Sales Negotiations

If you have reached this stage of the sales process, well done!?You have done your job well.?While the deal may not be closed, your customer almost certainly wants what you are selling.?Why would they bother to negotiate with you if they did not want it??Negotiation takes time and money.?No one has enough of these to waste just to irritate a supplier.?So, congratulations, you have a deal!?Quite what the final arrangements will be are yet to be decided and the deal could fall through but you have to try really hard to lose a deal from here.?Provided you have set expectations correctly and understood what is important to your customer, you should come away with a deal.

There is a saying that I came across that summarises this paragraph in a single sentence.?It states:

People will not negotiate with you unless they believe that you can help them or hurt them.

Simply, if there is not something in it for them, then they will not get involved.?So, if your customer is negotiating, then you know that they want your solution.?If you have done everything well up to now, the rest of the sales process should be easy.

If you have fully understood your customer’s needs and they fully understand your solution, then negotiations should be straight forward.?The more that you do to resolve their objections and misunderstandings before you reach this stage, the easier the negotiation will be.?This is why it is important to be mindful of potential negotiations and what is involved early in the sales process.?It allows the sales person to provide sufficient information to their customer to avoid protracted negotiations.?By the time negotiations start, both sides should understand each other and their objectives and the discussions should hopefully be resolved quickly.?However, that is not always the case and a longer negotiation may be required so let us consider what is involved.

Any agreement will have a set of legal terms and conditions associated with it.?My approach has always been to leave these to lawyers to discuss and finalise as they have the knowledge and experience to do this.?I would not be inclined to combine negotiations of legal terms with the commercial terms as they serve different purposes and are not always aligned.?We will therefore ignore legal arrangements here.

Negotiations may also start to involve other people within a company.?Many companies will have a procurement department that is responsible for buying products.?Indeed, I know some companies where the Economic Buyer is not allowed to discuss the price of a product; this must be done by procurement.?This is to avoid the possibility of bribery and corruption so is a reasonable practice for the customer.?However, it introduces significant complications for the sales person and sometimes for the Economic Buyer.

Procurement’s role is to acquire the solution at the lowest cost and with the least commitment on their behalf.?They are not the end user of the solution so frequently do not understand the value of the solution.?So, when you have spent all of your time selling value, all of a sudden you are dealing with a group who are just focussed on price.?It is very difficult to avoid this scenario if it is the practice within your customer; all you can do is to minimise the impact.

To do this, you have to be absolutely sure that you understand everything that is driving the customer to buy your solution and what value they will derive from it.?If negotiations get difficult, you can keep focussed on the value and use the knowledge that you have about the customer to dictate terms.?In the end, procurement will be forced to consult with the economic buyer who will hopefully understand the value and reasons for your offer.

The role of the sales person also changes slightly during a negotiation.?The sales person is often the middle person, representing their company to the customer and representing the customer to their company.?The sales person is really the only person who fully understands both sides.?Their sales manager wants a deal with the highest price, their customer wants a deal with the lowest price.?The sales person has to balance both requirements to get the best deal for both sides and this can be a strange position when they first encounter it.?Again, a positive solution for both sides will be reached through an understanding of the needs of both sides.?So, ensure that you also find the time to understand the needs of your manager!