Sales Negotiation & Conflict Resolution
After all the heavy lifting is done and you’re close to a signed contract, you need to make sure that you understand how to negotiate well. This lesson will cover all the important aspects of negotiation and how to deal with conflicts.
Sales & Negotiation
The fundamental difference between selling and negotiation is that selling is a process to identify the fit between what the seller is offering and what the buyer is seeking.
Negotiation, on the other hand, is the process of agreeing with the terms of the deal and is part of the selling continuum.
Yet negotiation should only begin when there is a genuine commitment from the buyer and seller towards a conditional sale, i.e. when both parties have reached an agreement.
In order to achieve a desirable outcome, it’s useful to follow a structured approach to negotiation. The process of negotiation includes the following stages:
3) Clarification of goals
4) Negotiate towards a Win-Win outcome
6) Implementation of a course of action
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Preparing for a Winning Sales Negotiation
In ‘The Art of War’, Sun Tzu stressed the importance of planning when he wrote: “Every battle is won or lost before it is ever fought.”
Preparation and planning have been shown to increase your chance of success – whether on the battle field, in a sporting competition or in a sales negotiation.
Many sales professionals spend a significant amount of time selling and preparing the details around their pitch and proposal, but unfortunately they fail to develop the strategy and tactics needed to use that information to negotiate with their customer. Make sure you’re prepared
In any potential sales negotiation, the first goal should be focused on developing a clear and compelling value proposition that is aligned with the customer’s priorities.The better job the sales professional does in positioning their solution (selling) the easier it is to negotiate a mutually beneficial agreement (negotiation).To begin negotiating price and terms before there is a compelling business case and a stated preference for your solution is futile.
Preparation is Key
Know about the party you’re negotiating with so you can capitalize on your strengths and their weaknesses.
If possible, talk to business associates who have dealt with this person before. Many negotiators develop patterns and certain styles that you may be able to use to your advantage. If you are a buyer, make sure you are thoroughly familiar with the product or service that will be the subject of the negotiation. If the other party senses that you are unaware of such details, you may be a prime target for a bluff or another technique designed to create anxiety and uncertainty.
Psychology plays a crucial role in your ability to make the most of the other party’s lack of preparation and anticipate their next move.
Always start with the end in mind
The benefits of a well-negotiated deal can have a major impact on bottom line profit and naturally, when the buyer and seller enter into a negotiation they both want the best possible deal for their own organization.
It is little wonder that negotiations are viewed as competitions, where the outcome has to yield winners and losers.
The ‘winning’ negotiator may experience short-term gains, yet long-term gains may prove difficult. That is why the process of creating an agreement that each party will willingly fulfill is referred to as a Win-Win and provides increased probability of sustaining long-term customer relationships.
Negotiation Readiness Checklist
Prior to your negotiation, ask yourself the following questions to determine whether you are ready to negotiate and to highlight those areas where you may have more work to do.
#1 Selling Value
– Identified and quantified the value of your solution in terms of the customer’s priorities?
– Identified all the stakeholders involved in this decision and understand what they care about?
– Determined how procurement will be involved in the negotiation and reviewed their specific requirements?
– Presented the value of the solution before engaging in any negotiation discussions?
#2 Setting the Stage
– Researched the people you’re negotiating with and become familiar with their background and interests?
– Considered the predominant negotiation styles of the people you’re negotiating with and are prepared to respond accordingly?
– Inventoried your sources of power in the negotiation and investigated where the client may have limitations?
– Worked to develop a common shared interest with the client that you can use to refocus the negotiations if they get difficult?
#3 Positions and Interests
– Clarified all the positions your client has taken?
– Asked questions to uncover the interests and motivations behind the positions?
– Planned to negotiate on interests instead of positions?
#4 Issues, Options and Values
– Attempted to identify and clarify all the current negotiable issues?
– Brainstormed multiple options to address each issue?
– Determined a value for each option in terms of the importance and tangible cost of presenting that option?
Here are some tips on how to improve your negotiating skills:
1) Sell first, negotiate second.
Never go into a sales call/meeting expecting to negotiate, rather go in committed to sell and close the deal without making any concessions. It’s during the selling phase when you have the best opportunity to learn the most about what it is the customer needs and wants.
2) Never negotiate until you know the needs the customer has or benefits the customer is looking for.
You can’t negotiate until you know what it is they want. Once you start negotiating with the customer, everything they say is going to be suspect since they too know that you’re negotiating.
3) Don’t start negotiating until you know the timeframe of when the other party intends to make a decision.
Time is a powerful negotiating tool. If the other party has all the time in the world to make a decision, then they will use it against you.
4) Let the other party put the first offer on the table.
No matter how tempting it is to get things going, don’t! Let the other party state the price they’re willing to pay. This at least gives you a frame of reference to work with.
5) Offer your ultimate package early.
One way to get the other person thinking differently is by letting them see your top of the line package and price. Doing this early can influence the customer’s mindset and get them thinking of something larger and, more importantly, a higher price.
No matter how skillful you are at sales negotiation, conflicts will arise. Therefore, if you are going to close the sale and build a relationship with your client, you must successfully resolve conflicts.
When negotiations get tough and you happen to stumble upon a conflict, it’s important to understand how to get pass the roadblock.
Even if the sale could be closed without resolving the conflicts, best practices suggest this approach often leads to major problems in the future. So, do not leave conflicts unresolved.
Types of Conflicts
There are three main types of conflicts:
1) Personal or Relational Conflicts are usually about identity or self-image, or important aspects of a relationship such as loyalty, breach of confidence, perceived betrayal or lack of respect.
2) Instrumental Conflicts are about goals, structures, procedures and means – something fairly tangible and structural with an organization or for an individual.
3) Conflicts of Interest concern the ways in which the means of achieving goals are distributed, such as time and money. They may also be about factors related to these, such as relative importance, or knowledge and expertise.
Strategies for Dealing with Conflict
Here are five strategies for handling conflict in a sales negotiation:
1) Compete or Fight
This is the classic win/lose situation, where the strength and power of one person wins the conflict.
Anyone using this strategy needs to be aware that it will create a loser and, if that loser has no outlet for expressing their concerns, then it could lead to a negative emotions.
This is the ideal outcome – a win/win situation.
However, it requires input of time from those involved to work through the difficulties, and find a way to solve the problem that is agreeable to all.
3) Compromise or Negotiation
This is likely to result in a better result than win/lose, but it’s not quite win/win.
Both parties give up something in favor of an agreed mid-point solution. It takes less time than collaboration, but is likely to result in less commitment to the outcome.
4) Denial or Avoidance
This is where everyone pretends there is no problem.
It’s helpful if those in conflict have time to ‘cool down’ before any discussion or if the conflict is unimportant, but cannot be used if the conflict won’t just die down.
It will create a lose/lose situation, since there will still be bad feeling, but no clearing the air through discussion.
Link to the video: https://www.youtube.com/watch?v=Hc6yi_FtoNo