Learn the signs the buyer is trying to negotiate, when to jump in, when to stall, and when to walk away.
- How do you know when to negotiate and when not to? Let's take Stan, a software sales person. He's in a place where he's starting to win bigger deals, and he's starting to win them with bigger customers. But something keeps happening. It seems like he does everything right. He thinks he has the deal. He tells his boss he has the deal. But then, when it comes time for the client to sign, they insert another round of negotiations. In some cases, Stan has lost deals.
But more often than not, he wins the deal, but has to lower his price. Every deal seems to come down to negotiation. Why is that? Has that ever happened to you? You think you got the deal sold. You put it on your forecast. You've done everything right. But then, when it comes time to sign it, your buyer starts to play hardball. Well, it's a common tactic. And the first thing you need to understand is that when a relationship descends into negotiation, it's usually not something that happened at the end, in many cases, the root cause is what happened or what didn't happen at the beginning.
So, there are three situations where you should never negotiate. These are common scenarios. It's when you are not dealing with a decision maker, when your product is clearly not a fit, or you haven't established value for the buyer. In either of these three scenarios, do not negotiate. Let's look at how they play themselves out in real life because the buyer doesn't present them to you in that way. So, scenario number one, a buyer might say, "I have to run this by my boss." That's scenario number one.
You're not dealing with a decision maker. So, there are a couple times when you might want to uncover this earlier in the process. Ideally, you'd ask something like this: "If we move forward, who else is going to need "to be involved?" There's some nuance to that because you're not point-blank saying "Are you a decision maker?" But what you're doing is you're uncovering the stakeholders without putting the other person on the spot. If it does come up at the end, do not put forth the contract without meeting with their boss. You can say something like "You know, I can't in good conscience let this go "forward to your boss unless we've discussed her goals.
"If she needs to sign off, you and I would both "be much better off if we have a sit down with her "to make sure we understand her goals." Do not let the contract go forward without that meeting. The second scenario is where maybe they don't actually need everything. They might say something like, "We don't need all these features." This is one of two scenarios. This is either a derailing tactic or you have more selling to do. Because what a buyer may be trying to do in this situation, one that uses "hardball tactics" is they may be trying to just belittle your offering so that they can get a lower price, or it might be that you're really not a fit.
If you've been listening to your buyer, this might have become clear early on the conversation. If they're bringing it up later, what you want to do is you want to take the pricing off the table, take the list of features off the table, and say something like this: "Well, let's talk about what would be valuable for you. "It sounds like maybe we need to spend more time on that." The third scenario is when the buyer just tries to rush you. They say, "Let's get this deal done. "I don't have time to fool around." This is a tactic.
It demonstrates you've lost value, but what is a tactic to do is trying to dangle a deal in front of the salesperson hoping they'll just take it just to close, and oftentimes, salespeople fall for it because they haven't demonstrated enough value. Now, in this situation, you need to put the negotiation on pause and that can be very challenging because you want to close the deal. Consider this though, in an academy of management review paper, about the very complex interplay between relationships and contracting, it was revealed that when people go to contracting too early, when they start to negotiate, they impose bureaucracy and red tape and it can destroy relationships or undermine value.
If any one of these three scenarios presents itself to you, do not jump into a negotiation. You have more selling to do. But now, not every situation means you have to put a negotiation on pause. Let's talk about a situation where you should negotiate. Your buyer is a clear buyer. They have the authority. They have value in place. They're clear on that and they look at you and they say, "Everything looks great. "I'm gonna need some flexibility on pricing and terms." This is a legitimate time to negotiate because you have a buyer and you have value on the table.
This is when you start asking them questions. Let's talk about pricing. Let's talk about terms. What matters the most? Where do you have room to be flexible? Where do I have room to be flexible? This is a negotiating conversation. It's not just two people using tactics against each other. So, only negotiate when you have the right person and the right value. If you do not have those things in place, you have more selling to do.
- 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