Is Negotiation a Strategy or a Skill?

When it comes to a successful negotiation, which is more important: strategy or skill?

The definition of the verb, negotiate, is to “deal or bargain with others, as in the preparation of a treaty or contract or in preliminaries to a business deal.” In a sales context, the key definition is to “bargain in order to create, or culminate, a business deal.”

Sales professionals are often negotiating with both prospects and clients. We bargain with prospects for access to key decision makers or in our own organizations for additional resources. We make tradeoffs with ourselves in an effort to improve productivity and improve time management. And we negotiate the final terms and conditions of new contracts in order to close business.

At ValueSelling Associates, we are often asked to help our clients negotiate more effectively. We have observed that there are consistent, common traps that torpedo negotiations.

1. Timing: When companies offer incentives to their customers in order to create urgency and persuade prospects to expedite signed contracts. These incentives may be pre-announced price increases, introductory offers, or embellished deliverables. Whatever the incentive, how and when it is communicated becomes critical.

We advise sales professionals NOT to negotiate before the prospect is a fully qualified opportunity. In our Framework®, the qualification process is multidimensional. There are four questions a sales executives should have the prospect answer to determine if they are a qualified opportunity:

• Should they buy this?
• Is this worth it?
• Can they buy this?
• Are they convinced?

Offering incentives to a prospect before the qualification process is confirmed will diminish your credibility as a sales professional and potentially devalue your offerings in the prospect’s mind.

2. Authority: As a sales professional, are you aware of your negotiating parameters?  Every organization draws a line in the sand for what is considered negotiable. To be a successful negotiator, it is critical that you understand what your organization allows to be included in negotiations with your prospects.

Negotiation Components:

• Deliverables
• Terms and Conditions
• Price

While many prospects attempt to focus the negotiating conversation solely on price, a smart sales professional only talks about price after they’ve exhausted deliverables and/or terms and conditions.

• Do you know what authority your organization has given you to negotiate?
• Do you know how you can include your sales manager, and their greater authority, in an upcoming negotiation?

You should know the answer to both questions before attempting a negotiation.

We’ve seen sales professionals make over-commitments to prospects, only to have to go back when they could not honor what they promised, then try to re-negotiate. It can be very embarrassing! When you understand what you can authorize, your negotiations have a better chance of succeeding.

Is negotiating a strategy or a skill? It’s both. Successful negotiators have a plan, use the authority they have, and are very purposeful in their negotiations with prospects.