There’s no doubt in my mind that one of the reasons small businesses fail is an inability to market/sell their product. So many business go through the same curve: Market their product, get really busy, realise there’s a lot of activity but no profit, put prices up, lose business, fail. Many of these failures could have been avoided if (1) the original business structure was better and (2) the people within the business were better negotiators/sellers.
It’s easy to give a product away cheaply. It’s a lot harder to achieve a good price for a good product, especially in today’s environment where a cheap competitor enters your market every other week.
Sometimes your number is up. It wouldn’t matter how good a negotiator you were if you had a telegraph business in the early 20th century. Progress and technology killed your business – there was nothing you could do (other than evolve). But this is not the case in most instances. Many businesses that fail could have made it work, or at least work better, if they’d started out on a different path and had a different approach to sales and marketing.
So over the next few weeks I’m going to outline some of the fundamental negotiating skills that have served me well over the journey. I hope you find them as useful as I have.
Tug of war.
Negotiating is a tug of war. In real life, the strongest team usually wins a tug of war, but in negotiation, the smartest team does. This is because knowledge is a fundamental and critical power in negotiating.
The more you know about the buyer’s situation the better you’ll fare. The more you know about how human beings act/react in a sale the better you’ll fare.
Most salespeople tend to think of themselves as being in an inferior position to the buyer. This is a really bad place to start as it encourages you to think that the only power you have is discounting. Dropping the price is a slippery pole that leads to bankruptcy. Any idiot can give the product away. It takes a skilled negotiator to finalise a deal where both parties win, and where the buyer receives a good product at a reasonable price.
Knowledge as a power.
The more you know about the buyer, the better. The less they know about you, the better. This doesn’t mean you have to use ‘cloak and dagger’ techniques and give nothing of yourself away. You’re not James Bond – and anyway you need to build trust with the client and that’ll never happen if you’re constantly being cagey. That said, building rapport and blabbing mindlessly are two different things.
People do tend to run at the mouth when they’re nervous (and negotiating makes most people nervous). This leads to them divulging information that they shouldn’t and by providing the client with this information, you are strengthening their bargaining position (and weakening yours).
Deadlines are a good example of information you should keep to yourself. If you’re under pressure due to a deadline, and you tell the buyer this, you’ve strengthened their position and given them a bat to beat you with.
Pricing is another. Any comments by you regarding flexibility with pricing will weaken your position. Your goal is to get a good price for a good product. If you tell the buyer the price is flexible, you can be sure they’ll immediately start asking for the cheapest price
It goes both ways.
Clients will also offer more information than they should. When a client says “my boss is in a real hurry over this” they are telling you that your bargaining position is strong. A fundamental rule in negotiating is ‘if you rush you’ll get less’.
Comments about performance can also strengthen your position. When a buyer says “my boss is giving me a hard time about the lack of sales this month” this puts you in a stronger position. You know the buyer is under pressure to perform and that your product is an effective way of turning this around (hence why the buyer is speaking with you).
If you become aware of pressures on the buyer, whether it be time pressure or a need to perform, of if you become aware of anything that points to them having a higher level of appreciation for your product, this tells you that your negotiating position is stronger than you thought.
Listening is critical.
You will have heard me say again and again that listening is a critical sales skill (quite possibly the most important one). I’ve seen so many salespeople ignore key information like the points outlined above, and each and every time this diminishes their performance/outcome. Salespeople who don’t listen don’t learn, and gathering intel is a crucial part of any negotiation.
So tune in to everything the buyer says. Things you previously thought were throwaway lines could be the keys to unlock your improved negotiating outcomes.