Sales Negotiations: How To Navigate Negotiations Like a Pro
For many people, negotiations feel uncomfortable. But a salesperson can’t afford to be squeamish - negotiation skills are an essential requirement of the job.
Great negotiating strategies aren’t just drawn from sales environments - some of the most effective sales negotiation techniques are adapted from law enforcement, behavioral economics, and psychology.
Learning to implement these techniques (and training your sales team in their use) will allow you to regularly increase your win rates.
What Is A Sales Negotiation?
Sales negotiation is a crucial element of the sales process. Although negotiation commonly takes place in the latter stages of a sales process, it’s important to create the best environment possible for negotiation at every step.
Even in the earlier discovery stages, the outcomes of processes like lead qualification are going to affect the way you negotiate later on. Finding out what your customer is prepared to say ‘yes’ and ‘no’ to - and how they respond to challenges - will help you choose the right strategies for successful sales negotiation.
The negotiation process can even be seen as an extension of the lead qualification process - as a negotiator, you’re powerless if you don’t retain the option to walk away. Not every qualified lead is a good fit, and negotiations are often the time when you find out if a customer relationship is going to succeed. Handling these trickier negotiations can require a high level of emotional resilience.
Sales Negotiation Techniques
Like any skill, negotiation techniques should be practiced regularly. A skilled negotiator needs to be able to adapt to evolving sales situations with responses that reflect a deep understanding of the principles of negotiation.
These aren’t shortcuts, they’re psychological approaches that can be mastered for consistent negotiation success. For example, salespeople can rely on the innate human need for reciprocity to ensure that in negotiations, they never have to give anything away without getting something in return.
Rather than asking the customer how much they’d like to pay and then attempting to match it, anchoring allows negotiators to quickly set a benchmark figure. This serves both to qualify the lead and dictate any further amounts suggested by either party. This technique was explored in detail in Daniel Kahneman’s ‘Thinking Fast and Slow’, where he explained;
“If you consider how much you should pay for a house, you’ll be influenced by the asking price. The same house will appear more valuable if its listing price is high than if it’s low, even if you’re determined to resist the influence of this number.”
This technique can be used in conjunction with independent standards such as industry benchmarks, past contracts, and competitor pricing. It can also, in some circumstances, be used to propose an unrealistically high first offer, to which the customer can respond with a more realistic figure which represents the most they’re willing to pay at this stage. Either way, anchoring is a powerful negotiating tool.
Mirroring leverages a different cognitive bias, whereby people have been shown to respond favorably to others who share similarities with them. This bias includes almost any characteristic including political persuasion, appearance, and body language - right down to which sports team you support.
Mirroring techniques can be used throughout the sales process, building trust and producing beneficial outcomes - such as those shown in this study, where lawyers who linguistically mirrored judges were shown to improve their chances of winning a case from 11% to 25%.
Persuasive Tools and Collateral
It’s not all cognitive biases and psychological mind games. A persuasive sales negotiation needs to demonstrate clearly to the prospect that what you’re selling is going to fix their problem. The more proof you can offer of this outcome, the less you’ll need to rely on hard negotiation.
That’s why having the right sales collateral can strengthen your negotiating position in every single sales conversation. With customizable templates, Qwilr lets you personalize your proposals and preempt common customer objections with beautifully presented data that’s perfectly targeted to reduce friction in the sales process.
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Say The Word ‘No’
In ‘Never Split The Difference’, ex-FBI agent Chris Voss’s popular introduction to high-stakes negotiation, he subverts traditional wisdom regarding ‘yes’ and ‘no’.
Voss makes a convincing case for actively seeking the word ‘no’ from the other side in a negotiation. As well as letting the customer establish a firm boundary, saying ‘no’ can give the speaker a feeling of ‘safety, security, and control’.
A skilled salesperson can steer a negotiation in a way that provides safe opportunities for the customer to say ‘no’, creating these psychological benefits at little actual cost.
A simple example from ‘Never Split The Difference’ is the opening gambit of any phone call - by asking, ‘is now a bad time to talk?’ (rather than, ‘is this a good time?’)
Framing the choice in this way, the customer is empowered to either use ‘no’ (granting permission) or reject the call by agreeing with the salesperson’s suggestion (yes, this is a bad time to talk).
Another cognitive bias-based technique defined by Kahneman and other behavioral economists, loss aversion theory proposes that people are more motivated by avoiding loss than by making gains.
The interactions between loss aversion, supply and demand can be used to explain many consumer behaviors, which at first glance make little sense. Loss aversion is a powerful tool that is used across many industries to negotiate with and motivate customers(most notably the insurance industry, whose entire sales strategy is arguably based on loss aversion).
Voss and others often categorize negotiation as a process of discovery - the more you can learn about what the other party wants and needs and the different factors influencing their decision, the easier it is to work out how to offer them a deal which works for both of you.
To this end, open questions beginning with ‘why’, ‘how’, or ‘what’ will let you find out much more about your customer and their pain points. Open questions also tend to sound less threatening, as the customer has a lot more choice in how much information they choose to share in response.
