The Three Skills Behind Effective Negotiations
Too often we see negotiations as adversarial or even a battle of wills. This perspective is misguided. Consider research from Harvard that concluded, “The myth of the effective hard bargainer should be destroyed.” The researchers learned that negotiators who took on the role of a problem solver were among the most effective. Developing these problem-solving skills means being able to reach a mutually beneficial outcome without relinquishing valuable terms.
Sales professionals can become effective negotiators by focusing on three key phases:
The opening consists of the sales professional’s offer and the buyer’s response. This phase is an early opportunity for sales professionals to maximize the impact of their value proposition.
Once the sales professional has made the offer, it is important to control, or protect, the position. Put simply, the sales professional must maintain the scope of work and the pricing.
As the negotiation draws to a close, the sales professional will likely need to engage in trading in which they give something to get something. Trading is effective because it avoids the trap of making concessions: giving something up without getting something in return.
The opening of a negotiation sets the tone for the rest of the exchange. This tone should be one of cooperation. Therefore, sales professionals should begin by recapping common ground.
Once the common ground is clear, sales professionals can position their offer. For many, this is a counterintuitive step. Conventional wisdom insists that an effective negotiator never makes the first offer. Unfortunately, this thinking is based on a false premise. Academics at Northwestern University revealed that “there is virtually no research that supports the claim that letting the other party open first is advantageous. In fact, it can backfire and lead to a worse outcome than you imagined.”
Once the sales professional has made an offer, they must engage with the customer’s response. Doing so means the following three steps:
Acknowledgment begins with the sales professional maintaining their presence and delivering a neutral statement. This kind of response demonstrates that the sales professional understands the customer’s response. It is critical that such an acknowledgment is nonjudgmental. There is no need to agree or disagree.
Getting the customer’s full response means eliciting all of the information with open-ended questions. Like acknowledging, these questions should be neutral. They should never appear as an attempt to lead the customer in any direction. For example, a sales professional might want to ask, “What are your thoughts on the offer?”
Summarizing limits the probability of late-stage changes. There is no way to guarantee that the customer will not change their needs or issue new, last-minute demands. However, summarizing acts as a mile marker in the buyer’s journey. By assessing areas of agreement, potential concerns, and areas of disagreement, sales professionals can validate what has been accomplished up to that point in the negotiation.
Customer demands are inevitable in negotiations. However, there is an important distinction to be made between demands and needs. A demand is non-negotiable. It is an ultimatum. A need, however, is a requirement that can be met in a variety of ways. The sales professional who can convert a demand to a need will succeed because they can meet that need in ways that do not require sacrificing valuable factors like payment terms, pricing, or the scope of the sale. Converting a demand to a need requires three, specific skills:
Sales professionals must signal that they have heard the customer’s demand. Doing so does not require agreement. “In a negotiation, that’s called labeling,” explains Chris Voss, the former lead international kidnapping negotiator for the FBI. In his book Never Split the Difference, he explains. “Labeling is a way of validating someone’s emotion by acknowledging it.”
UNCOVER THE NEED
By tuning in to what the customer says, a sales professional can go beyond their words and understand the underlying need. In fact, listening is such a powerful tool that it can even be predictive. Research from Princeton published in the Proceedings of the National Academy of Sciences shows that when fMRI technology is used to record brain activity of listeners and speakers, “the listener’s brain activity mirrors the speaker’s activity.” This alignment is what enables the sales professional to glimpse what is below the surface of a demand.
SHAPE PERCEPTIONS OF VALUE
Sales professionals shape perceptions of value when they focus the customer on what they will gain by reaching an agreement and what they will lose by falling short. Creating this influence is important because it makes the customer more receptive to trade later.
Trading is one of the negotiator’s most powerful tools. It is powerful because it guards the negotiator against one of the most common traps in a negotiation: making a concession. A concession occurs when someone relinquishes something and receives nothing in return. When a sales professional narrows the scope of the solution to meet a customer’s budgetary needs, they are conceding.
The solution to this trap is a focus on trading. When a sales professional engages in trading, they are giving something and getting something in return. Put simply, trading is not unilateral — it is cooperative. To implement an effective trading strategy, sales professionals must:
KNOW WHAT TO TRADE
Knowing what to trade means knowing the value of what is being traded. Prior to a negotiation, a sales professional needs to fully understand the intrinsic and extrinsic value of every aspect of the deal.
KNOW WHEN TO TRADE
Trades should be spaced in increments to make their value more perceptible. In contrast, presenting trades in a cluster gives the appearance that several trades are in fact just one. This diminishes the impact. Additionally, breaking up the trades allows the sales professionals to deliver them in order of decreasing value.
KNOW HOW TO TRADE
Sales professionals must lead with their trade first. This approach gets the customer’s attention and prevents them from becoming too focused on what they will be giving. Research published in Psychology & Marketing revealed that by “priming a consideration for fairness, a seller can increase a customer’s satisfaction without sacrificing profit.”
The value of equipping your sales team with training is clear. Consider McKinsey’s finding that “48 percent of fast-growth companies indicated that they invest significant time and resources in sales training versus only 22 percent of slow-growth companies.” That training becomes even more effective when it addresses the negotiation skills that preserve the financial scope of the sale