*Editors Note: John Barrows is the top sales trainer for industry leading tech companies. He trains reps from Salesforce, LinkedIn, Box, Marketo, Zendesk, and more.
It’s All About the Win-Win
True negotiations are all about coming to a mutual agreement on something where both parties feel like they got something out of the deal. Contrary to popular belief, you don’t “win” a negotiation by making the other person lose. Both parties need to give and get along the way. The more equal those gives and gets are, the healthier the relationship is and can become.
The problem in sales is that we tend to be ‘givers’. We give and give and give and expect one very large thing in the end as our ‘get’ (i.e. signed contract) and we think we’ve earned it because we did everything they asked for. However, if we give throughout the process without getting much in return, we condition the client to treat us like a doormat. They end up having little respect for us towards the end which is why they either keep asking for things (discounts) or they just flat out disappear on us and don’t even give us the courtesy of a call back. We need to find a way to create and condition equality from the start of the relationship.
Creating Equality in Negotiations
To create equality, most negotiations focuses on a quid pro quo approach to getting things in return for what you’re giving away which is necessary sometimes but tends to lead to a more contentious relationship. There is something else that can be even more powerful to leverage which is a human condition called the Rule of Reciprocity. This rule effectively states that we (as humans) are all bound, even driven to repay debts. We don’t like owning anyone anything.
If someone asks us for something, the receiver actually feels obligated to give them something in return. The sooner we ask for something in return, the easier it is for us to get. By understanding all the gives and gets along the way and matching them up, we can know exactly what and when to be asking for in order to move the deal through the pipeline to closure, or get out before it’s too late.
Don’t Jump to Discounting
Often times people jump to discounting to speed up negotiations. Discounting has such a negative impact in so many ways that it’s worth pointing out a few things to gain some perspective.
- The average S&P 1000 company would suffer a 12.8% drop in profitability by giving a mere 1% discount assuming no increase in volume
- Salespeople make a bigger deal about price than buyers do (Salespeople (8.3) Buyer (6.9)
- Whoever feels the most pressure will make the most concessions
- Discounts kills credibility and creates a negative perception of you and your solution
- Discounts set the stage for future discounts
So what’s the best way to combat discounting you ask? Well, there are some negotiation and objection handling techniques that can help but the best way I’ve ever come across is quite simple, just have a BIG FAT PIPELINE. The more legitimate, healthy deals we have in our pipeline the less desperate we are to close deals, and the more confident we are in dealing with people who are trying to squeeze us. We can also work more along the lines of the client’s buying cycle than our selling cycle. Too often we try and force a client into our buying cycle which typically is driven by the end of the month or quarter. We all know Sales should be about the client and not about us, so we need to do what we can to get them to buy when they’re ready to buy, not when we’re ready to sell.
This is why prospecting on a regular basis (even month or quarter end) is so critical. Spend 30 minutes a day prospecting in some way shape or form. It can be cold calls, direct e-mails, searching through linked in, asking for referrals, whatever, just do it. If you’re sick of feeling cheap and using discounts to close all your deals then prospect every day to have a consistently full pipeline and see what happens to your confidence and abilities to deal with discounting.