There is a common misconception that sales negotiation skills are only required towards the end of the sales process. The part in every sales process where costs and terms are agreed. Whilst this is undoubtedly true, it’s also true that the best salespeople are negotiating all the way through the sales process. In fact every Professional salesperson negotiates, every single day which is why it’s an important part of any training programme.
From negotiating with their children on what to have for breakfast, to negotiating with a Partner on where to go for dinner. In between times they will negotiate workloads with their line managers, negotiate meeting times with co-workers, negotiate dates & times for appointments with prospects and lastly negotiating sales contracts, project delivery and aftercare contracts. In short, Negotiation is actually unavoidable, and the ability to Negotiate is a core skill for every Salesperson.
Like most things in life when it comes to Negotiation knowledge is power. The more information you have and better prepared you are then the more likely you will achieve a successful negotiation. Follow the information below to discover how to research and plan your next negotiation.
These are the needs, wants and desires of the parties involved in the negotiation. In business this can be complicated as not only may both sides have differing goals, but parties within each side may have differing and even conflicting Goals.
Goals can be subjective for example “We need to increase the confidence of our people.” or they can be more objective like “We need to reduce our overheads by 10 this quarter”. Either way it’s important to know both your own Goals and that of the other side. Important questions you must ask are:
| Business Goals Examples | Personal Goals Examples |
| Strategic | Security |
| Change | Satisfaction |
| Growth | Peer Pressure |
| Improvement | Financial Gain |
Please note Goals are NOT the same as outcomes.
Example:
Goals – George is 65 years old and would like to retire (Goal). In order to fund his retirement he needs to sell his business but no one wants to invest a large sum of capital. Mike would like to buy a business (Goal) but does not have any capital to invest.
The Outcome is the Negotiated agreement that they come to.
These are all the possible solutions that satisfy the goals of both parties. They are all possibilities that both parties agree or say Yes to.
By investing time to explore all the Options then you are more likely to find:
Example:
Goals – George is 65 years old and would like to retire (Goal). In order to fund his retirement he needs to sell his business but no one wants to invest a large sum of capital. Mike would like to buy a business (Goal) but does not have any capital to invest.
Option – George can sell his business to Mike but rather than invest a lump sum he agrees to pay George on a Monthly basis from the profits for the next 5 years and hence fund his retirement.
Criteria are the “terms” of any possible Option
Example:
Goals – George is 65 years old and would like to retire (Goal). In order to fund his retirement he needs to sell his business but no one wants to invest a large sum of capital. Mike would like to buy a business (Goal) but does not have any capital to invest.
Option – George can sell his business to Mike but rather than invest a lump sum he agrees to pay George on a Monthly basis from the profits for the next 5 years and hence fund his retirement.
Criteria – George needs to guarantee a minimum payment every month regardless of the profitability of that month. Mike needs to ensure ensure he will not be liable for any warranty, liability or compensations claims from the period before he take responsibility/ownership of the business.
Not all Negotiations end in an agreement, it is therefore vital before entering into any Negotiation that you first work out what the Cost of No Agreement is for both parties. The costs of no agreement can be both Objective and Subjective.
Example:
Goals – George is 65 years old and would like to retire (Goal). In order to fund his retirement he needs to sell his business but no one wants to invest a large sum of capital. Mike would like to buy a business (Goal) but does not have any capital to invest.
Option – George can sell his business to Mike but rather than invest a lump sum he agrees to pay George on a Monthly basis from the profits for the next 5 years and hence fund his retirement.
Criteria – George needs to guarantee a minimum payment every month regardless of the profitability of that month. Mike needs to ensure ensure he will not be liable for any warranty, liability or compensations claims from the period before he take responsibility/ownership of the business.
CNA – George does not have the financial resources to retire (Objective) however he has been trying unsuccessfully to sell his business for three years and is now desperate (Subjective) for a solution. Mike is keen to buy a business (Objective) but knows there are hundreds of businesses for sale and he is pretty relaxed (Subjective) if this deal doesn’t go through another one will come along.
The Subjective Cost of No Agreement can be more powerful than the Objective ones as people make decisions emotionally and then justify their position intellectually afterwards.
