The Key to Good Sales Negotiation is to Eliminate the Causes of Bad Ones

Probably the most often heard objection from customers centres around the issue on price.

In my Nov 2007 issue, I mentioned that (apart from habitual bargaining) the main reason customers want to hack down the price is that they don't see how the value you provide justifies the (high) price they are paying.

However, justifying and educating customers on the value of your offering to be worth more than the price you are charging is just part of the answer to good sales negotiation. If you want to emerge as a winner in the selling game, you'd also have to eliminate the causes of bad negotiation too.

Are You Doing Enough Prospecting?

While most sales training materials will focus on objection handling techniques when it comes to handling price objections, it does not address the fundamental issues of negotiations. When negotiating, you may want to know what is your Best Alternative to a Negotiated Agreement (BATNA), which in simple English, what will happen if you don't accept the negotiation outcome placed on the table.

To sales people, the options are:

• Close a deal, but at smaller profits and smaller commissions;
• Close a deal at no profits and no commissions, but still able to achieve sales quotas
• Close a deal at a loss, but will make it up on the next deal, so that there will be profits for the account in aggregate

As you can see, this is a slippery slope for sales people who may just bend over backwards and give anything away just to make the sale. Now, what will be the root cause of such behaviour in sales people?

It is NOT because they have high sales targets to achieve, or that the sales person does not know how to apply objection handling techniques. The reason is that the sales person is not prospecting enough, and does not have enough prospects in the pipeline.

In the Nov 2007 issue, I mentioned that customers buy because "the pain of not buying is greater than the pain of giving the money to the sales person and buy". Similarly, sales people are unable to stand up against price pressures can also be largely due to the pain of not closing and losing the business is greater than the pain of sustaining losses in order to close the deal.

And what causes the sales person to feel a greater pain to lose a business? Burgeoning sales targets may be the reason, but a bigger reason is that there aren't many leads in the pipeline to follow through, and hence the need to "close something, anything" will be greater than the need to deliver profits.

In fact in most companies, sales people may be fired immediately if sales targets are not reached, but may only be reprimanded if the sales generated are loss-making ones. Strange, but true.

Are You Prospecting for the Right Kinds of Customers?

While some sales people may be masters in the art of handling objections, no amount of objections handling expertise can save the deal if the customer wants nothing but lower prices.

While it is true that most customers are cost conscious, they too will have to accept that there are differences between the price of a product vs. the cost of purchasing. However, there are also customers that refuse to make distinctions in either, and will just buy the cheapest priced offer.

If most of your customers in your pipeline belong to this category, then you'd probably need to do better qualifying and filtering in your prospecting process. This is not to say we will find customers who will buy our products and services at any prices we dictate. I believe we aren't naive enough to wish for that.

What we need to look for are prospects who are at least willing to listen to us, just as we are willing to listen to them. This means that more work is required when prospecting for new customers.

Unfortunately, most sales people love to interact with customers, but simply HATE to prospect. Hence, the sales team who can make the discipline to prospect more, and prospect better, is going beat their competitors hands down.

Eliminating the Causes of Bad Sales Negotiation

While there are many other causes of bad sales negotiation, and how you start your sales process may just determine what you get in the end.

In addition to poor prospecting, the causes of bad negotiation include:

• Poor questioning techniques that upset customers;

• Not knowing what customers want;

• Not knowing your customers' BATNA;

• Poor understanding of the values that customers want (and need) from you;

• Poor articulation of what you can do for your customer;

• Following through with customers with low influence on the decision making;

  Not know what each influencer in the buying process wants to get out of the deal; etc.

The list goes on, but it starts with the beginning, that is have you got enough qualified prospects in your pipeline?

If you would like to find out how you can prospect better and eliminate other causes of bad sales negotiations, simply e-mail info@psycheselling.com or call +86-13671902505 or Skype: cydj001 and arrange to buy me coffee. All information shall be kept in confidence.

c.j. is an Affiliate with HR Chally Group in China. Founded in 1973 through a grant from the U.S. Justice Department, the HR Chally Group provides predictive and compliant assessment system for management, sales, technical, customer care, and administrative talents. Unlike other assessment tools that just conducts personality profiles, Chally profiles what is exactly required by specific job descriptions and responsibilities and predict if these talents can succeed in these roles. The resulting effect is you'll get:

* Up to 40% reduction in turnover

* Up to 30% increase in employee productivity

* 85%+ accuracy in identifying effective performers

Prior to this, c.j. was Asia Marketing Manager for a Fortune 500 logistics company, as well as Corporate Training Manager for Ringier AG, Switzerland's largest media group, in China, where he was responsible for sales team development, and helped increase the % of new hires to close their 1st sales within 2 months by 30%, as well as increase overall sales targets by more than 50%. Visit http://www.psycheselling.com for more info.