When you're a business executive or manager, you understand the necessity of strong and effective leadership, and you understand the importance of business and sales negotiations. Negotiations are often a necessity for a successful sales deal, which is why you need to ensure your team is well-versed in negotiations.
Negotiation training is shown to improve the negotiation skills of employees in both external and internal negotiations, thereby improving the company's bottom line. There are several skills that salespeople can home in order to increase their ability to negotiate effectively, but there are also steps you can take to better train your sales team. For your sales team to succeed at negotiations, they need to understand the core ideals of the business, as well as the fundamentals of good negotiation.
What Is Sales Negotiation
Sales negotiation refers to discussions between a sales representative and a client or customer. Both the buyer and seller hope to arrive at a deal, one that benefits both parties. There is some give and take during these discussions, and both the sales representative and the buyer should be willing to concede some things to gain certain benefits.
This is a process that many sales representatives find very stressful. It's a delicate balance to find a mutually advantageous outcome, requiring research, care, communication, and significant strategy to complete successfully. Profit and the needs of the buyer have to be weighed. It can be frustrating for some salespeople that negotiation is so essential, especially if their understanding of why is limited.
The Importance of Negotiation in Sales
The value of negotiation boils down to the ability of the buyers and sellers to arrive at a beneficial deal. Without effective negotiation, the discussions could become much more intense or aggravated, and fewer deals will arrive at agreeable outcomes.
Effective negotiation, therefore, also has the effect of building strong relationships between customers and sales representatives thanks to mutually agreeable deals. Working towards a win-win outcome for negotiations will leave a more positive impact on both parties.
The communication that is essential to negotiation allows both parties to talk, develop a rapport, and understand the needs of the other party. When both buyer and seller walk away feeling their deal was beneficial, the professional relationship will remain strong. A sales representative who remains put together during negotiation can frame themselves as a resource and end up with a loyal customer.
Sales Negotiation Skills
More effective sales negotiation will provide more benefits and profits, so you want to bring several skills to your sales team to improve their effectiveness in negotiation. It will help the business thrive, and it will better the skills and confidence of your sales team. Here are five skills that you should ensure your sales team knows to create more successful and profitable negotiations.
- Planning and Preparation
A sales representative needs to arrive at negotiations prepared. This includes knowing, or preparing to learn, the goals and limits of the buyer and being aware of the goals and limits of the business they represent. Preparation ensures that important details of the sale aren't left out.
Your plan for negotiation should include comprehensive research on the buyer and their company, proof and backing for any of your claims, and a written out potential solution. Include what concurrent goals you and the buyer have and what an ideal win-win scenario might look like based on where those goals overlap. Then, determine what the best alternative to a negotiated agreement (BATNA) looks like if the win-win doesn't pan out. The more alternate plans you have prepared, the more likely you will come to an agreement.
- Communicate Your Goals and Limits
Communication between buyer and seller is essential to reaching an agreement. As a business leader, you need to ensure that any sales representative entering negotiations understands the bottom line of a win-win outcome. Be sure they know the goals and limits before they enter negotiations.
As a sales representative in negotiations, you need to lay out the goals you hope to achieve and what concessions you're willing to allow. Clearly explain what you think an ideal outcome would be and how both parties would benefit. The give-and-take of negotiations needs to be done through civil communication and active listening if both parties are going to leave with benefits.
- Learn to Create Value
It's important as a salesperson to ensure you don't enter negotiations with an antagonistic mindset. When you negotiate from wanting to "win" or beat the other party, you will severely undermine your credibility as a sales representative, the respectability of your business, and end up with unsatisfied customers. Maximizing profits isn't about minimizing the other party's profits. Instead, create value in negotiations, where both parties find great benefits. This will improve customer relations.
- Keep Discussions Calm
Maintaining a calm and confident conversation will lead to better negotiations. It has the added benefit of improving rapport and relationships with your customer. Even if a buyer begins negotiations as an adversary, remain cool-headed and remain conversational. Read the emotions of the other party to understand how they're taking your potential outcome suggestions.
- Know When to Walk Away
If a buyer is being unreasonable or a stalemate can't be worked around, a sales representative needs to know when to walk away from negotiations. Defining when a salesperson should leave negotiations is important and may motivate a buyer to present something more favorable. Or it may simply prevent a bad deal.