International sales negotiations can be challenging and rewarding, but they require careful research and preparation to avoid costly mistakes and cultural misunderstandings. In this article, you will learn how to research and prepare for international sales negotiations using six steps.
Before you enter any negotiation, you need to know what you want to achieve and what you are willing to compromise on. This means defining your best alternative to a negotiated agreement (BATNA), your reservation price, your target price, and your value proposition. You also need to understand your counterpart's goals, interests, and needs, and how they align or conflict with yours. Knowing your goals will help you set realistic expectations, avoid unnecessary concessions, and create value for both parties.
To research and prepare for international sales negotiations, start by understanding the cultural, economic, and legal landscape of the target market. Study the potential client's business environment and specific needs. Learn about the negotiation styles and business etiquette prevalent in that region. Develop a strategy that includes setting clear objectives, preparing a flexible negotiation plan, and anticipating potential objections. Equip yourself with detailed knowledge about your product or service and its competitive advantages. Finally, rehearse negotiation scenarios and ensure all logistical arrangements, such as language translation and travel plans, are in place.
Start negotiation before the meeting. Ask about their target price, their volume, and previous products they use etc. The meeting is just to conclude.
You win negotiations during your preparation! And subsequently the efforts you put into the preparation define your results. Start with identifying what you aim for (higher RSP‘s or higher transfer prices, more volume in pieces, higher marketing spending per item category, …) as sometimes there are internally (very) different ideas and points of view. So be sure you hear and align all internal stakeholders and get them to agree to the common denominator. Once this is reached check your minimum and your maximum results. The minimum defines what you need at least, while your maximum shows what you aim for.
As with any negotiation, you have to know what an ideal outcome would be and where your realistic expectations and absolute limits are. You also have to be prepared to be approached with solutions that you simply haven't considered the scenarios for as your counterpart comes from a different culture
The most important thing is to know the situation of the market, prices of our competitors and availability of stocks in the market.
The next step is to research the market conditions and trends in the country or region where you are negotiating. You need to know the demand and supply factors, the competitive landscape, the regulatory environment, the pricing strategies, and the distribution channels that affect your product or service. You also need to identify the key decision-makers, influencers, and stakeholders in the negotiation process, and how they are related to each other. Researching the market will help you tailor your offer, anticipate objections, and find opportunities for differentiation.
Try to verify the information you got from the customer. Do they really have that volume? Those are really their target price? Know your limits before the meeting.
Before you define your minimum and maximum outcome (see my first comment) you need to identify the marke pre-conditions, which might differ from market to market. Even within a market different segments have different needs, expectations, limits, etc. Therefore interview your colleagues internally as they will most likely already have some information (the Force-Field analysis might help here). Conclude all of that (the Highlighting analysis by Firestein and Treffinger should help here). Furthermore PESTLE and Porters′ Five Forces will deliver the insights you need to set the frame. Keep in mind local/ regional aspects look at these topics from the point of view of your customer respectively the End-user.
Knowledge is power, so the more you can research in advance, the better prepared and more confident you can be going into any negotiation whether it's international or not.
Good and real information is the key. Try to check the situation of the market talking with suppliers and customer, that is the only way to know real situation.
Conducting market research is essential before entering negotiations. It allows for a comprehensive understanding of factors such as demand, supply, competition, regulations, pricing strategies, and distribution channels. Identifying key decision-makers, influencers, and stakeholders helps tailor offers and anticipate objections effectively.
Culture plays a vital role in international sales negotiations, as it influences the communication styles, negotiation styles, decision-making styles, and conflict resolution styles of the parties involved. You need to understand the cultural dimensions and preferences of your counterpart, such as individualism vs collectivism, power distance, uncertainty avoidance, masculinity vs femininity, long-term vs short-term orientation, and indulgence vs restraint. You also need to be aware of the cultural norms, values, beliefs, customs, and etiquette that affect the negotiation behavior and outcomes. Understanding the culture will help you build rapport, avoid misunderstandings, and respect differences.
Culture is a little bit exaggerated. An important point is the person. In small talk, you can ask how did business with others. Ask him questions. For example, what do you do if your customer does not pay regularly?
