Learn the four problems that happen early, and why poor negotiation skills is only one reason.
- Do you ever wonder why your deals fall apart? Well, it's usually one of five reasons. The first reason is smoke and mirrors. The buyer has no intention of actually buying. They're just using you to get a lower price from their existing vendor. So, this wasn't even your deal to win. It was never even on the table. Now, you can find this out early by asking, who are you using now and why are you considering a change? That will reveal whether the buyer's really serious.
The second reason deals fall apart is the buyer's surprised. Sometimes we forget to tell them things that actually show up in the contract. Is there a 24 month commitment that you forgot to mention? You never want your buyer uncovering a major contractual point when you're in negotiation. Even if it wasn't your intent to leave it out, it makes your buyer feel deceived and that can blow the whole deal. So, make sure you cover everything before you ask the buyer to sign. And the third reason is, a lot of times, the seller doesn't ask for the close.
Now, this seems kind of obvious, but I see this all the time. Negotiators who have a low close rate often get there because they turn away the first time the buyer asks for something they can't do. They assume that if a buyer asks for something they can't provide, that the deal is off. But that's actually not always the case. How many times have you bought something and you didn't get every little detail you asked for? Odds are, your buyer is not going to ask for the close. If you provided value, you can ask.
The fourth big reason why deals don't close is there's not a clear identified buyer. Now, you think you have a buyer, but in reality, it's a committee and it's one of those committees where everyone can say no, but no one can actually say yes. And this happens a lot in big companies. A person who seems like a buyer brings you in before the committee. You do a great dog and pony show. You give them a contract and then nothing happens. In a lot of cases, it wasn't a negotiation.
It was only an exploration. Now, you can avoid this by finding out who the members of the committee are in advance. If it's a big enough deal, meet with them, call them, identify their objectives. And when you get in front of the whole group, make sure you ask about timing. And ask openly, who is ultimately going to approve this? Now, the last reason why deals fail is no value. Often times, the buyer will say, it's too expensive. But what they really mean is that you haven't demonstrated that it's worth the investment.
Now, if you have business from other clients, you're product's probably not overpriced, but in this situation, you haven't built enough value or you haven't demonstrated the value. They don't see a justification, so that's why it's going to fail. So, there are some other reasons why deals fail, but if you go back and look at the deals you lost, I think you'll probably see most of them fall in to one of these five categories. So, here's what I want you to do. Go back and think about your failed deals.
Look to see, are there some patterns? What do you want to do differently? 'Cause reality is, losing a deal isn't fatal. It's how you learn. Just make sure you don't keep learning the same lesson over and over again.
- Negotiating with noble purpose
- Three kinds of sales negotiation
- Why deals fall apart
- Spotting and diffusing negotiation traps
- Asking for their boss
- Negotiating via email
- Avoiding renegotiating sales