Posts Tagged ‘buyer’

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Real Deals Use Real Money And Sales Negotiators Never Forget It

Tuesday, July 21st, 2009
Although Funny Money May Look Like Real Money, It Isn't! (c) - gaymay

Although Funny Money May Look Like Real Money, It Isn't...! (c) - flickr / gaymay

My daughter is currently learning about how to add fractions in school. The trick to doing this right is that you have to make sure that the denominator (the number on the bottom of the fraction) is the same for both numbers before you add them. She’s struggling with this concept and it reminds me of a key sales negotiating point – never try to do a deal using funny money.

Just What Is Funny Money?

We all have heard the phrase “apples to apples” right? Well funny money is something that can either sneak into a sales negotiation or be slid into it by one side of the table. When this happens, all of a sudden you aren’t comparing two equal things such as how much a product costs and how much you are willing to pay for it. Instead, all of a sudden you’ve got apples, oranges, and bananas on the table in front of you.

A great example of funny money in real life is what happens when you gamble in a casino: you don’t use real money, you use chips instead. There are a number of reasons for this, but a key one is that chips don’t “seem” like real money. That allows us to gamble more and not feel as bad when they all go away (although it still hurts when we get the bill later on!)

Examples Of Funny Money In Sales Negotiations

Whether intentionally or not, funny money can slip into just about any sales negotiation. It’s the careful negotiator who keeps his / her eyes open and spots it when it shows up. Here are a few examples of what funny money can look like:

  • Price Per Unit: If I’m asking you to lower your blue widget price by two cents per unit, that seems like a small matter, right? It is until you realize that I’m trying to buy two million blue widgets and so what I’m really asking for is a $40,000 discount. Now that’s real money!
  • Price Per Lot: This is the flip side of the previous tactic. If I’m laying mulch in my yard and you tell me that you’ll sell me 10 bags of mulch for $20, that sounds like a fair deal. Until I realize that since I need 200 bags of mulch, we’re really talking about me paying you $400 for mulch. The total quantity needed and its price is what we need to negotiate.
  • Interest Rates: This is exactly what built those credit card companies into the powerhouses that they are today. If I borrow $60,000 at 10% on a 5-year loan to start my business, then I’ve just agreed to pay the bank $16,489.20 for the privilege of using their money. Sure seems like I should try to negotiate a lower interest rate.

Final Thoughts

It is the job of every sales negotiator to train yourself to always be asking the question: what is that worth. Just like my daughter is trying to learn to remember that she always needs to convert the denominator of two fractions to the same value, so too do sales negotiators need to learn to always “map” funny money to real values.

No matter what the other side of the table says, always take the time to translate funny money into real dollars and cents (or whatever currency you are using). If you don’t take the time to do this, you run the risk of making a bigger concession than you intended to. Learn to deal with funny money correctly and this will allow you to close better deals and close them quicker.

Questions For You

Have you ever been in a sales negotiation that included funny money? What form did the funny money take? How did it get into the negotiation? Did you take the time to map it to real money? Did you end up making a larger concession than you would have if you had been dealing with “real” money? Leave me a comment and let me know what you are thinking.

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What We’ll Be Talking About Next Time

The basics of sales negotiations are pretty straightforward; however, it can be easy to lose sight of them as we talk about tactics, preparation, and detailed sales negotiation skills. Maybe it’s time that we took a step back and got an expert to remind us about what we really need to be doing in our next sales negotiation?

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Don’t Believe What Anyone Says Is What Sales Negotiators Need To Learn To Do

Tuesday, July 7th, 2009
Sales Negotiators Need To Know When To Hold The Truth - And When To Fold

Sales Negotiators Need To Know When To Hold The Truth - And When To Fold

People are either honest or they aren’t right? Umm, well not exactly. Look, in a sales negotiation everything is not as it seems. I hate to use strong words like “lying” or anything like that, but let’s just say that a healthy dose of skepticism is often a sales negotiator’s best friend.

What’s Going On Here – Can’t Anyone Tell The Truth?

The older a sales negotiator gets, the more he / she is less likely to believe just about ANYTHING that they are told. There is a reason for this! In the end, sales negotiating is all about power – who has it and who doesn’t. However, just like in the game of poker bluffing is not only allowed, it is often encouraged.

If you don’t believe me (or you don’t WANT to believe me), then think about how a buyer and a seller interact when they are trying to complete a deal to buy a house – talk about some serious poker playing!

Where Do The LInes Get Drawn?

We are in a very murky area here and it’s very easy for a sales negotiator to stumble over the line and fall into the dark side – becoming a flat-out lier. It’s necessary that you operate here, but you’ve got to watch your step.

Our house buyer / seller are going to be presenting information that may not quite be the complete truth. The house seller is going to be talking about all of the things that make the house a fantastic house – and leaving out any discussion about the leaky pipes in the basement and the squirrels that have set up a home in the attic.

