What is an Agile Negotiation Approach & How Can Your Team Execute It?
The Need for a New Approach to Sales Negotiations
It's not a secret that customers are changing their buying behavior and these changes mean sales professionals need new skills to adapt their selling strategies to better align with the customer’s dynamic movements.
The desired buyer, seller alignment is driven by embracing an agile selling approach throughout each phase of the sales cycle. Developing the ability to agilely engage customers throughout the sales cycle requires building skills that focus on discrete points in the customer conversation. Collectively, these skills work together to ensure sales professionals are equipped to handle anything their buyers throw their way.
Here we will demonstrate how the concept of agile selling applies specifically to sales negotiations.
The Negotiation Continuum
People often think of selling and negotiating as two separate ends of a timeline. In truth, they exist together on a spectrum.
Every moment of selling involves some amount of negotiating. Effective sellers know this and seize opportunities throughout the sale to shape the customer’s perception of value. This creates a context for later-stage negotiations.
For example, sellers who develop rapport early create a context for give-and-take in negotiations. Sellers who take the time to understand the customer’s deeper needs early create a context for reinforcing value later.
This close relationship between selling and negotiating is the reason why an effective selling framework is like an effective negotiating framework. This framework anchors in a repeating prepare – engage – advance pattern that accelerates the sale in sprint-like movements.
Agile Negotiations Approach
The agile negotiations approach is about maximizing deal size, reinforcing relationships, and developing ongoing improvement by adhering to four key principles; reinforce trusted relationships, control the negotiation with confidence, treat value persuasion as a process, and seek mutually successful outcomes. In the following sections, we show how to apply the prepare-engage-advance model in your negotiation strategy to attain the execution of these key principles.
Everything that you do leading up to the negotiation, including what you accomplish in the sales phase, impacts your success. Effective preparation helps you to establish a foundation for success in terms of relationship, information, and strategy.
Know Your Customer
Strengthen your relationships with key stakeholders and assess who has the authority to negotiate. In this early phase set a tone of mutual respect and avoid becoming the sole giver in the sales phase.
Explore the competitive landscape. The more you understand customer needs, the better you can differentiate yourself and your solution from competitors. Before putting price and terms on the table, build confidence in the value of your solution by connecting its value to customer needs.
Know Your Plan
Make an honest assessment of your strengths and weaknesses. This means understanding how well you have:
- Identified the customers’ pains
- Accessed the decision-makers
- Aligned on a vision of a solution
- Illustrated the financial and operational value of the solution
- Built consensus among stakeholders
Consider how the development of each of these during the sales cycle has contributed to the effectiveness of your opening terms and bottom line.
Know Your Next Step
Have a clear objective for the outcome of the negotiation. For negotiations of long duration, keep the momentum going. Follow through on all action steps until negotiations are complete.
Remember that the status quo is the most powerful force working against the negotiation. Once a competing priority emerges the stakeholders are likely to pause. When this happens the solution and its value begin to appear less pertinent and relevant. Make sure that every discussion ends with a next step that is clear, scheduled, and involves both parties.
The engage phase of the agile negotiation methodology is where most of the progress towards a win is made. This stage of the negotiation consists of four parts, open, control, trading, and closing. The combination of these parts enables the seller to preserve the full financial value of the sale while also meeting the customer’s needs.
The opening sets the tone for the negotiation process. The most effective sellers use this opportunity to demonstrate their interest in reaching a mutually beneficial outcome. Doing so does not require relinquishing control. Instead, it means projecting confidence and having a plan.
In the opening phase that plan should consist of three parts:
- Set the Stage: Sellers should seize this early opportunity to build rapport and ease tensions. Doing so signals a willingness to work together towards a deal that is agreeable to both sides. A good rapport also reduces the likelihood of either side resorting to ego-driven decision-making. Setting the stage is also a good opportunity to recap common ground which maintains momentum and underscores the cooperation achieved to date.
- Check for Changes: Ask open-ended questions to uncover any changes since the last conversation. This is a critical step because negotiations often involve several stakeholders even if the seller has only been speaking with one person. To be effective the seller needs to fully understand the position of all stakeholders.
