . . (sound painfully familiar?)
This is a negotiating tactic. To combat this tactic, you don’t play. Instead, you negotiate once.
Once Price Negotiations Begin, Negotiate
Once your dream client begins to negotiate, you have to decide whether to engage or withdraw.
If you are going to negotiate, you have to be certain that your negotiations are final. Whatever you agree to must be binding, and your client has to agree that they will buy at the conclusion of negotiations. You have to ask, “If we are negotiating price, are you committing to buy upon our successfully reaching a deal?”
If the answer isn’t “yes,” or if your not completely satisfied that this is true, you must ask the follow up question: “Who else is going to be involved in this negotiation?” If purchasing or some other professional buyer is going to be involved, bring them in now. You want to be sure that you negotiate only once.
Or don’t negotiate.
If your contact suggests that there are going to be further rounds of negotiation, don’t negotiate. The result will be that you end with a lower price than you need, and your client will end with a poorer result than they need. You know your price isn’t going to go up with additional negotiations, right?
Tactics to lower prices are highly effective at lowering prices, but they don’t do anything to improve execution. Instead they make it more difficult to produce results because they strip out the profit necessary to do delivering those results.
Instead of engaging in a negotiation, be honest and say something that sounds like this: “I think negotiating price now is premature. Our efforts are better spent figuring out how we put together the biggest, best value-creating solution we can, and then we can negotiate once we have done that.”
Do what is right for you and your dream client: Build the biggest, best value-creating deal that you can, and then negotiate price once at the end of that exercise.
How many times do you negotiate in the course of deal?
How many people do you normally end up negotiating with?
What is the best strategy to combat negotiating more than once?
How do you ensure that you negotiations don’t cause you to drop your price so much that you don’t destroy your ability to deliver the value you promised?
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Filed under: Sales 3.0