The Best Negotiation is No Negotiation
I led a session on negotiation earlier this week, and it sparked a couple of thoughts (here are four of them) worth sharing.
Most of the salespeople in that room (and most of the teams I coach) think it’s a foregone conclusion they're going to have to give something up near the end to close a deal. They almost assume there’s going to be a discount instead of laying the proper groundwork ahead of time.
Ideally, you’d rather not have to negotiate at all.
That’s usually not possible, but that doesn't mean your concessions should become a part of your strategy. There's a lot of room between full price and fire sale.
Here's what most people miss: if you built an airtight business case from the start, you'd need to discount a lot less. And when those discussions do happen, you'd hold far more leverage, end up selling at higher margins, and drive better customer satisfaction.
What If Discounting Felt Like A Failure?
Discounting at the end always meant to me that I hadn't established enough value upfront. I failed somewhere along the way. I didn't understand the buyer's true motives, problems, or goals, and I couldn't position myself as the clear and only solution.
I’m being a little hard on myself, but I came from an environment where I sold a premium product, and discounting just wasn’t tolerated.
That feeling (fair or not) always drove me back to these principles:
People don't haggle when they believe you're the obvious choice.
They don't fight over terms when they’re eager to get started.
We Train Our Customers How to Buy From Us
Here's the thing: our customers and clients follow our lead. When we signal that concessions are coming, it starts a vicious cycle of how soon they start asking for discounts, and then how many.
When we accept this as the norm, it changes the way we approach the deal. The path of least resistance is to provide less value at a lower price.
Think about that. We’d rather provide less impact for the customer?
When you’re starved for opportunities, it’s easy to get happy ears and give away more than you should. This hurts us, our companies, our profitability, and our reputations.
Where Most Companies Fall Apart
Most companies don't set clear enough boundaries around the problem they're solving, the cost of that problem, and the value of solving it—and I don't just mean dollars.
What won't the prospect accomplish if this problem persists?
What's the bigger goal?
What barriers stand in the way?
Many companies, especially successful ones with excellent products, tend to lead with their solutions. They drink too much of their own Kool-Aid and focus on features and benefits, leaving prospects to connect the dots for themselves instead of building value around removing a business challenge.
In most cases, people won’t go deep into their pockets for something really cool. They certainly don’t go as deep as they will when they need something to accomplish their mission. Seeing a clear connection between their problem, your solution, and the impact it’s going to make on their business is a lever that you can’t afford to ignore.
Could you keep half of the discount you normally offer if you could illustrate that connection more effectively?
The Calendar Becomes Your Enemy
The blessing and the curse of great products is that you get wrapped up in how cool your stuff is and forget how much people need it and why. Without perceived need, there's no urgency.
The deal stalls because those dots aren’t connected. Everything becomes a want-to-have instead of a need-to-have, and people don't move quickly for those.
End of quarter arrives. You've got a number to hit. Your manager has a number to hit. The company has earnings to report.
"What's it going to take to get this done now?"
With six more weeks? You'd sell at X. But you don't have that time, so you'll sell at Y—usually 20 to 30% less.
You wish you could hold the price, but there are mortgages to pay, mouths to feed, and the promise that you’ll do better next quarter. Go get ‘em, Tiger.
Break the Cycle
This cycle has become the norm for a lot of sellers, but it doesn’t have to be, and no, you don’t need to miss a quarter to break it.
With the new deals you‘re starting, focus a little less on the product and start talking more about your customers’ problems. Help them define those problems. Talk about the value of solving or eliminating them. Create context around what success looks like, and be as specific as possible, rather than letting them daydream for themselves.
This is the fundamental blocking and tackling of B2B selling.
When you've got such an airtight business case that you're just agreeing on details, and not arguing about value, everybody wins more.
The real question isn't whether your prospects will pay full price. It's whether you believe they should.