Culture is crucial in preparing for international sales negotiations. Start by researching cultural norms, values, and communication styles of the target market. This knowledge helps build rapport and trust, crucial for successful negotiations. Adapt your approach to align with cultural preferences, such as decision-making processes and business etiquette. By respecting and understanding cultural differences, you can navigate negotiations more effectively, fostering stronger relationships and achieving mutually beneficial outcomes in international markets.
Your approach to cultural differences might make or break the deal! As a first step its best to understand your own culture - sounds simple, but is far from that. What is the negotiation style you are used to? How do you approach such a situation in your typical cultural context? How does other persons in your surrounding act/ perform/ behave? These answers are crucial to understand yourself which is the first step to master such situations. In a second step you investigate into the cultural context of your counterpart(s). Check all resources, especially colleagues with experience in similar situations. What is the base line of the persons you are going to meet? Consensus oriented? Or individuality driven? Direct or indirect expression?
Be aware that the culture is the local culture and also the company culture and they can be different. In international sales, sometimes the decision maker in a local market is from somewhere else and that situation will influence everything.
It's not only important to learn about the culture of the persons you are negotiating with, but you also have to know what cultural norms tend to drive your own behaviour. Accept that each person is also an individual and not going to react necessarily in the textbook style of a "Texan", "Norwegian" or "Thai". It takes a huge amount of empathy and active listening to really tune into what your counterpart is saying and meaning, but also to understand what they are realistically looking to achieve and how they expect you to react.
Based on your research and understanding, you need to plan your negotiation strategy and tactics. You need to decide whether you will adopt a competitive, collaborative, accommodating, avoiding, or compromising approach, depending on the situation and the relationship. You also need to plan how you will open the negotiation, present your offer, handle objections, make concessions, and close the deal. You should also prepare a list of questions, arguments, evidence, and alternatives that you will use during the negotiation. Planning your strategy will help you stay focused, confident, and flexible.
One tip is that let them ask what you can deal. Always pretend as you do not give, they take it. For example, if you are okay to 10$, say 11$, and let them conclude as 10$.
Prepare a strategy for as many scenarios as you believe are realistic, but be prepared to be surprised with a proposed solution that you perhaps haven't considered. If you're negotiating as part of a team make sure the roles are thoroughly defined
Identify your main objectives and the compromises you can accept. Think about which terms you can be flexible on and which ones are essential for you.
Of course, without an strategy it is impossible to sell, different tactics must be planed before the negotiation with a customer.
Based on thorough research and understanding, crafting a strategic negotiation plan is essential. Assessing the situation and relationship dynamics helps determine whether to employ a competitive, collaborative, accommodating, avoiding, or compromising approach. Mapping out the negotiation process, including opening, presenting offers, handling objections, making concessions, and closing the deal, is crucial. Preparation of questions, arguments, evidence, and alternatives is key to staying focused, confident, and flexible throughout the negotiation.
Another step is to prepare your materials and resources that you will use in the negotiation. This includes your proposal, contract, presentation, brochure, samples, testimonials, or any other documents or tools that support your offer and value proposition. You should also prepare your technology, such as your laptop, phone, camera, microphone, or any other devices that you will use for online or face-to-face communication. You should also check the compatibility, security, and reliability of your technology with your counterpart's. Preparing your materials will help you demonstrate professionalism, credibility, and quality.
This is a must for every occasion. At least have an offline storage in your phone to show your materials. It is better to share your materials before the meeting.
This article is about international negotiations - which are not a product presentation. Let’s assume you meet face-to-face (as dynamics in online meetings differ significantly) and invested in traveling (more than just a day trip by car). Under these preconditions it is essential to have all data/ files/ presentations/ etc. ready made in advance and - undoubtedly - with a back up. Don’t just rely on a laptop - have a second storage available (I prefer a USB stick as this works with any computer, no matter where it comes from). Beyond that I am (still) an advocate of printed material. Have a handout ready for the people you deal with as - while you hand over your presentation - you set the frame.
