The Sales Negotiation Process

There is a misconception in sales that people buy price. However, in a complex business sale, people don’t buy price they buy risk. Knowing this is paramount to ensuring your sales efforts are superlative. It’s important to be able to show that you have the least risky solution to their problem. If you can do this, price becomes almost irrelevant.

Another thing critical to the process is understanding that you are the #1 choice. Many people go into negotiation without believing they are the clear winner. Instead, they go in ready to price cut to make it to that #1 spot. In situations like negotiation seminars individuals are taught how to sell, but never how to finish the sale with positive negotiation. If you are the #1 choice and they know they want to buy your service, the next step in their mind is to see what price they can get you at. The individuals you are selling to are trained to squeeze you, trained to get as much out of you as possible at the lowest price. Most sales people find it hard to respond to this in a positive way; you have to remain aware that they need you just as much as you need them.

When a potential customer presents you with a budgeting issue ( it will happen), look to other places that budget can be taken from. If they claim there is no other place where monies can come from, look to their next budgeting cycle. Since most customers’ primary concern is price, be sure to always refocus on value and begin with a value analysis upfront. Expressing your value to the customer is key to a successful negotiation strategy. Do this by collaborating with the client; look at their gross margins, net margins, price earning ratio etc., to produce some kind of value-creation mechanism. Doing this as a collaborative effort is important. You don’t want it to become you telling them what you’re going to do, but rather you guys coming to those conclusions together.

Tip: Instead of cutting price in order to make a project successful, try offering something like in-house or extensive training. Find something that lowers the risk further for your client, but isn’t a dollar for dollar trade-off.