It’s said experience is the greatest teacher. This rings true for most professionals, such as doctors, lawyers, and sales pros. And a big part of gaining experience is making mistakes. In a sales negotiation, however, mistakes can result in lower margins, reduced profitability, and lost deals. Our recent white paper The Ultimate Guide to Sales Negotiations identifies some of the most common mistakes sellers make when negotiating. To help sales professionals gain the essential experience while avoiding costly errors, let’s take a closer look.
- Not Negotiating With a Final Authority
This is probably the most common mistake in a negotiation, but it is also the most difficult to avoid. Of course, it goes without saying that preparation is key, but no matter how much you research, the most important decision makers have a habit of hiding. In addition to your own due diligence scanning, searching, scouring corporate bios and pictures, ask each new contact who else needs to get on board. Play attention to every name that comes up during your preliminary discussions. Sometimes, even the most casual reference, “Manny might love that,” can reveal the decision maker with the final authority.
- Setting a Bottom Line
Knowing the boundaries of a “good” and “bad” deal is critical to any negotiation. The clearer reps are on this, the easier it will be to move through the negotiation without accepting deals they shouldn’t. For every contentious issue that arises, reps must weigh how it affects the overall quality of the deal. Part of this is avoiding tunnel vision or getting fixated on a point, such as stating deal breakers or setting a bottom line. Instead, evaluate each decision in terms of what can be added or subtracted to resolve issues within the larger framework of your goals.
- Being in a Rush
While pop culture often presents sales professionals as fast talking, a career in sales requires patience. This is important during a negotiation. As consultative sellers, salespeople should build negotiation into the sales process. From prospecting to discovery to presentation, sellers should reach as many agreements as possible before starting a formal negotiation process to work out specific language. At this stage, there may be a natural inclination to move faster. After all, you’re in the homestretch, and the deal you’ve been cultivating is finally in sight. Remember, patience is a virtue, and in Arthurian legend, only the purest of knights could achieve the grail.
- Not Building in Concessions
Before entering a negotiation, sellers should know what they’re willing to give up. Maybe these are your ideal takeaways, but more importantly, these are the things you can trade. In The Ultimate Guide to Sales Negotiations, we compare this to thinking like a chess player, evaluating trades based on the comparative value of pieces. As bishops and knights are considered three points each, they could result in a fair exchange. However, if one is more comfortable with the movement of a bishop over a knight, it might not be beneficial. Know in advance what you want to get, but just as important, know what you’re willing to concede.
If this sounds like a physical ailment, think of it as overexerting during a workout. A common mistake is sellers pushing too hard or doing too much. In a negotiation, this often occurs when sellers hear something as an ultimatum, a make-or-break decision, that really isn’t. Instead, it’s an opportunity build in more value. For example, if the buyer says they cannot pay more than $20,000, this does not have to be a deal breaker. The best negotiators know they now have a target number the buyer is comfortable with. This is an advantage because it gives sellers greater maneuverability. They can now better judge what they can take off the table and what value they can add to sweeten the deal.
- Not Achieving Technical Wins
While outside of sales, a technical win sounds like a consolation prize, it is an important part of the negotiating process. These are things you have won along the way, agreements you have reached, or knowledge you have gained, such as knowing the buyer prefers your products or your company over the competition. They could be small, but the best negotiators know to keep these in their pocket as incentives to work though the challenges that can arise. Technical wins can also be put together and used as leverage. The important thing is not to dismiss them out of hand but recognize when you have achieved one.
In every profession, mistakes happen. As a sales negotiation can be a complicated process, with a lot of moving pieces, there are any number of things that can go wrong, any number of opportunities missed, and any number of mistakes to be made. In most cases, the best defense is a good offense, and part of that is knowing in advance the traps to avoid. For more information, check out The Ultimate Guide to Sales Negotiations.