As an ex-professional buyer, negotiation is always a fascinating topic for me. Whenever I’m working with salespeople or business owners, they often fail to get the price for their products or services that they wanted — and often get even less than they deserve.
And the pressure is even greater in today’s market conditions — where savvy buyers are looking to get the best value when they’re purchasing. Therefore to get good results, the salesperson or business owner has to be able to stand their ground in a negotiation in order to get the price they deserve. Sadly, this often doesn’t happen.
So why is it that the buyer often has the upper hand when it comes to negotiation?
One simple reason is that the buyer is often better prepared to negotiate than the salesperson is. Often a salesperson gets caught up in a negotiation when they aren’t ready for it.
So if you think that a meeting or phone call could result in a negotiation, make sure you prepare for it beforehand. If a negotiation starts before you’re ready, don’t be afraid to postpone it and re-schedule it for another time when you’ve had chance to prepare.
Another typical reason that salespeople struggle to get better results from their negotiation is that on most occasions, they’re so desperate to win the deal that this comes across to clients, and they use that as leverage to swing the negotiation in their favour.
Prospects and clients can smell desperation and it certainly isn’t attractive. Once a client knows the salesperson is more desperate to do the deal than they are, that just gives them the green light to get the best deal they can.
It’s about time that we realised that prospects and clients often want to do the deal as much (or sometimes even more) than we do — but often we don’t know it.
Any buyer or decision maker worth their salt will attempt to play tricks during a negotiation. If you can spot these and deal with them, then you’re usually fine. However, most salespeople aren’t even aware what the other party is doing and end up falling for them.
You need to learn how buyers and decision makers operate so that you can deal with their tricks and handle their objections.
Another reason salespeople often come off worst in a negotiation is that they fail to find out enough about the other party before the negotiation starts. The decision-maker may well have strong reasons to purchase now. Very often there are pressing issues that mean they want a quick deal. But if the salesperson doesn’t know this, then they lose the advantage.
Think for a moment: When was the last time you went (or sent a member of your team) on a professional negotiation skills course, lasting for, say, one to three days? Possibly never.
Think about the other side: If they’re a professional buyer, you can guarantee that they will have been on such a course. If they’re a key decision-maker in a business, they’re also likely to have been on a similar course. At the very least, they’re far more experienced at negotiation than you!
If you listen to the news, or anyone commenting on it, they’ll tell you that we are “officially” out of recession.
However, it might not feel like that at the coalface. Even though we may be officially out of recession, many businesses are still experiencing recessionary conditions and that means they’re selling in a tough market.
A tough market for some companies might mean that they’re selling against a lot of competition, or that potential prospects are beating them down on price — meaning lost margins and lost profit.
Whichever of those situations is affecting you and your business right now, here are some tips on how to sell more in tough market conditions.
My first tip for anyone selling in a tough market is to increase their new business or prospecting efforts. If people are taking longer to decide whether to buy or not, having more prospects is a good exercise in risk mitigation. Secondly, the more prospects you have, the choosier you can be who you work with. What’s more, you can then prioritise your prospects, based on who can make quick buying decisions — which mean quick sales.
For most small businesses I work with, their levels of prospecting just aren’t high enough. In this tough market, they sit there and think, “if only the phone would ring more” or “I wish I got more enquiries over the web”. It’s time to take some action and to get some prospecting done, instead of waiting for it to come to you. Because it probably won’t.
One of easiest things to do to get more sales, more quickly, is to increase the levels of interest in you and your business from your network of existing contacts. The advance of social media has made this very easy.
How are you communicating with your prospects and existing contacts over social media? Now I’m not saying that all social media is useful (there are plenty of so-called social media gurus peddling that kind of rubbish), but I am saying that you need to be where your prospects are and communicate with them.
Are you posting success stories for your business? Your new business wins? Examples of how you’ve helped people? Positive feedback and testimonials from customers? If not, now would be a good time to start.
