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Sales Negotiators Know How To Ask “How Much?”

Friday, November 12th, 2010
Image Credit If you don't know how much it's going to cost, then your in big trouble

If you don't know how much it's going to cost, then your in big trouble

Sometimes it’s the littlest of things that can trip up even a professional sales negotiator. In this case, we often don’t want to ask the one question that we need to ask the other side of the table: “how much does that cost”. In the end, this can end up costing us a great deal…

Why Don’t We Ask “How Much”?

This seems like such a trivial issue, and yet it all too often turns out to be a big deal in the end. The question that we need to find an answer to is just exactly why we don’t seem to be able to remember to ask the other side how much something is going to end up costing us.

There are a lot of different reasons why we don’t feel comfortable doing this, but getting to the reason that is holding each of us back is something that is important for each of us to do. One big reason is often that we fear that simply by asking the other side how much something costs, we’re going to cause them to raise their price to us.

Other reasons can include not wanting to get involved in a long, drawn-out negotiating session (go figure that!) that could result if the other side’s price is to high. Another reason could be that we fear what asking for a price will communicate to the other side of the table about what we think of them. Like perhaps we really don’t trust them and we’re checking up on what they’ll be charging us.

Why Not Asking Is The Wrong Thing To Do

The primary reason that not taking the time to ask the other side how much something is going to cost is a bad idea is because it can quite easily end up costing you a great deal of money. This is a case where what you don’t know can come back and haunt you.

When you are negotiating with the other side of the table and you don’t ask them how much something is going to cost you, then you are making an assumption about how much it’s going to cost. This assumption is not necessarily correct.

The farther that you go into the negotiations without clarifying this issue, the stronger your self-generated belief in what the price is going to be will become. After awhile, you won’t even think to ask the other side how much because you’ll assume that the number that you are picturing in your head is the same number that they have in their head.

It’s disconnects like this that can easily trip up a sales negotiation in the 11th hour. Assumptions that have been made about price turn out to be not true and that can screw everything up at the last minute.

What All Of This Means For You

One of the most important questions that you can ask during a sales negotiation is “how much”. Although this sounds easy to do, it turns out that for most of us it’s actually quite difficult to do.

The reasons that it’s so difficult to do vary from negotiator to negotiator. However, it generally has to do with either not wanting to upset the negotiations or from a false sense that both sides have the same price in their heads.

When you are involved in a sales negotiation, take the time to ask “how much” every time the other side makes a proposal to you. It may feel a bit awkward the first few times that you say it; however, over time you’ll get comfortable using this power phrase and you’ll be amazed at just how much information you’ll get by using it!

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: Can you think of a case in which asking “how much” would not be appropriate?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

How would you like to end up spending the next year in court and costing your company many millions of dollars? Not a good way to manage your IT Leader career, eh? Too many of us risk doing this whenever we try to fill an IT position without first clearly defining what the job is…

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Making The Right Team Decisions Before A Sales Negotiation Starts

Friday, November 5th, 2010
Image Credit Choose Who You Are Going To Get Down & Dirty With

Choose Who You Are Going To Get Down & Dirty With

In order to be successful in your next sales negotiation, you need to make the right decisions before you sit down to start negotiating. If you take the time to make the right decisions then you can end up being successful.

It’s not only the person who is leading the negotiation that you need to select. However, you also have to make the right decisions about the other people who will be on your team. This is probably the most effective way to stack the deck in your favor during a negotiation.

Picking A Negotiation Leader

If there is one decision that can determine the outcome of a sales negotiation, it’s who you select to lead your side of the negotiation. There are a lot of characteristics that you should be looking for in your team’s leader.

The person that you want to have leading your team has to have two sets of characteristics: negotiating skills and team leadership. Just like a quarterback in football, your lead negotiator will be calling the plays that the rest of the negotiating team will be executing.

Choose Your Team

After you’ve decided who is going to lead your side of the negotiation team, you’ve still got a lot of work left to do. Your next task is to choose the rest of your negotiating team.

Just like putting the rest of a sports team together, you’re going to want to build your team so that it will be able to support its leader. Each team member needs to bring their own set of skills in order to support the rest of the team.

