If there's one thing everybody knows about sales, it's that serious negotiation starts when you and your customer or prospect sit down together to close a deal. Right?
Think again. In any successful negotiation, the real work begins long before either party comes to the table.
"When people hear the word 'negotiation,' they think 'Oh, that happens at the end of the sales process,'" says Grande Lum, author of The Negotiation Fieldbook: Simple Strategies to Help You Negotiate Everything. In fact, he and other experts say, the best salespeople start thinking about negotiation much earlier--sometimes even before they've made the first contact.
"Too often, salespeople don't dig enough to find the customer's real interests," notes Damon Jones, who, as Miller Heiman's chief operating officer, is responsible for the firm's global sales operations and international growth. "They need to find out whether the client's focus is around price, or around the terms and conditions, or around something else. They need to understand what's driving the customer--for instance, is it that they've just bought a similar product or service somewhere else?"
Developing a deep understanding of both parties' interests is just the first of four elements that Lum calls critical to preparing for any type of negotiation. Those building blocks make up what he calls the ICON Negotiation Model, a framework developed from the best practices of successful executives, salespeople, diplomats and others skilled in negotiation. Each letter in the acronym "ICON" summarizes one of those four key elements:
Interests: The subjective needs, goals, concerns, fears and desires of each party.
Criteria: Objective benchmarks, precedents and standards for judging and filtering potential options.
Options: Possible solutions that satisfy all parties' interests, making them agreeable to all concerned.
No-Agreement Alternatives: The actions each party can take if they leave the table without formally agreeing to any option. In these cases, negotiators often strive for what's known as a BATNA--"the best alternative to a negotiated agreement."
Lum, who describes those interlocking elements in more detail in his Fieldbook says that, together, they provide a proven road map for planning any type of negotiation. By consciously and thoroughly addressing each element beforehand, and by understanding how each can be used as a source for creating more value, savvy salespeople will come to the table better prepared--and more likely to succeed.
Collaboration or Manipulation?
So what's the key to negotiating well? It may sound like a clich�, but it's nonetheless the only method that works: Strive for a win-win outcome. Or, as Lum puts it, "Create the best solution that will meet your interests and mine."
Ending up at that point requires starting with the ICON road map, first by obtaining that all-important insight into the customer's interests. Then establish objective criteria. By using criteria, Lum says, "You can resort to objectivity rather than force of will. You can be persuasive based on data outside yourself," such as information provided by an independent consulting firm. "That way, neither side feels that they're being taken."
A clear understanding of interests and criteria will lead both parties toward options, and, ultimately, either an agreement or alternative resolution (which, Lum notes, may well involve walking away, at least for a while). No matter how the negotiation ends, both parties should leave the table feeling confident that they were treated honestly and fairly--and, ideally, that they're better off than they were before they sat down together.
If there's a sales-specific caveat on negotiation techniques, it's this: "Salespeople have a tendency to capitulate too quickly," Jones notes. "In the spirit of trying to get the deal done, they discount too quickly or leave dollars on the table, which they didn't need to do. They take shortcuts. It's easier to just discount something than to go through further discussions to find new value--which takes far more salesmanship." (In fact, Miller Heiman's study found that 69 percent of sales leaders and 75 percent of salespeople felt increasing pressure from existing customers to cut their prices.)
Lum says that when salespeople cave on discussions involving prices, it's typically because they haven't explored the customer's interests thoroughly enough. "If you haven't discussed value, then any price is going to sound too high," he notes.
"A successful salesperson can see beyond the smokescreen of price and rigidity," he continues. "Be like a detective. Ask good questions." Based on the answers, suggest alternatives, he says: "Bottom line: It's about being a problem-solver rather than just pushing a product."