When you’re selling in a touch market, it is vital that you ring fence your existing customers, in order to stop them going to your competitors.
Think about it, you’ve invested time and money in getting that customer to buy from you in the first place. So why on earth would you let them go without a fight? Surveys have told us for years that the biggest reasons customers leave an existing provider is because of supplier apathy. They just didn’t feel like their business was valued; that we didn’t care. So they took their business elsewhere.
Can we afford for that to happen in a tough market? I don’t think so. So make sure you ring fence your existing customers as a matter of priority.
Sometimes there are additional sales opportunities sitting right under our noses. And often we don’t spot them, or sometimes even think of them in the first place.
One of the most effective sales questions of all was simply, “would you like fries with that?”. So simple but did it work? Of course it did! That question has triggered millions of dollars of additional sales all over the world.
Now, if something that simple can have the impact that it did, what could you introduce in your business to have a similar effect?
It’s simply about spotting the additional sales opportunity at the right moment, or even preparing for it in advance. Think about the process that a customer goes through when they are buying from you. What opportunities are there for additional sales that you’re not taking right now? Or not taking consistently enough? And if you did, what kind of difference would it make to you and your business?
One of the major advantages of an economic downturn (even a landslide like the current one is shaping up to be) is that there are great deals to be had. The challenge is that many of us are very bad at negotiating.
There is clearly an element of nature vs. nurture here; some of us are clearly genetically more inclined to haggle, while for others the process is more unpleasant and degrading than having teeth pulled.
This is especially true for salespeople who are typically outgoing and persistent, with a hide as thick as a rhinoceros. But when it comes to negotiating the detail of a deal, many experienced sales people crumble, especially under pressure from a well-trained negotiator or purchasing director.
Negotiation is a basic skill we use every day of our lives, whether it is making sure we get a cup of tea in the morning at home or in buying a car, when we are up against an expertly trained and highly motivated individual. Negotiation is not a black art: it can be studied and learned, and I have had advice from a true expert: Derek Arden.
Arden started his working career in a bank, in training and development; but soon found himself in major account management, negotiating with hard-nosed senior buyers at a large supermarket chain. He says he often left meetings with a strong feeling that he had come a distant second in the negotiation, if only because he was operating solo against a team of four people who were clearly expert in identifying and exploiting any of his personal or business weaknesses.
He resolved to read all the books available and go on courses to develop his own best practice for negotiation. He has since spent more than eight years passing on this knowledge to everyone from teams of salespeople to a high-profile individual in the Middle East who needed one-on-one coaching for family as well as business negotiations.
Arden explains that developing negotiation skills is a constant process; you always learn new techniques. Where most people fall down is in understanding the timing of a deal. This is aptly illustrated in his first major personal negotiating challenge, which was to arrange a favourable exit from the bank where he was working.
Arden's advice is that the secret to making a graceful departure from your current employer is to understand the timing: there will be a perfect time to leave, and forcing your own schedule on their internal processes is likely to be very counter-productive.
This leads us naturally into the key element of negotiation: preparation. Arden believes strongly that the most important work is done well in advance. The better prepared you are, the more likely you are to secure a good deal for yourself and for the other party. Successful deal-makers always ensure a win for both sides as they are always looking for a long-term relationship with the buyer.
The hardest part of negotiation is always the price, especially if the buyer gives no clue about what they want to pay. Arden suggests having three prices always to hand. First you should always have a high-value dream price, which buyers will accept more often than you might suspect, for example if they need your products or services in a hurry or are looking to empty a budget before the end of the financial year or risk losing it for the following year.
Then you should have a target price which represents what you feel the customer should pay, based on both value for money for them and a sensible profit for you. Finally, you have a walk away price, below which you cannot go, based on hard evidence developed internally from your delivery and finance people.
In a friendly negotiation you can even share this information, and a fair buyer should appreciate your openness and respond favourably. It is important to remember that very rarely do people buy the cheapest offer; what is more important, especially in these hard times, is your providing proof of value for money and return on investment.
