By: Debbi Conger on August 23rd, 2013
Choosing the Best Sales Negotiation Style
Much of the advice on how to conduct effective sales negotiations counsels you to use a collaborative sales negotiation style to achieve a "win-win" outcome, but there are situations where you are better off to be competitive in your negotiating style.
Collaborative vs. Competitive
Before we get into the question of when to be collaborative or competitive when you negotiate, let’s define the outcomes of the two negotiations.
Collaborative negotiating, or achieving a win-win outcome, in sales negotiations generally means an agreement in which both parties get something of value and they are happy with the outcome.
When should you use a collaborative negotiating style?
- You want to preserve or enhance your relationship with the customer.
- You plan on doing business again or continuing to enjoy an ongoing relationship that benefits both of you.
- There are multiple issues on the table.
- You have sold the customer on the value and superiority of your product or service over other suppliers.
- You have convinced the customer that he/she needs to act now to achieve his/her goal and you have time to work out the terms of the agreement.
- You will be negotiating issues that are important and have long-term consequences. Because there are long-term consequences, at the end of the negotiation, both parties have committed to support the terms of the agreement and make it work.
Competitive negotiating means each party will have gotten something of value, otherwise, they shouldn’t have agreed, but only one party is happy with the outcome while the other one feels foolish.
When should you use a competitive negotiating style?
- The issue can’t be very important or doesn’t have long-term consequences.
- You either have to get to an agreement quickly or you can postpone the issue.
- You either don’t really need or want the item or issue you are negotiating for, or there are many other suppliers for the item.
- There is a single issue or only a couple of issues to negotiate. But the key to all of this is that you have no plans to do business with the person or company again.
Techniques that Help Ensure a Win-Win Solution
Align with Customer Priorities
Identifying customers’ priorities prior to negotiation will help you increase the value of your product or service by aligning benefits with customer needs.
Identify Stakeholder Issues
Often in a large sales negotiation, you will have additional stakeholders add other issues (e.g. procurement or a CxO). Prepare by getting prior information on the nature of those issues from your supporter in the company
As you offer a trade, you always reinforce the value of that trade by relating the benefit to the customer based on his or her priority. You have to be patient and allow the issues to unfold. You will be holding some of your offers back as will the customer. If you have done effective questioning, research, and planning, you can be prepared with what you can trade for the customer’s requests for additional consideration. You will not only be patient but also persistent, using the negotiation process to gather additional information on why the customer wants or desires something from you. This is especially important if additional stakeholders with new demands show up after you think you have gotten all the issues identified and perhaps agreed to.
Paint the Picture
Make it clear and obvious what it will be like in the future when the customer achieves his or her important goal. When negotiating you will relate the value of what you trade to the customer, you will let him or her know the total value of what you trade and how that value will be there for a long period of time.
Identify Multiple Issues
Identify multiple issues to increase your ability to provide a creative solution that will benefit the customer. Issues are either tangible or intangible. Tangible issues are easily identified costs, such as cost of goods. Intangible issues can be a competitive advantage, time to market, or enhanced image. Intangible issues are harder to value, but it offers you the creativity and flexibility to trade something that is of low cost to you (such as consulting hours), but of high value to the customer (improved productivity).
Collaborative negotiating helps build a stronger relationship and increases the probability of future business. You will have an equal partner in supporting the solution, who will be as invested as you are in seeing the solution implemented and effective.
You may also enjoy these articles on Negotiations:
- Five Sales Negotiations Tactics to Use with Procurement
- 5 Counter Negotiation Tactics When Buyer Makes the First Offer
- 3 Types of Negotiation Tactics and How to Respond
- 13 Tactics to Prevent a Heated Price Negotiation
- Effective Sales Negotiation Process to Increase Leverage
About Debbi Conger
Debbi Conger has over 25 years of experience in instructional design and development of customized training program for sales professionals, marketing organizations, and technical teams. She spent over 12 years at Microsoft where she developed and taught a wide selection of courses covering product knowledge, partner programs, and selling skills. Debbi also was responsible for Microsoft's world-wide new hire sales onboarding program.