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SPEAK NEGOTIATION FLUENTLY: KNOW PRECISELY WHAT YOU’RE GIVING AWAY

Negotiation is the language of give and take, but very few salespeople are fluent in it. Most don’t understand the value of what they’re giving away. What’s worse, sales managers don’t broach the subject in team meetings and rarely invest in training that will give their team the negotiation fluency to win better deals.

ARE YOU LIVING IN NEGOTIATION DENIAL?

Instead, sales managers are intensely focused on pre-call preparation, such as perfecting their elevator speech, and reciting product features and benefits. But in all of these activities, sales professionals control the conversation. And if the customer seizes control of the conversation, the sales professional stumbles.

Here’s a common example:

The customer looks at a carefully crafted proposal and announces, “Your price is too high.”

Back in the friendly confines of the office or even in the car heading to the account, the seller will rattle on about the dozen things that makes his offering better. But in the cold, hard light of the customer’s environment, he stutters and stammers when the customer challenges him. And the customer take advantage.

It’s the easiest negotiation ploy.

Yet, sales managers still live in negotiation denial. They don’t see it as a critical tool in their sales team’s skillset. Instead, at best, they view negotiation as a necessary evil, and fall into three schools of thought:

Our business is a continuous relationship. Negotiations are for the one-time sale.

Our customers don’t negotiate and asking our salespeople to try some kind of trickery would only hurt our reputation.

Our salespeople are experienced, they can take care themselves and our company without negotiation training.

These sales managers don’t realize that negotiation isn’t trickery and it isn’t mastered the instant their team steps onto the sales field. It requires a commitment to training and education.

GET SOME REAL-WORLD LESSONS ON THE COST OF CONCESSIONS

Consider the experience of Cruz Ramirez, Branch Manager of IEC Supply LLC. Ramirez recently attended a SPASIGMA negotiation training seminar in Tempe, Arizona. His employer is an electrical distributor that focuses on high-tech products such as drives, sensors, automation systems and related hardware, and services elite customers across much of Arizona, New Mexico and Nevada.

Nearly every distributor transaction has some room for negotiation. Sales professionals can make logistical concessions, offer back-up stock, provide technical guidance or warranty support. Every day, they’re making snap decisions that can make a financial impact.

IEC supply is no exception.

“We are able to provide a great many value-adds along with our work. These range from technical to logistical in nature, but they all cost IEC Supply money,” admits Mr. Ramirez. “And when price isn’t the main point of discussion, it’s not uncommon for our customers to ask us to provide additional services to sweeten the deal.

“The problem is, the costs of our value-add has increased and our sales team hasn’t kept up with the escalation of the cost,” he notes.

One of the points that keeps coming back to Mr. Ramirez, as he contemplates his SPASIGMA training, is that he needs to understand the cost of the concessions they’re making.

“I know that I have been guilty of throwing something in, even after I had the sale, all in the name of building customer relationships. I see the results with my people as well,” he confesses. “Rarely do they take time to evaluate the concessions they make from a financial or time-cost basis. But understanding the cost of concessions is critical for making the right deal.”

Think about this: Do your sales people prepare a concession-making strategy in advance? Do they quantify the costs of the concessions they’ll likely to be asked to make? Some of the little extras thrown in during negotiation give-and-take can cost very little, others severely cut into the financial benefits of the sale.

This is a point driven home during the practice negotiations that takes place in SPASIGMA seminars, when participants are asked to work out a deal. They must track the cost of absolutely everything they’re giving away, and measure that against what they’re getting in return. The goal is to help them understand the dynamics of building a better deal.

“In our sales meetings we now review the hidden costs of our value-added service,” says Mr. Ramirez. “We talk about the cost to deliver the service. Running through calculations, we talk about the future gross margin required to offset the cost. We drive home the point that distribution is a two-percent business with rising costs and pricing pressure; all the stuff SPASIGMA helps us handle on a regular basis.”

Ramirez says this is enabling his sales team to make better decisions.

“I would like to report that we have completed the journey, but old habits die slowly. We are making progress,” he says. “Our salespeople are more aware of the costs associated with just tossing something into the package. They aren’t making perfect decisions, but they are making better decisions. And, the results show the difference,”

DO YOU KNOW THE COST OF WHAT YOU’RE GIVING AWAY?

Make sure your sales team can quantify the cost of everything they’re giving away. Consider a distributor that gave away hundreds of calendars each year. When the sales manager told his team they cost $5 a piece, they asked for 40% less! While it’s possible fewer people wanted calendars, it’s more likely that when his sales professionals realized how much they cost, they became more selective about the recipients. Understanding the internal cost of concessions drives similar thinking and negotiation training pushes this thinking even further.

That’s why sales professionals who have mastered negotiation will seldom concede anything without making sure they receive something of value from the customer in return. They have a keen understanding of how give and take impacts the bottom line. They know much each concession costs and how much their customers want those concessions, and can therefore demand the highest price for whatever they give up.

They are fluent in the language of negotiation, which translates into both greater opportunity and revenue.

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