Negotiating For A Mutual Commitment
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From the beginning of the negotiations, your goal should always be to win the best deal for yourself without making the prospect or customer feel that he or she has lost. This is why in any negotiation its important to reach what is called a mutual commitment to open a relationship, not close a sale.
If youve done the selling process correctly, youve been able to get your prospect or customer to concentrate on value, the benefits he or she will receive from buying. In the negotiation stage the process needs to shift from benefits to costs, how much it will cost to receive those benefits.
At this point, dont destroy everything youve built, by haggling over prices, the relationship that youve painstakingly built up with your prospect, because the result will be a win-lose situation: Someone has to lose so that the other party can win. This situation is not the type of long-term relationship you want to nurture with a prospect or customer. Your role as a negotiator is to try to reach a win-win agreement that meets the present and future needs of both you and your prospect or customer.
The first step in successfully negotiating a win-win agreement is to analyze the negotiating power of both you and the prospect or customer. Many salespeople underestimate their strengths in negotiation. They are eager to make a sale and afraid the buyer will go someplace else, so they end up making overly generous concessions. As a result, profits from the sale are limited and the salesperson, as well as his or her company, loses in the agreement.
The next step in reaching a mutual commitment is to establish a range of flexibility. This specifies the minimum position you will accept. In other words, your most favorable price, scenario, middle ground, and what you hope to achieve through negotiations.
For example, your best-case scenario might be selling your product for $12,500, with 50 percent down and the balance on installation. Your negotiation target is $11,250 with 25 percent down, and balance due in 30 days. The minimum you would accept would be $10,000 in three monthly payments.
For your best case-prices, prepare a justification for the price of each item. You should also generate a list of high value concessions that you can offer in place of price concessions.
You should always be a reluctant seller. If your prospect knows that you are eager to sell, he or she will lower their offer. If on the contrary you appear to be a reluctant seller, the prospect will assume a he or she will need a higher offer to make the deal. By doing this you can actually increase the negotiating range before the negotiation even begins, but you have to be careful because a reluctant prospect or customer may be trying to lower the range on you.
Once youre aware of your negotiating strengths, armed with justifications and possible concessions you are ready to negotiate. Remember to always strive for a win-win agreement. Negotiations should never be a battle to the bloody finish.
Here are a few tips that will help you reach win-win negation:
When faced with an outrageous price objection, dont attack. Instead, acknowledge and calmly ask for clear justification. If the prospect or customer is unable to justify your request he or she will either withdraw it or offer a reasonable price.
Once the prospect or customers offer is proposed and countered, get all the additional demands out in the open. This will prevent the prospect or customer from nibbling concessions through negotiations.
Never give a concession without getting one in return. Give concessions one at a time, and give them in decreasing amounts. This, then signals to your prospect or customer that you are approaching the bottom and additional requests will get less value.
If you cant agree on a final price or deal with the prospect or customer dont be afraid to withdraw your offer. You can always retreat to a higher authority, then come back and say something like, Im sorry, I made a mistake: The previously discussed price is no longer available.
Suddenly the previous price may seem very attractive to the other side. Youll often find that the prospect or customer will ask you to reconsider and offer him or her the same price and terms.
The goal of any negotiation, as I mentioned earlier is to open a relationship, not close a sale. You want the prospect or customer to commit to you, but you must also commit to him or her.
Once youve made the sale, always remember to not just to thank the prospect or customer, but also to congratulate him or her, on the wonderful purchase he or she has just made.
Copyright2007 by Joe Love and JLM & Associates, Inc. All rights reserved worldwide.
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