- Position the Offer: When positioning the offer avoid using compromising language suggesting that you are open to bargaining. State the complete offer. Putting incomplete terms on the table leads to a fragmented approach that undermines the trust and transparency that is part of any successful negotiation. While it is important to be complete it is also important to be concise and express the full terms without becoming longwinded. Lead with the positives and link the value to the terms while also connecting value to customer needs.
Control is about maintaining a collaborative tone while responding to customer demands. The goal is to avoid engaging in trading too soon and instead use the time to convert the customer’s demands to needs while shaping their perceptions of value. A customer demand is an expression of an underlying need. By drilling deeper with questions, it is possible to uncover those needs. This approach is important because needs (“I need more flexibility in the payment schedule”) are much easier to discuss and resolve than demands (“I can’t pay that much”).
Here is how to do it:
- Neutrally Acknowledge the Demand: Rephrase the customer’s response without qualifying their remark. Let them know that they have been heard. Take notes if needed.
- Get a Complete List of Demands: Elicit all reactions, demands, and requests while asking neutral, open-ended questions. Be sure to take a mental note of areas of agreement or disagreement.
- Recap and Check: Summarize what has been discussed and check that the customer is comfortable with all other aspects of the terms. Check to understand the customer’s priorities which are likely to change as they, and other stakeholders, gain clarity on their needs.
A trade is different from a concession. A concession occurs when one gives something up and gets nothing in return. A trade is an exchange; the seller is giving to get. An effective trading strategy consists of three parts: positioning the trade, managing the response, and reaching an agreement or continuing to trade.
- Positioning the Trade: When positioning a trade, the seller must know the value of what they are trading. Without this information, it is not possible to gauge if what is received in return is of equal or greater value. This important step also reveals items that may be of low value to the sales professional but high value to the customer. Taking “inventory” of tradable items also illustrates the bottom. It reveals what aspects of the deal are immovable. This understanding clarifies when it is time for the sales professional to walk away. Position one trade at a time, be specific and use silence to elicit the customer’s response.
- Managing your Response: Do not negotiate against yourself. When the customer states that the trade offered is not enough avoid responding with a new offer. Instead, ask the customer to provide more detail about why they believe the trade is not sufficient. When they offer more information provide your response by giving additional rationale for your trade. Keep phrasing concise and be comfortable with silence.
- Agree or Continue Trading: If there is an impasse consider tabling the trade for a period and moving on to other negotiated terms. When you return to the trade it is likely that the negotiations will have moved forward which creates more momentum ultimately dislodging the last remaining trade. In these later conversations do not give in to demands when you think that the deal is done. Late-stage concessions are tempting when the deal is near closing.
Knowing when and how to close is critical for preventing over-negotiation which can exhaust the customer. Moreover, sellers must recognize what constitutes a close because often a commitment from the customer is mistaken for a close. Until the seller has a signed contract they have not closed, they have only reached a commitment. Closing requires three steps:
- Recap Agreements: Summarize and reinforce value. Underscore the positive outcome reached, even if the conversation was difficult. Begin the summary with customer gains. Here, it is crucial to confirm all the terms of the agreement.
- Set Next Steps: Specify the details of who, what, and when. Position the action steps with clear, confident language to avoid ambiguity or reopening the negotiation. If you’ve only reached a partial agreement, summarize, and confirm an agreement on those partial terms. Make that agreement contingent on reaching an agreement on outstanding points.
- Reinforce the Relationship: Emphasize the progress made and strengthen the perception of a win from the customer’s perspective.
The Advance Model provides a systematic process for ensuring that the correct internal and external actions are taken, immediately following the negotiation, to solidify support for the agreements, maintain momentum, and further reinforce the relationship. The three key elements that comprise the advance model are debrief internally, send a written summary and implement action steps.
- Debrief Internally: Schedule time to review business results, lessons learned, and any follow-up actions that need to be taken. This is an opportunity to understand what can be done differently next time and what was learned about the customer.
- Send a Written Summary: Shortly after closing send a written summary reinforcing the value of the deal and the relationship. Summarize progress and agreements while recapping agreed-to actions.
- Implement Action Steps: Deliver on all promises made to the customer and follow up on all internal actions.
The Key to Agile Negotiations
Effective negotiating is what empowers a seller to capitalize on the full scope of work they have put into the sales pursuit.
Click here to connect with us to learn how Richardson Sales Performance can help your sales organization learn and apply the Sprint NegotiationsTM methodology.
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