Arden also trains people in advanced techniques including influencing and body language, all based around asking good questions, prepared in advance. As Rudyard Kipling aptly put it, "I keep six honest serving-men; they taught me all I knew. Their names are What and Why and When, And How and Where and Who.”
Copyright ©Mike Southon 2012. All rights reserved. Not to be reproduced without permission in writing. Mike Southon is the co-author of The Beermat Entrepreneur and a business speaker.
Most salespeople will get the majority of the specification down, but some have to call back a second time to get things they forgot, or that their colleagues tell them will be needed in order to produce an accurate quotation or proposal. You can imagine the impact this has on the prospect. If you’re in a competitive market with other people pitching for the work, you’ve put yourself on the back foot before you’ve even started.
These two areas are essential areas to investigate in every sales opportunity — you need to establish early on in your sales conversation how serious they are, and how serious the project is. Even more important however is getting the “why you” bit answered. The aim here is to uncover both the buying motivation, and also what chance you have of picking up this business. Remember, the fluffier the answers to the questions you ask here, the less likely you are to win the work!
Failure to establish the decision makers involved will mean that you could go all the way through the process, and then fall at the final hurdle as someone else comes in to influence the buying decision that you weren’t aware of. Once you’ve identified the decision makers, you can then decide your approach for engaging them. You also need to identify the process they’re going through in order to make the decision. If they’re cagey about the process this time, it might be that the person you’re talking to is low-level in the organisation. In which case, simply asking about a previous process for similar projects will uncover most of what you need to know.
Asking about the other options they’re considering will usually set the platform for you to get information about other potential suppliers/vendors. It will also get you vital information about alternative competition — either them finding another way to achieve the results they want, doing it themselves in-house, or not doing it at all.
Another area you need to know about is their timescales. Most salespeople make the mistake of only finding out when the clients want to implement the project or when they need to take delivery of the product. If you only get this timescale then you’re missing out on something that’s potentially more important. Make sure you understand their buying timescales to give yourself the best understanding of how to handle the proposal and give yourself the best chance of winning it.
It’s vital in any sales opportunity, let alone a proposal situation, that you identify budget or funding as early as possible. As most decent-sized projects require money from someone’s budget, or the company to have thought about how they’re going to pay for it, failure to identify this can mean the project stalling at the last minute — when you’ve put lots of time and effort into it.
Make sure that you’ve got the budget area covered and you’ll reduce the risk of the project being put on hold, or shelved, plus it may also highlight other people involved in the buying process that you weren’t aware of.
This is the final and most important part of any sales situation, and even more vital at proposal stage. Now for those of you with a short sales cycle, you could also think of the word closing here. For those of you on longer sales cycles, usually with higher-value items or projects at stake, think about gaining commitment to the next stage and to yourself and your company. Failure to get commitment to the project and/or next stage and also to you and your company will mean that you’re likely to be disappointed when it comes to announcing who won the business and who lost it. So gain commitment to ensure you end up in the winner’s enclosure.
So, make sure you take action on the above and the best of luck with your sales!
If out-selling your competitors in 2013 is your goal, then here are seven simple tips to get you started.
1. Ring-fence your existing accounts
If you want to get ahead, and stay ahead, of your competitors in 2013, the very first thing you need to do is ring-fence all your existing customers. What are your relationships like with your existing accounts? The ones you don’t get on as well with? Would they tell you if a competitor had been in? And if they did, would you retain the business at the same price, or would you have to price match to keep it?
2. Focus your prospecting
The quality of your prospecting will be one of the biggest factors in how successful you are in 2013. There will be certain specific criteria that make certain prospects more ideal for you than others. If you don’t know what they are, you need to find them out — and fast! If you’re really not sure, take a look at your existing client base. What was it that made them purchase at the moment they did?
3. Become a “valued resource”
In order to be seen as a valued resource, you have to earn it. Get updated on industry trends, technological advancements and understand the impact that these could have on your client’s business. You have to be able to hold a business conversation with the level of decision-makers you’re meeting. Invest the time to do things like this, and it will pay you back tenfold!