Likewise the buyer is going to be trying to mask any real interest that he / she may have in buying this particular house. Additionally, the buyer will be working hard to NOT communicate how much funding he / she has to complete the purchase. Is anyone lying here? No – but they are also not telling the complete truth.

One Word – Be Skeptical

A good sales negotiator is ALWAYS skeptical about anything that he / she is told by the other side. This includes when the other side uses facts & figures (where did they come from?), experts (what makes them an expert?), and handsome bound color documents (Kinko’s can turn out great stuff overnight).

As a sales negotiator your job is to always be asking questions. Take nothing at face value and always assume that the other side is probably not giving you the complete story. This is how you are are going to transfer power from the other side to you.

Final Thoughts

Being a “doubting Thomas” is a great skill for a sales negotiator to have. One important rule of life has been give to us by the Las Vegas board of tourism: “What happens during a Sales Negotiation, stays in the negotiation.” This means that you can’t have any hard feelings about what information the other side revealed (or didn’t) during the negotiation after it is all over and done. Having a healthy dose of doubt while negotiating will allow you to close better deals and close them quicker.

Questions For You

Have you ever accepted anything that the other side has told you at face value during a  sales negotiation? Did it turn out to be completely true? Have you ever been fooled by the other side? Have you ever stretched the truth during a sales negotiation? How did the other side use the information that you gave them? Leave me a comment and let me know what you are thinking.

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What We’ll Be Talking About Next Time

We all hear so much about the smooth Donald Trumps of the world that we can fall in to the belief that everyone shows up for a sales negotiation better prepared than we are. Nothing could be further from the truth. In fact, there are four common sales negotiation mistakes that even really smart people make all the time. Are you making any of them?

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Shut-Up Is What Sales Negotiators Need To Learn To Do!

Tuesday, June 30th, 2009

Sales Negotiators Need To Learn To Just Keep Their Mouth Shut!Negotiation is all about power. The trick to walking away from a sales negotiation feeling satisfied about what you were able to achieve is to make sure that you walk IN to the negotiation with more negotiating power than the other side has. Sounds easy doesn’t it? I’ve been amazed  over and over again to see sales negotiators just give away their negotiating power to the other side time after time. They just don’t realize that they are doing it. Let’s see if we can put a stop to this…

How Do Sales Negotiators Lose Power?

Negotiating power can be a be a funny thing. You can have a lot of it and not even know it. Likewise, you can give it away and not be aware that you are doing so. There are a lot of ways to lose power but the #1 way is for you to run your mouth too much. Ultimately negotiating power is all about having more information. Whichever side of the table has more information about the other side has the power. Information can be used against you, so you want to hold on to it as tightly as possible.

How To Hold On To Power During A Sales Negotiation

If only it was as easy as keeping your mouth shut! Nope, there are actually a number of things that you can do in order to ensure that you keep the upper hand when it comes to negotiating power during you next sales negotiation:

  • Don’t Talk Business: In the small talk that occurs before the start of any sales negotiation, don’t talk about business. You might be able to not give away any secrets, but maybe you’ll make a mistake. Stick to weather, sports, family – anything but business.
  • Let The Other Side Do The Talking: Even better than you talking is getting the other side to talk, and talk, and talk. Just as you can leak power to the other side, the more they talk the better the odds that they will say something that will give you more negotiating power.
  • Keep Your Timeline A Secret: At the end of a fiscal quarter, negotiating with a salesperson who has already met his / her quota is completely different from negotiating with one who hasn’t. If you are this salesperson, don’t let the other side know where you stand – also don’t mention if business has been slow, or if you’ve got product piling up all over the place.
  • Don’t Start With Discounts: All too often salespeople will start a sales negotiation that they are anxious to close by offering a discount or some other enticement to the other side right off the bat. Don’t do this – although it might have worked in some other negotiation, if you start this way then the other side won’t see the value in your offer and you will have lost power even before the negotiations have begun.
  • Tell Everyone On Your Team To Shut-Up!: Even if this discussion sinks in to your brain, you can still lose power by comments that the engineers, procurement staff, and even the lawyers on your team make. Take the time BEFORE the sales negotiation begins to huddle with your team and explain to them that the more they talk, the more negotiating power they will be giving away to the other side.

Final Thoughts

Things that we can’t see are hard for most of us to get our hands around. Power in a sales negotiation is one of these things – it can be hard to tell how much of it you have and if you’ve lost some of it. Remembering to keep your mouth closed and working with your team to make sure that they do the same thing will allow you to close better deals and close them quicker.

Questions For You

Have you ever been in a sales negotiation when the other side revealed something that gave you power? Have you ever made a slip and given power to the other side because of something that you said? Has your team ever said something that weakened your position? Leave me a comment and let me know what you are thinking. Click here to get automatic updates when The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

People are either honest or they aren’t right? Umm, well not exactly. Look, in a sales negotiation everything is not as it seems. I hate to use strong words like “lying” or anything like that, but let’s just say that a healthy dose of skepticism is often a sales negotiator’s best friend…

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Sales Negotiators Know Not To Give In First

Tuesday, June 16th, 2009
Sales Negotiators Who Make The Wrong Concessions End Up Playing Defense

Sales Negotiators Who Make The Wrong Concessions End Up Playing Defense

I wish that there was some sort of black magic potion or single scientific study that I could point to in order to justify what I’m about to tell you, but there isn’t. So here it goes: never be the first to make a concession on a MAJOR issue.

