Negotiations Training

There's More than Revenue at Stake:
Negotiating with Customers

Ask anyone in sales and marketing and they'll be quick to tell you that more than money is at stake during a sales negotiation. Generally, while the primary concern most have when negotiating with a customer is money, other areas also come into play:

* Potential for good/bad word-of-mouth "advertising" (bad news travels fast)
* Potential to become a referenceable account
* Positive publicity (press release, even participation, etc)
* Credibility within an industry (ex: effects of landing a marquee company in the food and beverage industry)
* Internal references that can lead to additional business in other departments or divisions

Remember that you're not just negotiating for money, shipping terms, completion times or product specs. You're trying to build a long-term relationship that can pay off not only in the near-term but also in the long-term. A struggling company trying to build a name for itself stands to gain a great deal by landing a large client name with a household name. The ability to say a company like Dell or ExxonMobil uses your products or services can be tremendously effective when trying to win new business.

Listed below are some general DOs and DONTs of negotiating with prospects or existing customers:

What to Do When Negotiating with a Customer

• Approach negotiations as problem-solving sessions, not as bargaining sessions designed to outdo the other party. If you follow our suggested consultative selling approach, you will already be in tune to the idea that you are working towards providing a solution rather than pushing a product or service. Project a professional image of a trusted advisor, not of just another organization hawking its products or services.
• Deal with common areas of agreement first. You can build a strong foundation for agreement by knocking out the "easy" issues first. This strengthens goodwill and makes it easier for both parties to work together to resolve areas where there may be greater disagreement or conflicting concerns.
• Come up with items that are easy for your team to provide to the customer that are considered by them to be of high value. Your customer may place a great value on receiving expedited shipping terms while your company can easily absorb those costs. Is there something you can provide very willingly that will be of benefit to your customer? One word of caution: Just because a concession is easy to make does not mean you should make that evidently clear to the customer. If you cheapen the value of a concession, the customer may not see it as valuable as they once did.
• Seek to negotiate based on the future of your relationship with your customer. While you shouldn't roll over in order to earn a customer's business, you should make every effort to act in a good-faith manner to build loyalty and effectively lock out the competition.
• Make sure your customer feels they are important. Even if your client list is made up of a thousand companies, you should make your client feel like they are at the top of the list. Even small deals can mushroom into large opportunities. Take care of each and every customer to build a pipeline of goodwill and future business.

What Not to Do When Negotiating With a Customer

• Don't be too quick to discount. One of the greatest pitfalls of a sales negotiation is the willingness many have to agree to a discount to earn a customer's business. Not only does this reduce the size of a sale by leaving money on the table, it can also leave a bad impression on customers. Being to quick to discount cheapens your product or service and leaves customers wondering if you had been overcharging them in the past.
• Don't let customers use competition against you. When a customer points out that a competitor is willing to provide the same product or service at a lower cost, focus not on the competitor but on your product or service. Utilize benefit statements to show why your product or service is not like the competition. Help them understand that the reason your price is X rather than Y is because of particular Features, Advantages and Benefits (what we call FAB statements).
• Don't be afraid to walk away. That's right? Every one of us will eventually find ourselves walking away from potential business when a customer's requirements become too unreasonable. Granted, walking away from potential revenue is painful. Yet, agreeing to irrational terms that lead to losses or potential legal action can be far more painful. Consider the ramifications of what a customer is requesting. If the danger is too high, be prepared to walk away. The customer may change their tune. If not, you've saved yourself a future headache.
• Don't Let Yourself Get Trapped by "Standard Operating Procedure". One of the worst things you can do during a negotiation is fail to be creative. Some companies have one way of doing things - it's their way or the highway. We believe you should approach negotiations with an open mind. Think about "different" ways of doing business or providing your products or services. Being flexible and open to ideas will help you score points with your customer and can help you win a larger piece of business than originally expected.