This should be a given. If you need something (a ppt, a cable or a brochure etc) to make your point, check, double check and make sure you have a back up especially for overseas visits. It costs a small fortune for a company to send you abroad so it's essential to remove as much margin for error as possible.
When you visit a customer you must to show all the details of your product with the laptop, brochure or another tools. Customer will be happy to see the portfolio through the proper tools.
It's always good to have several people looking at any documents and assets to look for errors and room for improvement. Once you have worked in an asset for several days, some basic misspellings will be very easy to miss, and they do make a difference. In some countries more than others. In international sales, have a native born speaker or local expert also see everything in case there are local aspects you're missing.
The final step is to practice your negotiation skills and techniques before the actual negotiation. You can practice with a colleague, a friend, a coach, or a mentor who can give you feedback and suggestions. You can also practice by yourself, by recording your voice or video and reviewing your performance. You should practice your verbal and non-verbal communication skills, such as your tone, pitch, volume, speed, pauses, gestures, eye contact, and facial expressions. You should also practice your listening, questioning, persuading, influencing, and problem-solving skills. Practicing your skills will help you improve your competence, confidence, and effectiveness.
Remember that negotiations vary across cultures so you need to be really prepared. In Asia silence is one tool which is more often used than in Europe or the US and this can be the downfall of many sales managers looking to close deals there, if it is misinterpreted as disagreement or a lack of approval. Learning not to jump into the space but to get comfortable with making an offer and sitting in silence takes a lot of practice
Prepare yourself by taking notes (I personally prefer old-school notes on paper, like the Leuchtturm journals) highlighting your key-arguments. Put them in order based on your planned or expected schedule of events (nevertheless be prepared that the discussion runs different). By formulating your thoughts into key words/ sentences you force yourself to clear all the "noises" and be focussed on what really matters. Perform the discussion upfront as a test and decide how you want to respond to counter-arguments/ interruptions/ distraction maneuvers/ etc. The energy you put into your own preparation upfront will pay a great ROI, as your increased self-confidence will allow you to really see and hear the other parties action.
Reach out to people who already have experience in the specific market you're interested. Friends, consultants, professionals in other industries. Get insight into the reality of that market. If you're not fluent in the language, aim to learn at least some basic lines to start the conversations.
Make sure that every person in your team understand his/ her "function" to avoid adverse effects. Allocate enough time upfront to prepare the team, and align everybody towards the goal and share all relevant data. Based on the cultural differences you need to accept hierarchical limits. Be prepared to respect the Senior′s and their position. Collect relevant information from sources you have access to, especially regarding the "base line" of the topic and look at it from both parties perspective. And know your self-worth - be sure you know what you aim for and defend your minimum outcome. And be strong enough to leave table if the outcome is not good enough.
If you are going to be negotiating in a team, make sure you really clearly define the role of each person in advance. You don't want your negotiation to be ruined by a naive comment from a team member who means well, but has little practical experience in that market.
Mainly five distinct Negotiation styles can be cited: Competing, Collaborating, Compromising, Accommodating, and Avoiding. Negotiators usually fall into one or more of these five categories; whether they are trying to reach an agreement, or resolve a conflict with multiple parties.
International sales negotiations differ significantly from Western practices. Some cultures allow only senior members to speak during negotiations, contrasting with the interactive Western approach. Therefore, hiring an experienced professional like myself is often wise. Consider additional factors: respecting hierarchy, understanding non-verbal cues, building relationships, adapting negotiation styles, patience, and time sensitivity. Familiarize yourself with gift-giving customs, etiquette, and "face" preservation. Recognize decision-making processes, legal compliance, and post-deal relationship maintenance for success.
Don′t assume anything at all! International sales just add one more level of challenges, and the basics are still the same Understand not only the company you're negotiating with, but also the person or persons. Where are they personally, what do they want to achieve with this deal. Will it help them progress with their own personal goals or not really. Also get to know the company, are the goals and values aligned? do your products or services completely match their needs, or is there some room for improvement. The culture will also be important, it's different to negotiate in each market. Timelines, requirements, communication styles all vary depending on each country and they unconsciously influence the negotiation. Be conscious.