The phrase “leaving money on the table” is an idiom that means not getting as much money as you could from a transaction. Whether you are a banker where up-selling and cross-selling is the difference between profit and loss (“Did you know we also offer great rates on mortgages…”), or you sell products in a competitive environment and you have to concede on price in some SKUs in order to win the rest of the business (“I can provide that rate for the carpet in the hallways if you also get tile for the kitchens”), strong negotiation skills are a certain path to maximizing results.
And, as if that isn’t hard enough – the toughest task is to achieve maximizing results while still satisfying the other side. That is why Shapiro Negotiations Institute has taught for decades how to plan for successful sales and negotiations while maintaining and enhancing the relationship for future deals. If a goal of your sales team is to make better deals, faster and at better margins, then you must read (and follow) these five tips:
Are they preparing enough?
Most sales pros tell us that while preparation is a logical task, they have little time for it. During our work with sales organizations all over the world we discovered the two biggest hurdles to preparation are that salespeople don’t know how to prepare and they don’t feel they have time. An efficient process solves both of these issues.
A system helps build habits that occur naturally under pressure. Think P.A.I.D.
Precedents: Has this happened before? What worked? What didn’t work? What precedents will they use when we negotiate?
Alternatives: What are all of my options? What are theirs? How would I rank these in order of importance? And, what is my highest goal (the most I can reasonably expect to get) and my walkaway (where I walk away or at least stop and reconsider my options)?
Interests: What is their need? To “win”? To avoid pain, risk or hassle? To achieve more sales? By keeping your conversation focused on what fuels their emotion, you can accelerate decisions.
Deadlines: Deadlines set a sense of the level of importance, urgency and exchange value for your goods and services. Deadlines also help us manage expectations so maximize our value. Best practice is to use the deadline to create a timeline – this is one of the simplest and most powerful tips (if shared with the other party) to guard against those stagnant deals we have all been through and wish to avoid.
Is their discovery deep enough?
Once the conversation is underway, pressure builds towards a resolution. As time passes, both sides would rather get it over with and move on to other matters. Great sales performers resist the temptation to start making offers and instead continue to probe for information.
Use W questions. You can gain a lot of information fast by stating your intention to learn about their business. A few quick questions will help me provide you with the most relevant answers….and then delve into: “What is important for you?” Acknowledge it when they say “price” and go on to ask “What else? What else? Which is most important? Why?” Use your gut to tell you when to change direction in the conversation.
Hypothesize. Experienced sales people will recognize buying signals in any situation. They are wired to see sales potential. And, when they see it, they often use hypothetical offers to test for interest in different aspects of your ‘offer’ in order to progress toward a close. Hypotheticals are also very effective when trying to break a deadlock and a great way to gauge the other side’s true interest.
Answer questions with questions of your own. When you are faced with an unexpected or manipulative question, answer it with a question of your own. A vendor asks about your profit margins and why you can’t pay more for his service. Respond with “That’s an unusual/interesting question. What margins do your other vendor’s typically maintain? Or, how does that compare with your margins?”
Tell me more. Asking questions is a safe harbor that prevents you from conceding anything while you keep learning more about their real needs. When you aren’t asking direct questions, encourage them to continue sharing information by saying “Tell me more…” or “That’s interesting, go on…” or “I’m curious about that.” People like to talk so let them and just listen. When your lips aren’t moving, you cannot cave in.
Are their proposals value based?
By probing and actively listening you learn what the other side wants to achieve, what they fear, and what they most value, prior to making your proposal.
The bottom line is that buyers need your goods and services, and you should ask yourself these three questions to find where real value can be delivered:
- How can you help them make more money?
- How can you help them to reduce risk?
- How can you reduce the hassle of working together?
If you can deliver value on these issues, there is another deal to be done with that partner. Remember, it always costs less to keep your best customers than to go find new ones.
Do they manage client/potential expectations?
When budgets, timelines, renewal opportunities or quotas start creating additional pressure, it is hard to resist deals that meet your minimum needs. Buyers will smell the opportunity to ask for more when they sense that you need the deal.
Great salespeople manage expectations by avoiding the twin traps of overpromising and undervaluing.
Overpromising is a short-term solution that quickly outpaces most sales professionals’ energy, organizational skills and/or calendars. Early customers love the low price, and the fast, responsive over servicing of their business as you build the relationship (and the sales!). As the sales reps’ customer base starts to grow, they soon discover they can’t keep up with the “Yes, I can do that” commitments. Balls start to drop. Customers start to reconsider your value. In an age of instant anonymous internet reviews, this can be a customer satisfaction (and new business development) killer.
When asked to concede something, the best negotiators:
Deflate expectations (“I’ll see what I can do…” or “I’ll have to check…”) and then back it up with a justification (“because we haven’t seen the price of our raw materials this month…”).
and then explore a hypothetical (or real) trade. “If I could find a way to do that, would you consider this…” The concession is stalled, and the exchange of value is on the table. The key here is to get something in return.
Undervaluing is the result of succumbing to the temptation of “discounting.” You have a good or service that is worth whatever value you can establish for it. Always frame your offers in terms of how it helps them to get what they want.
When the other side pushes on price, and you might be tempted to give in – use the five most valuable words when negotiating under pressure:
“I’ll get back to you.”
This buys a little time to consider your response before making concessions. Good negotiators move slowly and are always exchanging value during the back and forth phase of the proposal exchange.
Ultimately, when you do get back to them, you will be reminding them of the value your product or service will be providing them, and ideally countering with questions such as – What were they expecting? Do they see value in your offering? Is this a solution they are supporting internally? Etc.
Are you properly coaching them with regard to negotiations?
Great sales leaders observe the tasks and behaviors that drive sales and hold sales teams accountable for executing the entire process from preparation, probing, listening, and proposing. Reinforce good negotiation and influencing behavior by:
- Requiring and reviewing preparation documents of some type
- Coaching for active listening
- Using and promoting good questioning techniques
- Setting expectations for proposals by encouraging creativity and exploration while adhering to the proposing guidelines
We hope you have found these five in-depth tips valuable as you coach your team members on negotiation.
Andres Lares is managing partner at Shapiro Negotiations Institute. He will be presenting a free webinar with colleague Jeff Cochran at 2 p.m. Tuesday, April 28 on the same topic – “Is Your Sales Team Leaving Money on the Table?” You can register here.