Sales Negotiation Training Strategies for Teams
Across a sales organization, members of the sales team may have different experiences and comfort levels with negotiation techniques. This is why sales negotiation training and practice should be a key component of your sales organization's ongoing training program.
You don’t want negotiation training to be a one-and-done experience, as consistent practice will help sales team members continue to build this skill which can help grow your bottom line. This sales negotiation training doesn’t have to be stuffy and theoretical. You can (and should) include elements of role-play and challenge your salespeople to practice real-life scenarios from the point of view of both the seller and the customer.
Chris Voss talks at length about the importance of ‘tactical empathy’ in negotiation strategy. Unless you understand the point of view of the other person, you’ll never build rapport - and you’re unlikely to reach your desired outcome.
Practicing Mock Negotiations
Mock negotiations are a great way for your salespeople to slow down the interactions of the sales negotiation in a ‘test environment’ that’s considerably less stressful, with much less at stake than in a real-world sales conversation.
Running scenarios allows sales professionals to experience aspects of negotiation that they might be scared of trying in real life - walking away from the negotiation table is much less nerve-wracking in a consequence-free simulation.
To ensure negotiations run smoothly with no surprises, it’s vital to make sure your team accounts for everyone with the power to make or break a sales deal. There’s nothing worse than securing an agreement only to find out that a ‘silent partner’ isn’t so silent, after all.
Identifying decision-makers early should be factored into your lead qualification framework - sales reps should be researching information about the company structure before exploring the decision-making process in early conversations as part of the sales process.
Your team can practice doing this due diligence together or learn from past deals where stakeholders or decision-makers appeared later in the sales process. When reviewing the latter in a training conversation, ask the team to consider and brainstorm ways they might have discovered this additional decision-maker earlier in the sales process.
Recognizing Negotiation Tactics
A schooling in sales negotiation should also be accompanied by an overview of buyer’s negotiation techniques. Learning to identify the tools used by the opposition is an essential element of your sales team negotiation training program.
While many of these buyer’s negotiation techniques are rooted in the same cognitive biases as sales negotiation techniques, the difference in starting position might make them difficult to recognize if sellers aren’t looking for them.
Using Data To Define Boundaries
Effective negotiation involves give and take. But how much can you give? How much should you take? This information should be present and clearly delineated in the sales playbook.
It’s even better to take your team one step further and train them to understand why these limits exist. Train them to understand sales metrics, forecasting, and analytics properly. Then they’ll understand the deals they’re making and bring that value to their sales negotiations, helping the customer understand the value of what’s offered.
Testing Negotiation Frameworks
Academic negotiation theory is a fascinating (and profitable) field of study. Frameworks like Zone of Possible Agreement (ZOPA), Best Alternative to a Negotiated Agreement (BATNA), and Win-Win build on game theory rationales that have been put to good use since the 1940s.
It’s important to remember that these frameworks may not always work for your specific product and sales strategy. It’s worth learning about and experimenting with their elements, but they aren’t magic bullets. Analyzing negotiation frameworks (and their drawbacks) will help your team think more strategically about negotiation.
Empathising, Listening and Labeling
With many salespeople identifying as extroverts, and being very comfortable taking the lead in a sales conversation, training in the art of active listening can take some practice. Remind sellers to really slow down and listen to their prospects, don’t just wait to respond. Doing this in your role-playing scenarios is important, as just like exercising any new skill it gets stronger with regular practice.
In ‘Never Split The Difference,’ Chris Voss returns time and again to the idea of ‘active listening’ as a way to better understand the obstacles preventing the other party from agreeing to your request. He encourages negotiators to;
“Negotiate in their world. Persuasion is not about how bright or smooth, or forceful you are. It’s about the other party convincing themselves that the solution you want is their own idea…It’s not about you.”
One technique you can use to facilitate this approach is labeling. This is a psychological tactic used to communicate your understanding of the other party. Once you’ve identified something about their position through listening to what they have to say, verbally label it, e.g. ‘it seems you’re feeling uncomfortable with the fee?’
When training this skill, have sellers take note of the word ‘seems’ here. It’s important not to tell people how they’re feeling
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Frequently Asked Questions
What are the main stages of a sales negotiation?
There are four main stages in a sales negotiation - preparation, exchanging Information, bargaining, and closing/commitment.
How do you negotiate calmly in a sales negotiation?
To negotiate calmly, you need to separate your emotions from the issue or problem that you and the other party are trying to resolve. To quote FBI negotiator Chris Voss, “he who has learned to disagree without being disagreeable has discovered the most valuable secret of negotiation.”
Absorbing and implementing these sales negotiation strategies (or any sales tips) will only improve your win rates if you continue to focus on your primary purpose - solving the problems of your customers.
Much of the sales negotiation advice above is intended for sales conversations - however, not everyone retains spoken information, and some customers may find it easier to absorb visually presented information. Using Qwilr’s automated sales proposal and collateral templates lets you quickly provide strong text and visual support for your sales negotiation. Want to see it in action? Sign up for a demo today.
About the author
Dan Lever|Brand Consultant and Copywriter
Dan Lever is an experienced brand consultant and copywriter. He brings over 7 years experience in marketing and sales development, across a range of industries including B2B SaaS, third sector and higher education.