Why Should We Take The Hard Line Here?

Concessions are a part of every sales negotiation. In fact we’ve spent a lot of time talking about the 5 ways that sales negotiators can use concessions to get what they want.  Now all of  a sudden it looks like we’re doing a 180 and telling you to not give in. What’s up with that?

The big difference here is that we’re focusing on the MAJOR issues – not the 100′s of other, smaller issues that come up during any sales negotiation. It’s on these issues and these issues alone that you need to take the hard line.

It’s All About The Experiments

This is one of those things that has been the subject of a lot of  on-the-job experimentation. What each of the studies has shown is that the side of the table that makes the first concession on an important issue always seems to end up doing poorly. The reasons are not completely clear, but it appears as though the side of the table that made the concession then finds themselves on the defensive during the rest of the negotiation.

How Can You Use This Information?

Knowing that giving in first on major issues is a bad idea, you need to adjust your negotiating strategy so that you don’t deadlock over these issues. This means that BEFORE you allow the sales negotiation to get to a major issue, make sure that you discuss several smaller issues. On these issues, make the first concession if it is appropriate. This will buy you good will with the other side that you’ll be able to play on when you reach a major issue.

Final Thoughts

When you stand firm on the major issues you’ll be sending a message to other side that perhaps their expectations are too high and they should start to expect to lower them. Since you won’t be giving in first, you won’t have to be on the defensive for the rest of the sales negotiations and you’ll be all set to close better deals and close them quicker.

Questions For You

Have you ever been in a sales negotiation where you ended up being the first to make a concession on a major issue? How did that sales negotiation turn out? Has the other side ever been the first to make a concession on a major issue? How did that make you feel when they did that? Leave me a comment and let me know what you are thinking.

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         The Accidental Negotiator Blog is updated.

What We’ll Be Talking About Next Time

Every sales negotiation has some sort of time limit associated with it. You might have an hour, a day, or even longer to conduct the negotiations, but there is some point in time at which you’ll run out of time to talk. This is when most sales negotiations fall apart…

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3 Secrets Successful Sales Negotiators Use To Win

Tuesday, June 2nd, 2009
3 Secrets That Top Sales Negotiators Know

3 Secrets That Top Sales Negotiators Know

Ok, so I’ll be the first to admit it – I used the forbidden word “win” in the title. In sales negotiations we prefer to not say “win” because it implies that there is also a “loser”. and that’s not a good thing. How about if we try something like “3 secrets to always walking away feeling successful“?

It’s All About Patterns

Successful sales negotiators are good at what they do because they know what they are doing. That being said, they also have developed patterns for conducting sales negotiations that serve them well. If you want to improve how your sales negotiations turn out, then taking the time to study these patterns will help move you towards your goal.

The 3 Secrets

  1. Control Your Location & Time: Just like most sports teams, the sales negotiator who conducts a negotiation on his / her home turf tends to do better. Negotiating at your base of operations makes life easier – you have better access to information and people and you spend less time searching for things that you need to complete the deal. Additionally, although there is no one perfect time to conduct sales negotiations, every deal has its own best time. Late on Fridays can often be a powerful time to close a deal quickly!
  2. Understand Your B.A.T.A.N.A?: Before you start any sales negotiation, you need to make sure that you have a good understanding of what your Best Alternative To A Negotiated Agreement (BATANA) is. If the talks break down, what will your next action be? Knowing this in advance gives you more power while you are negotiating.
  3. Start High, Give In Slowly: If you are negotiating to sell something, you need to plan the negotiation in advance. This means setting your price high enough so that you have room to allow the other side to “bring you down”. During every negotiation, you will have to make  concessions to the other side. Studies have shown that sales negotiators who make their concessions in smaller increments seem to end up doing better.

Next Steps

The art of sales negotiations does not have one magic “sliver bullet” that suddenly transforms an average sales negotiator into a top-notch sales negotiator. Instead, there are a 1,000 negotiating skills that provide the scaffolding that we all need in order to climb to the next level negotiating. Get this right and you’ll be well on your way to being able to close better deals and close them quicker.
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The Accidental Negotiator Blog is updated.

Questions For You

Have you ever had to conduct a sales negotiation in a location that was less than ideal for you? How did that deal turn out? What was the best time that you ever conducted a sales negotiation? What was the worst? Leave me a comment and let me know what you are thinking.

What We’ll Be Talking About Next Time

Wouldn’t it be great if the best sales negotiators in the world could drop by our place and sit down with us for awhile to share what they’ve learned? If you knew that they were coming, what questions would you ask them?

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