End of Year Squeeze – Learning to Negotiate

More decisions are going to purchasing, even when budget seems to be approved! This means more negotiating…

(Note: Here’s a mushroom picture from our Labor Day picnic in the mountains – forecast; 10 inches of rain. Lucky for us we had a picnic shelter)

Strategy

Don’t be fooled into thinking you are just there to go through some read tape or that the questions are just part of an informal price discussion. Large companies (and probably many mid-sized companies) are going to negotiation training – you go to sales training; they attend negotiation classes. They also read sales books – probably more sales books than you read.

Your best weapon is found in understanding how negotiations work and what is being taught in negotiation school. They read sales books in order to understand the tactics you use to get people to buy. If they know what Sandler says to do, they know where you are headed, and will craft their strategy to counter you. Most discounts are given at the end. The old Pareto principle – 80 percent of your discounts are given in the last 20% of the sale, which is often driven by dates you must hit to meet quota, accelerators or company goals that affect stock prices. Managers and purchasing officers are watching the clock, studying the landscape is order to better understand your sales cycles, and your need to close by a certain date. Once understood, they control the deal. Michael Bosworth illustrates this with the wringing of the washcloth, squeezing you along the way until the water stops coming. Tom Hill, a presenter from a resent homeschool conference notes in his talk on negotiations, “If someone gives in once, the buyer knows he’ll give in at least one more time”. How does it feel to have people know what you’re going to do?

Counter Strategy

How do you combat the year-end squeeze? In just about every presentation I give at sales conferences and training seminars, I urge sales people to create urgency through the discovery process. Urgency is your best weapon against negotiations. If something is urgent, there isn’t time to shop. That’s why I love security sales! There just isn’t time. But there are other things you can do…

1. Does your client have a deadline – or can the project be tied to some upcoming event? If there is justification for the initiative, knowing the gains or safeguards your client is reaching for can really help. If you know it’s costing them to wait, you have an advantage. Find out – don’t just sell a project, understand why this was approved in the first place and lean on it. Note, sometimes negotiators will give false information to create a cushion here. Don’t take one person’s answer as the gospel, especially if they live in IT.

2. Keep your quota to yourself. It’s none of your client’s business how or when you get paid. Don’t share compensation plans. This sale should be customer focused – you are helping your customer achieve something, not trying to make your own number. If they see you hurting for money, they’ll likely take advantage of you. If they know sales are slow, expect them to push for higher discounts to close sooner.

3. Stand firm – be confident in your solution. If you focus on the great advice you are giving – if you act as a trusted adviser, you will be less affected by their negotiation strategy. If they sense nervousness, they’ll keep pushing. As long as you appear to be caving in, they know they can get more. I was asked by one customer, “What if we don’t buy this?” Not sure why they asked, but I simply said, “If you don’t buy, someone else will,” essentially I was saying, “Your loss, not mine.” Any other attitude will give them the advantage.

4. Put away stress – along with the above, manage your stress outside the deal. If they sense panic, “I must close this deal!” you’ll lose every time. Purchasing agents are looking for signs of panic, and in this economy there are a lot of people panicking. You can’t afford to panic, so before you make calls or visit, encourage yourself and put aside the emotional effects of not making it. You can’t negotiate from a position of fear.

5. Always remove value…you may have to bring down the price, but first assess what they need aside from price. “Price aside, is this what you need?” I love what Negotiation Expert Landy Chase says, “If they say yes, you know you’ve been selected.” This puts you in a great position to negotiate, and once they see you are going to lessen the deal when you lessen the price, and are willing to walk from the deal, they’ll stop negotiating. Do the reverse, and expect to go through this again, every time you sell them something.