What is Negotiation?
Negotiation is the art of the deal. Negotiation is an event, or series of events, designed to produce an agreement of how best to proceed. These events are dialogues to consider all of the various interests and to create a consensus on an agreement that is most advantageous for all stakeholders.
But, let’s be honest. Not all who negotiate do so with the intention of maximizing the value created for all interested parties. Some negotiate only for their own individual advantage.
Negotiation in Sales
Salespeople spend much of their time negotiating outside of negotiating final agreements. Final agreements are the events around contracts and the legal documentation that take place before they move forward with their solution. Before this final agreement, a salesperson has negotiated dozens of prior agreements. Professional salespeople negotiate for agreements to proceed throughout the sales process; they negotiate to advance the sale at every stage.
They negotiate for the first agreements that result in their gaining access to the individuals who are involved in buying or using the product or service that they sell. They exchange the value that they potentially create during the exploration of issues for access to the individuals within the prospect organization. Negotiating for time is a challenging negotiation; it is a commodity in short supply.
As the salesperson learns about their client’s business, they negotiate each advance, including access to additional individuals within the buying team and access to the information they need to help create a solution.
Successful salespeople negotiate agreements within and between the departments or divisions of their client companies, ensuring that the implementation and the execution of their product or service creates the maximum value for all stakeholders without damaging something upstream or downstream.
Successful salespeople negotiate agreements within their own company for changes to their offering, resulting in modifications that create value for their individual clients.
All of these negotiations occur before a presentation is made, and before a drafted proposal, pricing, or legal documentation is ever provided.
Great salespeople don’t bargain for lose-win agreements that result in value creation only for their client; the long-term relationships that truly create value for the client aren’t built on the client’s gaining the single advantage. They know that the partner they need to help them achieve a better outcome have to do so at a profit in order to be the strong partner that they need.
Great salespeople don’t bargain for win-lose agreements that result in their gaining the single advantage without creating a similar value for their clients. They know that these agreements are not the stuff that long-term relationships are built upon, and that they will have violated their client’s trust.
When the final negotiation events occur, great salespeople know how to expand the pie before claiming takes place. They know that a negotiation has to maximize the interest of all the stakeholders. This means creating win-win deals where value is created for their company and for their client. Having successfully negotiated agreements throughout the sales process, they create a foundation of trust that allows the final negotiations to be done without either side bargaining for their own single advantage. Much give and take has already occurred on both sides.
Great salespeople walk away from deals where value cannot be created for both their company and for their client. They know that this is the price of professionalism and that the damage to their reputation and their ability to be trusted must be protected.
When the Ability to Negotiate is Missing
Too often, salespeople see negotiation as a single event. They see a negotiation as something that happens at the end of the sales cycle, instead of something that occurs throughout.
When the ability to negotiate is missing, the salesperson struggles to advance the sale from stage to stage. They struggle to gain the initial access to individuals within their prospect’s company, often because they fail to deliver anything of value in exchange for time. When they are fortunate enough to get face time with their prospects, they fail to negotiate next actions.
When the ability to negotiate is missing, salespeople fail to negotiate within their own company. They fail to sell the modifications, the changes, and the exceptions their prospect needs from their own organization. This results in their not being able to create the value necessary to win the deal.
If these salespeople are fortunate enough to get to a final negotiation over a solution, pricing, and legal documentation, they often see it as a value-claiming event. They either try to claim value for their organization without ensuring that the bargain creates the maximum value for the other stakeholders, or they allow the client to claim value without any value created for their own company. Neither of these results is acceptable, and neither produces the long-term relationships that successful business is built on.
Worse still, without the ability to negotiate, too many accept poorly structured deals, failing to walk away and creating a situation where one side—or both sides—eventually leaves dissatisfied.
This results in a damaged reputation and a loss of trust, a price too high for any salesperson to pay.
Great salespeople have the ability to negotiate. They see every advance in the sales process as an opportunity to negotiate in good faith, creating value for their company and their client company at each and every stage. They build trust within their client’s company, negotiating changes and modifications within the buying team to ensure that value is created for all of their stakeholders. They negotiate within their own organization to innovate and create value for their clients. All of these negotiations lead to the trust that makes final negotiation easy, with both sides trusting that they can create a win-win agreement.
1. Do I see negotiation as a one-time event, or do I treat every stage of the sales process as an opportunity to create value for both my company and my client?
2. What value do I need to create for the client to create a win for them in moving from one stage of the sales process to the next?
3. Do I ensure that the agreements that I negotiate first seek to expand the pie, working to discover all of the ways to create the most value for all parties?
4. Do I postpone value-claiming behaviors from all stakeholders until we have discovered how to create the most value for everybody?
5. Do I accept lose-win agreements where the client gains and where my company loses? Do I fail to claim my company’s share of the value that is created?
6. Do I accept win-lose agreements in which the bargain is one-sided to my company’s advantage, resulting in a short-term gain at the expense of long term success? I am agreeing to poorly crafted agreement that sets up a future dispute in which our reputation and trust will be damaged?
7. Do I have the power to walk away from poorly structured deals? Am I exercising this power?
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Filed under: Sales 3.0