4. Have a plan for your attack
One of the best ways to get ahead of the competition is to win some of their customers from them! Why not map out competitors’ accounts in your territory, then create a call plan for getting in to see them, and focus on winning their business. Experience shows that focused approaches like these have a far better chance of success — and also put a big dent in your competitor’s motivation at the same time.
5. Increase your activity
Now, once you’ve targeted your prospecting, the next thing you need to do is crank up the volume. I’m a big fan of a high level of activity and the reason for this, is that the more deals you have in your pipeline, the more you can afford to lose! Purely by increasing your activity, you increase your chances of success — and therefore increase the amount of money you can earn. Who wouldn’t want to do that?
6. Keep motivated
We all know that motivation is important for a salesperson. But it’s the salesperson’s ability to be consistently motivated that will help them stand out from the rest.
7. Sharpen your sales skills
If you want to stay ahead of your competition in 2013, you’ll need to sharpen your sales skills. This means getting up-to-date, relevant sales tips and advice from trusted sources. If you get some internal training at your company, great! If your company invests in bringing an external trainer to help you improve, even better! If you’re one of those people that believes in investing in yourself (even if your company doesn’t), I take my hat off to you.
However, you don’t have to spend money to keep your sales skills updated — there are lots of free or low-cost podcasts you can listen to and plenty of seminars you can attend without spending a fortune. Just make sure you put into practice what you learn.
Friday 5th October marked one year since the death of Steve Jobs, but his legacy as an entrepreneur lives on. In particular, there are important sales lessons that we can learn from Steve Jobs.
In particular I admired his ability to release new products that people didn’t even realise they needed until he released them! At which point they became must-buys for a lot of people — and that’s coming from the owner of an iPod, iPhone, Macbook Pro and iPad 2.
So what sales lessons can we learn from him?
1. Don’t be afraid of being different
Steve Jobs was never afraid to stand out from the crowd and to pursue things that other people thought were stupid. Until he did them and the people stood back and applauded. In a sales context, what aren’t you doing right now because other people think it’s stupid?
2. Love what you do
One of Steve’s favourite sayings was “love what you do”. My question to you is “do you love what you do?” The answer for most salespeople, and most people in general, is “yes, when things are going well”. I’ve always said that in my opinion, sales can be the best job in the world when things are going well…. And the worst job in the world when things are going badly! So for those of you that don’t currently love what you do, you need a more compelling reason for doing what you do.
3. Turn your TV off!
I remember Steve saying: “We think you watch television to switch your brain OFF, and work on your computer when you want to turn your brain ON”. I’ve always loved that saying. When I ask most salespeople “how much time do you spend on trying to improve your sales or your sales career against how much time do you spend watching TV?” guess which one is normally most popular? Most salespeople I meet rarely work on their sales career outside of work and even inside of work they rarely work on improving it — they just end up doing it.
4. Create a buying experience
Steve Jobs and Apple were fantastic at creating a “buying experience” every time you bought one of their products. Anyone who has bought from Apple will confirm this! Whether it’s an iPod, iPhone, iPad, iMac or anything else in their product line, if you’ve bought one you’ll know that it’s a bit different from the usual buying experience.
An Apple store experience is just that — an experience. The majority of people on the shop floor know exactly how to answer your query, or find someone who does in a minute. Does that have any impact on how many people buy more products from Apple? Of course it does!
5. Don’t fear failure
The majority of people I speak to, at some point, have to deal with failure. So therefore most people also have to deal with a fear of failure. Something that happens in advance of an event that they think will mean failure for them. So one of the things that I do when I work with an individual or sales team is to look at what failures they’re afraid of. Number one on this list is usually cold calling, or in some cases, any kind of sales calls at all! How many of you or your team are putting off calling a prospect that could be a really good source of income for you, because you feel like you’re not ready?