Posts Tagged ‘Contracts’

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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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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Negotiation Tactic: The Reverse Auction

Thursday, January 15th, 2009
The Reverse Auction Negotiation Technique Is A Powerful Tool For Buyers

The Reverse Auction Negotiation Technique Is A Powerful Tool For Buyers

In the world of negotiations, there are few tactics as old and as well thought of as the “reverse auction”. This is a powerful negotiating technique that allows a buyer to get the sellers to offer their best pricing for the most amount of work. Not bad if you are a buyer, eh?

Here’s how a reverse action works for you if you are a buyer: let’s pretend that you wanted to build a house. You go out and get three different offers from three different home builders. As you can imagine, when you get the bids they will contain a confusing mix of different options and time frames.

Your next step will be to call a “reverse auction”. You invite all three builders to meet with you. You have them show up early and have them wait in the same room before they meet with you. After they’ve had a chance to sit and glare at each other for a bit, you then call them in to meet with you one by one.

Each builder will then proceed to tell you why they are the best and why you should avoid selecting the other builders. After you’ve had a chance to talk with all three builders, you now understand the subtleties and the risks that are involved in building the house that you want.

With all of this new information, you are now able to more clearly refine your specifications because the alternatives have become clear. You can now provide the builders with an updated proposal that they can bid on.

You will end up selecting the builder who can provide the best price while providing the most house for that price. By using a reverse auction, you were able to learn a great deal about building a house and you were able to trade off options that you originally did not know existed.

Why does a reverse auction work for a seller? Simple, there are four reasons:

  1. Competition Works: when you allow sellers who are competing against each other to “see” each other, it increases the level of competition.
  2. Apply Pressure To Management: the reverse auction technique allows you to move beyond the salesperson that you are dealing with and actually put pressure on the company’s management.
  3. Almost There Syndrome: each of the sellers has already put a lot of time and effort into responding to your original proposal. This means that they all think that with just a little more effort they can close the deal.
  4. It’s Concession Time: you know that sellers are more adverse to losing a deal during negotiations than earlier in a deal. This means that they may make concessions that they normally would not.

This negotiating technique is not without its downside. You need to keep in mind that whichever seller you select is going to feel as though they were put through the ringer. They will probably resent the auction process and will want to make up for being forced to bid a low price.

What this means to you is that any changes that you want to make to the contact after it has been signed will probably end up costing you dearly. Additionally, the seller may end up delivering the product to you late and may even shave some corners on the quality of what gets delivered.

Have you ever had a chance to use a reverse auction during a negotiation? Was it successful? Were you happy with what was delivered in the end? Have you ever had to compete in a reverse auction process? Did you win? How did you feel if you did win? Leave me a comment and let me know what you are thinking.

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Say Hello To The Bogey-Man – A Negotiator’s Best Friend

Tuesday, September 30th, 2008
When Negotiating, The Bogey Is Your Best Friend

When Negotiating, The Bogey Is Your Best Friend

As a negotiator, the key to your long-term success is to have a number of different techniques that you can use when a situation calls for it. One way to think about this is like a carpenter who has a tool belt with his most commonly used tools on it. As the carpenter is working on a job, just about any situation can be solved with one of the tools that he has close at hand. Today we’re going to talk about the negotiation equivalent of a carpenter’s hammer: a practical, simple, and ethical tool that everyone should know how to use. What’s this negotiating tool called you say? The Bogey.

The easiest way to define what the Bogey is, is to show you it in action. Let’s say that you want to have your house painted. You have a contractor come out to the house, he looks it over, and then he gives you a quote for $20,000 to do the job. You then tell the contractor “Hey, I love your proposal and I think that you do great work; however, all I have to spend is $17,000 that I got from an insurance claim. Here is a certified check for that amount.” The painter accepts your offer and gets to work.

So what happens when you use the Bogey technique? There are three fundamental principals of negotiating that are at work here and it’s important that you realize what they are:

  1. By complimenting the painter, you have boosted his ego. He realizes that you now expect something from him in return. In a subtle way, you have actually asked for his help and in most cases you will usually get it.
  2. In all negotiations, the seller knows more about his product than the buyer ever will. The Bogey is one way that the buyer can give the seller a chance to show what they know about the product.
  3. One of the fundamental rules of negotiating is that there is always a better deal available for all parties that are participating in the negotiation if only they are willing to search for it. The Bogey technique is how the search for this better deal starts.

When you present a Bogey to a seller, the seller generally won’t roll over and accept it. Instead he will come back with a more complete description of what he is selling to you: the quality of his product, his workmanship, the quantity of different items included in his quote, etc. Out of all of this you will now have a much better understanding of what you are buying. Now the real negotiation begins. The seller may lower his price, drop some options, change the delivery schedule, etc. No matter where it goes from here, you will end up ahead of the game.

Have you ever used the Bogey technique when you were negotiating? How did it work out for you? Has someone ever used this technique on you? How did you react as a seller – did you start to describe all the values of your product / service? Leave me a comment and let me know what you are thinking.

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