Negotiation starts with increasing the size of the pie. To negotiate effectively you have to make the pie as big as possible.
That’s exactly how many times I have been told by sales managers, sales leaders, and entrepreneurs that their salespeople need negotiating training And who couldn’t benefit from more training in negotiation (especially in this Disruptive Age, when prospects want to commoditize you and your offering)?
But the negotiation problem isn’t that they could use more training. It’s that they need to start negotiating.
It’s All About Pies
There are two parts to negotiating:
increasing the size of the pie
claiming part of it.
Negotiation starts with increasing the size of the pie. When someone asks you to sharpen your pencil and you run and ask your sales manager to allow you to discount the price, you aren’t increasing the size of he pie. Instead, you’ve moved on to the claiming phase. More accurately, you’ve let the client determine that you are in the claiming phase.
To negotiate, you have to work on making the pie as big as possible. I see salespeople play small, afraid to create the maximum value for their prospective clients because they fear that it will increase the risk and the time it takes to win (and sales leadership should be indicted here for allowing a short term focus to outweigh long term goals and value creation).
Slicing the Pie
The second phase of negotiating is dividing up the pie. Doling out the price concessions isn’t the right approach when it comes to claiming value.
Negotiating means ensuring that you negotiate the profit margins your business needs to execute on the what you’ve sold. It means that you find an agreement that allows you to capture value in proportion to what you create. It means you help your client makes the right investment. This isn’t easy. It never has been.
You need to push back and reiterate the value you create. You also need to help your buyer justify your pricing internally.
If you’re going to improve your negotiating, you have to start by actually negotiating.
How much do you work on increasing the size and value of the pie?
How much do you work on confirming that the value you create is the value your client really needs from you?
When you negotiate, do you claim a portion of the value you create, or do you really just negotiate the discount?
What do you do to reiterate the value that you create?
How do yo help your clients justify the investment you are asking them to make?
About the author
Anthony Iannarino is President and Chief Sales officer for SOLUTIONS Staffing, a best-in-class regional…