Supporting Roles

Good leaders know that they are only as good as the team that is supporting them. When it comes to negotiating, the two most important supporting roles are the listener and the note taker.

The outcome of any sales negotiation is ultimately determined by the quality of the information that your team has. The members of your team who are responsible for listening to everything that is said and writing it down are how you’ll be able to stay on top of what is going on.

There Is Strength In Numbers

In order for your next sales negotiation to be a success, you are going to have to make sure that you have enough (but not too many) people on your team. The key will be to match the other side of the table.

If you don’t have enough people sitting on your side of the negotiating table than you’re potentially going to find yourself overwhelmed. Likewise, if you find yourself with too many people on your side of table and not enough on the other side then the other side may decide to not negotiate with you.

It’s All About Time

Having the right people on your team to successfully negotiate your next deal is an important component of being successful. However, you’ll need more than just warm bodies. You’ll also have to have time on your side.

This means that the members of your negotiation team need to have enough time to do a good job of negotiating. If they are distracted by some other task or if they are trying to do multiple things at the same time, then they’re not going to have enough time to do a good job of getting you the best deal possible.

What All Of This Means For You

Any modern sales negotiation is generally not done by a single negotiator – it takes a team. That means that if you want to be successful, then you need to make sure that you take the time to build the best team possible.

The first thing that you need to do is pick a great leader. Next, the supporting team members who will collect the information for that leader need to be selected. Finally, you need to make sure that your negotiating team is large enough, but not too large.

It is possible to have a successful sales negotiation. However, to boost your chances of reaching a deal that meets your needs, you need to take the time before the negotiations start to build a negotiation team that will put success within your grasp before the negotiation even starts…

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: What role on a negotiating team do you think is the most important?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

Sometimes it’s the littlest of things that can trip up even a professional sales negotiator. In this case, we often don’t want to ask the one question that we need to ask the other side of the table: “how much does that cost”. In the end, this can end up costing us a great deal…

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Posted in team | 1 Comment »

Using The Bogey Tactic To Get Your Way In A Sales Negotiation

Friday, October 29th, 2010
Image Credit If Your Wallet Is Empty, Then It's Time To Bring In The Bogey Tactic

If Your Wallet Is Empty, Then It's Time To Bring In The Bogey Tactic

So there you are in a sales negotiation, you like what is being offered to you but there is one small problem. You don’t have enough money to buy it. What can you do? Walking away is of course one option; however, maybe there’s something else that you can do. It turns out that this is right time for you to pull out the bogey tactic and give it a try.

The Bogey Tactic

So just exactly what is the bogey tactic? This is when you simply don’t have enough money to buy what is being offered to you during a sales negotiation and you tell the other side that.

The beauty of the bogey tactic that, if done correctly, it can turn into a win-win approach to reaching a deal. There’s a very good chance that either you’ve used it in the past or it’s been used on you (successfully probably!)

How To Use The Bogey Tactic

When you are in the role of a buyer who is involved in a sales negotiation, the bogey tactic can be your best friend. Here’s how you would go about using it.

Let’s say the other side of the table has presented you with a proposal. What they are offering is great, but you simply don’t have the cash to pay for it. What to do now?

Using the bogey tactic, you’d tell the other side that you like their proposal, but it was currently out of reach of your ability to pay. This would cause two things to happen on the other side of the table. First, they’d be pleased that you are interested in their proposal. Secondly, they would instantly start trying to think of ways that they can still make this deal happen.

You may need to prove your point. This can be done in a bunch of ways. Your goal will be to show to the other side how much money you do have to spend and why additional funds are not available to you.

What You Can’t Accomplish Using The Bogey Tactic

If you are trying to get a lower price from the other side, the bogey tactic probably isn’t going to help you out. However, what it can do is actually get you more for your money. As the other side works with you to find a way to make the deal happen, more choices will be presented to you to choose from.

Just having more choices doesn’t mean that the cost to you is going to decrease. However, by choosing wisely you can end up getting more value for the money that you do end up spending.