Not all Negotiations end in an Agreement, it is therefore vital before entering into any Negotiations that you first work out what the Best Alternative to No Agreement is. In some cases you may well experience that the other party is so entrenched in their position that they have no desire to Negotiate. BATNA is typically but not always, an alternative course of action that can be taken if no agreement is reached.
BATNA helps you prepare for a Negotiation by:
Example:
Goals – George is 65 years old and would like to retire (Goal). In order to fund his retirement he needs to sell his business but no one wants to invest a large sum of capital. Mike would like to buy a business (Goal) but does not have any capital to invest.
Option – George can sell his business to Mike but rather than invest a lump sum he agrees to pay George on a Monthly basis from the profits for the next 5 years and hence fund his retirement.
Criteria – George needs to guarantee a minimum payment every month regardless of the profitability of that month. Mike needs to ensure ensure he will not be liable for any warranty, liability or compensations claims from the period before he take responsibility/ownership of the business.
CNA – George does not have the financial resources to retire (CNA) and has been trying unsuccessfully to sell his business for three years and is now desperate for a solution. Mike is keen to buy a business and has spent £3,000 with Solicitors and Accountants thus far completing his due diligence on the company.
BATNA – George is in discussion with his Lawyers to explore the possibilities of a Management Buyout for the business. Mike knows there are hundreds of businesses for sale and he is pretty relaxed if this deal doesn’t go through another one will come along.
A concession is something given to the other party in furtherance of the agreement. These concessions should be identified in advance and segmented for both parties in terms of:
High Value – High Cost
High Value – Low Cost
Remember – Never give anything away without receiving something of equal or greater value in return.
Example:
Goals – George is 65 years old and would like to retire (Goal). In order to fund his retirement he needs to sell his business but no one wants to invest a large sum of capital. Mike would like to buy a business (Goal) but does not have any capital to invest.
Option – George can sell his business to Mike but rather than invest a lump sum he agrees to pay George on a Monthly basis from the profits for the next 5 years and hence fund his retirement.
Criteria – George needs to guarantee a minimum payment every month regardless of the profitability of that month. Mike needs to ensure ensure he will not be liable for any warranty, liability or compensations claims from the period before he take responsibility/ownership of the business.
CNA – George does not have the financial resources to retire (CNA) and has been trying unsuccessfully to sell his business for three years and is now desperate for a solution. Mike is keen to buy a business and has spent £3,000 with Solicitors and Accountants thus far completing his due diligence on the company.
BATNA – George is in discussion with his Lawyers to explore the possibilities of a Management Buyout for the business. Mike knows there are hundreds of businesses for sale and he is pretty relaxed if this deal doesn’t go through another one will come along.
Concessions – George is prepared to spend 3 months of his time ensuring during the handover period which is Low Cost to him as he will be retired but High Value to Mike as he is new to the industry and recognises the benefit of George’s experience.
Mike is prepared to move quickly which has no cost to him however this is High Value to George as the last thing he wants is a long protracted sale.
Aggressive Tactics
Co-operative Tactics
1. Be prepared to walk away. Sales Negotiation is 70% Mindset and 30% Strategy and unless you are prepared to walk away, no strategy will help you.
2. It’s not what you charge it’s what your worth. Thoroughly research the market and discuss with the buyer the Value you bring to the table?
3. Take council from colleagues and external advisors and agree a pre-meeting strategy for the negotiations then PRACTICE.
4. Never give anything away without receiving something of equal or greater value in return.
5. Never enter a Negotiation without first providing your price and outline terms in advance, to anchor the prospect to a higher number and terms.
6. Where possible in high value deals do not include your sales people in Negotiations, as they will be emotionally involved in the sale and not objective.
7. Ensure everyone in your team have agreed in advance your trade-offs, your concessions, and your best alternative to a negotiated settlement.
8. You must be comfortable with silence and at most only talk 30% of the time, as the more you talk the more information you are giving away.
9. If it’s not Win Win then you run the danger of the prospect backing out or failing to implement your agreement, then the lawyers are the only winners.
10. Negotiation is between human beings, you must therefore be familiar with Human Psychology, DiSC, Neuro Linguistic and Programming.
Iain Swanston has spent over 30 years in B2B sales selling, training and leading teams both domestically and internationally. In addition he serves as an Associate at Strathclyde University Business School where he has delivered the sales content for the Masters in Entrepreneurship since 2015.
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