Negotiation

According to sales expert and researcher Dick Canada, of the Dartmouth Group, "negotiation should be the last action that a salesperson should pursue. Why? Because if you are altering price or terms and conditions, you are usually giving something up. And, when you give something up in sales, it costs you and your company. Second, it implies that you are using negotiation as a substitute for effective selling. This can be a problem for a company that decides to train its sales people in the art of negotiation rather than in the art of selling. Fred Webster, former associate dean at
the Tuck School, was fond of saying that “the most frustrating experience in the world is to solve the wrong problem.”
And, if an organization is training its sales people “to negotiate,” (assuming the two words are not used as synonyms) instead of teaching them “to sell,” it could become an expensive proposition for a company that has solved the wrong problem!"

I would be happy to send you the full article: research@ecsellinstitute.com
For example, it isn’t uncommon for inexperienced sales people to offer
immediately to reduce their product’s price when the prospective customer objects that
the price is too high. In this example the seller is using negotiating as a substitute for
effective selling.

A common tactic in negotiation is a win-win approach. Make sure that in the negotiation process that you don't have a "winner take all approach". Be willing to give up something in order to get something. In the end both parties will leave with a feeling that they won.

The two books used in my business school negotations class were
"Harvard Business Essentials - Negoitation" and "Getting to Yes"

Pricing is a big deal in the recession; one solution for larger businesses is a pricing management solution like Vendavo, that can tailor a price range for a given set of products based on the value of the customer, the customer's buying patterns, the mix of volume to value of what he buys and other aspects. It doesn't take away the sales rep's flexibility; it could actually help a customer understand what pricing means (for example, if freight costs are involved, or integration or other services that are freebies with you but not with a competitor).

One tip is to be prepared to negotiate either comprehensively vs. on a per issue basis. In general, it is very useful to frame the all of the issues that stand between you and agreement (e.g., pricing, deliverables, term, resources, etc.) before really negotiating any particular one. For example, if your client is ok with standard deliverables vs. heavily custom deliverables and the agreement term syncs well with your minimum contract term policy, and a client is willing to enter a contract quickly vs. drawn out negotiation(lower cost of sales), then perhaps pricing can be more flexible.

Customer Centric Selling, a popular tactical sales methodology contains a strong negotiation component. I've used this kind of approach for a variety of complex negotiation scenarios.

Consider negotiation as a Common Problem Solving Issue. Where there should be collaborative effort to solve the problem.

You can see Harvard results Driven Manager : Winning Negotiations, for preserving relationships while hadling tough situations.

Consider negotiation as a Learning Experience, as you go ahead and discover the parties Opinions, constraints with your own. Applying Critical thinking for checking the Validity of Statement. So that finally you can take an Informed and Strategic decision.

It is not always a Zero Sum Game :) . you tend to get everybody happy if you are informed sufficiently.

My advice is this. Slow down. Think. Nothing for free -- if they want a discount, they give you a down payment. See the world through their eyes.

Good luck.

Check out Eight Steps to a Successful Negotiation

1. Prepare: Do your research ahead of time to so that you know your opponent and you know what you want from the negotiation.

2. Open: Let the other side know what you want and let them tell you what they want.

3. Argue: Back-up your case with evidence and uncover defects in their argument.

4. Explore: Search for common ground and agreeable outcomes.

5. Signal: Show that you are ready to reach an agreement.

6. Package: Put together different acceptable options for both parties.

7. Close: Come to an agreement and finalize the negotiation.

8. Sustain: Ensure that their side, and yours, follows through with the negotiated agreement.

In practice, these steps will not be followed exactly. You may get stuck on one step, or go back to another. Starting off with a definite plan of attack gives the upper hand and confidence that you would not otherwise have had.

Tweak the process as the negotiation progresses, find your own style, and use what works best for you. There is no magic formula that will guarantee you come out on top every time, but practice, preparation and knowledge will skew the odds in your favor.

Sorry my site link didn't work in the last post. Here is the URL http://negotiationboard.com/eight-steps-to-a-successful-negotiation/

By the way, Thomas, Dick Canada is our guest instructor during the November 23rd EcSELL Institute webinar. Here is your complementary invitation to join us: https://www2.gotomeeting.com/register/944761682

I would build off what jaime has offered -- know when to keep selling and know when it is time to negotiate. I took a course many years ago that taught you should only negotiate when:
1) You have tried to overcome the objection without negotiating first (e.g. when the customer says the price is too high, try to re-focus on the value they are getting).
2) We have a clear agreement on terms and conditions (goods/services to be delivered, dates, etc.)
3) We have a conditional agreement that if we can come to terms, we have a deal. There is nothing worse than going through a negotiation only to have the customer say, "We still need to think about it".
4) There are no other issues to be discussed or negotiated. This avoids coming to agreement on price, only to have the customer then start negotiatiing on delivery dates, etc.

What kind of sales are you in? What is the key focus for negotiation for you usually?

Is it worth negotiating at all?

There are many things that customers want, that actually don't cost you anything. If that's the case, then you can make concessions in exchange for commitment easily.

If you find that the negotiation is always price based, then it's not negotiation skills you need to work, in it's your sales skills. Price negotations are usually about perceptions of value, others have said it, you should be prepared to walk away, but before you do, it's worth exploring why they don't feel it's worth what they've been asked to pay, and re-selling the deal is much better than negotiating anyway, in the long run customer satisfaction rests on the perception of value anyway.

If it's not price, but tends to a specific aspect of the service, such as delivery timescales, it's time to start negotiating but not with the client. If there's a consistent issue for clients, you need to let the folks in the office know and see what you can do to resolve this.

If it's purely random with each customer, it's a perception of value issue being expressed in different ways.

I spent 8 years in sales, before moving into HR, and I rarely spent anytime negotiating and my clients included some of the largest companies in the world.

In your selling, try to anticipate objections and handle them before the client raises them. Whatever they tell you, an objection is not a buying signal in high value sales, it's an obstacle that will reduce the perception of value in your offering.

There is a school of thought around reaching a BATNA (Best Alternative To a Negotiated Agreement), which is essentially asking the client what they could live with, and if that falls within your boundaries, accepting it - that might help too.

Read the book "Start With No" by Jim Camp. Best negotiation text ever. http://www.startwithno.com/
Just talked to Jim again for a story I'm doing, and his approach always amazes me at how common sense it is, yet based in research and experience.