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The Why and How of Preparation for Sales Negotiations

There are probably situations where an initial sales contact seems to occur without preparation; a “meeting engagement,” as the military says.

But even here, such as with a causal conversation waiting for an elevator, sales people may already have some idea of the needs of the firm whose representative they meet. They certainly should have some idea of what their company offers.  What happens here is simple – you get the person’s business card, ask what they might be seeking, offer some insight, promise to get back to them soon, make note of the conversation, and get back to them . . . soon.This is taking advantage of an unexpected opportunity, showing the flexibility one needs in business.

Other people may seem like natural negotiators, able to make deals, with no advance preparation. But you will be surprised at how much advanced preparation this requires. According to McKinsey, a 1% increase price discount leads to a 9% decrease in operating margin. That’s a big hit to the bottom line! For the rest of us humans the best way to avoid a bad deal is to prepare before you formally seek the deal.  Use the lower pressure lead time before negotiations to create a foundation on which you can build with power and influence, time, information, and skill to reach the best deal possible.

Ideally, you and a cooperative potential client can set the stage for negotiations that are just pro forma, dotting the i’s and crossing the t’s for a deal already set.  In the real world preparation for sales negotiations is the time to:

  • Build a foundation of trust that can sustain progress during the heat of negotiations.
  • Define the issues and potential barriers to reaching a deal.
  • Identify and understand what the customer needs and what you need. Determine what is at stake in the negotiations.
  • Gather facts and data to control the negotiation, reduce pressure, and open what otherwise would have been a “closed book” of valuable information during the negotiation. Go on the web to research the client.
  • Establish a pattern of trading and fair dealing on the part of both negotiating partners.
  • Marshall support within the potential client company; develop relationships with influencers and decision makers in the company.
  • Marshal support within your own company.  If possible, get stakeholders within your company to sign off on your negotiating range and details.
  • Determine the customer’s real degree of interest in doing the deal.
  • Strive for equilibrium in strategy and tactics (not being too easy or too hard).
  • Establish the relationship and two-way communication patterns between you and the client that will be carried into the negotiation phase.
  • Set realistic expectations.
  • Develop your negotiation objectives
  • Develop your proposal – the written proposal and the verbal summary to present during formal negotiations.
  • Prepare information and materials needed to open negotiations.
  • Determine opening cost and scheduling figures.
  • Build flexibility into your proposal (if the negotiation cannot bend, it will break!).
  • Develop alternatives (think “what if… “); consider options you might bring into the negotiation.
  • Analyze your customer’s strengths and weaknesses.  Find out their buying process and who is involved.
  • During lead time it is often advantageous to meet with customers and influencers (both inside and outside the company) such as lawyers, accountants, and so on, so that you are sure all interests are being considered. A good customer will appreciate this as a way for you to better meet their needs.

One final word- Remember always that while you are checking the potential customer and preparing for negotiations, the customer is checking you and preparing to meet and negotiate with you.

Richardson offers customized sales negotiations training programs that can help your sales team learn how to prepare for the negotiations process.  Our programs help sales professionals learn how to position their product in order to avoid having to offer steep discounts to close the sale.

About the Author

Richardson is a global sales training and performance improvement company. Our goal is to transform every buyer experience by empowering sellers with critical skills so they can create value to buyers and drive meaningful conversations. Our methodology combines a market proven sales and coaching curriculum with an innovative and customizable approach to learning that ensures your sales teams learn, master, and apply those behaviors where and when it matters most — in front of your customers. It’s our job to anticipate change in your industry so that your sales team can focus on fostering long-term relationships, becoming indispensable partners for their buyers.

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