Why Sellers Like The Bogey Tactic

Just to be completely fair here, sellers like the bogey tactic also. The reason is because when the buyer uses the bogey tactic, then the seller knows that they are close to making a deal.

There are two things that a seller can do once the bogey tactic starts to be used. First they can test to see if the buyer ready is at the limit of the amount of money that they can spend. Often times there are still additional funds that can be tapped and the buyer just needs motivation to find them.

If this turns out to be true, then the next step is to change what is being offered. By substituting less expensive options for what was in the initial proposal while keeping the price at the customer’s upper end, the profit margin on the deal can be increased.

What All Of This Means For You

All too often during a negotiation you’ll be presented with a proposal that meets your needs, but which exceeds your budget. When this happens, you can use the bogey tactic to see if you can move closer to completing a deal.

When you use the bogy tactic, you reveal to the other side of the table that you like the proposal that they are making; however, it’s too expensive. This encourages the other side and motivates them to work with you to find ways to lower the price of their offering.

The bogy can work for both the buying and selling sides of the table. The key thing is that by revealing why an offer is too expensive, you may open the door to moving closer to making a deal that works for both sides. Don’t fear the bogey!

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: Do you think that you could reveal how much you have to spend too early on in a negotiation?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

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Posted in tactic | 1 Comment »

Why Professional Sales Negotiators Build A House Of Straw

Friday, October 22nd, 2010
Image Credit Using Straw Issues During A Negotiation Can Give You More Shelter

Using Straw Issues During A Negotiation Can Give You More Shelter

In order to make your next sales negotiation a success, you are going to end up having to make some concessions. Knowing that you’re going to end up having to do this means that you’re going to need to have some strategies up you sleeve relating to how you want to manage your concessions. One time-honored way to make the whole concession thing work out for you is to use “straw issues”. Let me explain myself…

What Is A Straw Issue?

A sales negotiation is simply a discussion about a set of issues. The number of issues that are being discussed can play a big role in the eventual outcome of the negotiations. The more issues that you have to discuss, the greater the probability that you’ll be able to reach an agreement with the other side of the table.

This is where straw issues come in. Straw issues are throwaway issues that you put on the table. You really don’t care that much about them; however, you present them to the other side along with your real issues. Their real value to you is in that they have an exchange value.

The beauty of straw issues is that the other side won’t be able to tell the difference between your real issues and your straw issues. This means that they’ll see your straw issues as being just as important as all of the other issues and assume that they need to be solved if a deal is to be reached.

How To Use Straw Issues

Face it – you’re going to end up surrendering your straw issues during the course of a sales negotiation. This shouldn’t be a big deal – that’s why the straw issues are there in the first place.

What you need to understand is what giving up a straw issue is going to do for the negotiations. The other side will feel an immense sense of satisfaction when they “win” on the straw issue. It will be a trophy that the other side will be able to show to their management. Additionally, the negotiator on the other side will feel a sense of relief just because another issue is off of the table now – they are that much closer to reaching a deal.

How A Buyer Should Deal With Straw Issues

Straw issues are a buyer’s best friend. You should make sure that at the start of the negotiations that you ask for more than you really want. This can include such things as the amount of time that you’ll have to pay for what you are buying, increasing your credit limit, changes to the warrantee, etc.

Keep in mind that you won’t actually get everything that you are asking for. That’s not the purpose here. Just by giving in on some of the issues that you don’t care about you’ll make progress towards the negotiating goal that you want to achieve.

How A Seller Should Deal With Straw Issues

As a seller, you’ve got to realize that there will always be straw issues on the table during any negotiation. This can be a powerful internal tool for you: as you clear the straw issues off of the table your management will believe that you are doing good work.

Just because the other side of the table shows up with a lengthy set of issues that they want to discuss, don’t despair. Recognize that many of the issues that they are presenting don’t really count and work to find out which one’s do matter. Most of the time you can get the other side to fold on most of the non-essential issues fairly quickly – unless they are an expert negotiator!

What All Of This Means For You

Half of the art of sales negotiating is knowing when to give in. It turns out that even this part of a negotiation can be managed. The use of straw issues can make your negotiating job a lot easier.

Straw issues are valid issues that you really don’t care about. By including them in the negotiations you provide yourself with additional ammo when it comes time to make concessions. Giving in on a straw issue can make the other side happy while not eroding your position on more important issues.

In the end straw issues are one more negotiating tactic that you have available during your next sales negotiation. Study it and you’ll understand how to use this powerful tool in order to strike better deals.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: How many straw issues do you think that you should include in your initial list of issues to be negotiated?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

So there you are in a sales negotiation, you like what is being offered to you but there is one small problem. You don’t have enough money to buy it. What can you do? Walking away is of course one option; however, maybe there’s something else that you can do. It turns out that this is right time for you to pull out the bogey tactic and give it a try.

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Posted in tactic | No Comments »

Why Providing A “Best And Final Offer” Is Never A Good Idea

Friday, October 15th, 2010
Image CreditSometimes the other side of the table can make scary demands of you

Sometimes the other side of the table can make scary demands of you

Every sales negotiation starts out in a particular way. Sometimes it’s good like when the other side lays out the issues and makes a concession to you right off the bat. Other times it’s bad. You know it’s going to be bad when the first words out of the other side’s mouth are “Give me your best and final offer”. What’s a sales negotiator to do now?

Demand And Offer Tactics

In the world of sales negotiations there is a group of set tactics that have been used since the start of time. Starting a negotiation by stating that you want the other side’s best offer is one of these ancient tactics.

Often times when the other side makes this bold statement, they’ll follow it up with an explanation. This explanation often goes something along the lines of “I don’t like to negotiate”. Great statement, but it’s pretty much untrue – this is simply the way that they like to start their negotiations.

Why Providing A Best And Final Offer Is Never A Good Idea

What the other side is trying to do is to get you to start the negotiations at a lower price point than you normally would. This is a fantastic advantage for them – they will have made a great deal of negotiating progress with very little effort on their part.

All too often, when a negotiator is presented with this kind of statement, they’ll panic. The last thing that they want to do is to anger or upset the other side of the table and so they’ll react in a way that they think will diffuse the situation. Generally this means that they’ll go ahead and lower their price.

The problem with this is that despite what the other side said, the offering of this lower price does not result in a deal. Rather it just provides a point for the negotiations to start at. Once the other side sees how much you were quickly willing to come down in price, they’ll know that there is more lowering that you can be made to do.

How To Counter This Negotiating Tactic

As a sales negotiator you need to be on the lookout for the use of this tactic. When the other side starts to use it on you, clearly what you don’t want to do is to follow along and provide them with a low-ball offer.

Instead, what you are going to want to do is to change the discussion. Without rejecting outright what they are asking for, you’re not going to want to give it to them.

What you are going to want to do is to take the time to explain why your position is so unique that it’s worth the initial value that you’ve placed on it. Make sure that you point out things that the other side of the table can’t get anywhere else.

After all of this is said and done, you may still find yourself in a position where some lowering of your price is going to be necessary. That’s ok. Just make sure that you only lower it a small amount. Once again, this isn’t going to allow you to reach a deal, rather it’s the start of the negotiating process.

What All Of This Means For You

Every sales negotiation involves the use of tactics by both sides in order to get what they want. You will often encounter situations where the other side tells you to provide them with a best and final offer. Don’t do it!

Instead, use this as an opportunity to revisit why your offering is more valuable than other offerings that may be available at a lower price. Yes, the other side will push back on this, but you will have changed the discussion from a pricing discussion to a discussion about the value of your offering. This is much safer ground.

In the end, every sales negotiation comes down to price. Being aware of the other side’s tactics and making sure that you are ready to deal with them is what will make you a great sales negotiator.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: How do you deal with the other side when they become visibly angry with your negotiating position?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

In order to make your next sales negotiation a success, you are going to end up having to make some concessions. Knowing that you’re going to end up having to do this means that you’re going to need to have some strategies up you sleeve relating to how you want to manage your concessions. One time-honored way to make the whole concession thing work out for you is to use “straw issues”. Let me explain myself…

Tags: , , , , , ,
Posted in tactic | No Comments »

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