Top five sales negotiation mistakes

By Peter Hiddema

Picture the scene: it’s late in your fiscal year and you’re in the final stages of negotiating a big sale.  If you land it, you will exceed your annual sales target by 25% and your bonus will double. No doubt about it – you want this one.

Then comes the bad news: to do the deal, the client wants a 20% price concession that will erode the profitability of the transaction and set a bad precedent. You quickly counter the suggestion by talking about value and competitive price but they don’t budge.

Then, as the clock ticks and your fear of losing the deal increases, you decide to meet them halfway by offering a 10% discount. You hope that will do it. You’re wrong. They’re still insisting on the 20%, and you can feel the momentum and goodwill fading away.  

=You just made one of the top five sales negotiation mistakes. Let’s take a look at them:

=Addressing the prospect’s position instead of their underlying interests

=Selling a product instead of meeting needs

=Acting on untested assumptions about buying behaviour  

=Asking too few questions and not doing enough listening

=Negotiating against yourself with one-sided concessions

Addressing the prospect’s position instead of their underlying interests

This mistake is at the core of almost any negotiation that’s going badly, First, some definitions: A “position” is what someone says they want.  It is their stated request or demand; an “interest” is why they want it. In the example above, the prospect took a position by asking for a 20% discount.

As the salesperson, we naturally assume it’s because they think our product or service is too expensive. But if we dig a bit deeper, we might discover that they actually think it’s fairly priced and that it is in fact, very good value. The reason they asked for the discount is because they have a limited budget this quarter, but would prefer to buy it all now instead of later.  Hmm…  

Now that you know the real reason for the request, many solutions emerge, one being that you sell it all to them now at the full price, but simply spread the billing over two quarters. You’ve addressed their real need; it didn’t cost you a cent; and you’ve created an excellent relationship with a now-loyal customer.

Selling a product instead of meeting needs

No matter what industry you’re in, you have some set of products and/or services to sell.  But here’s what too many salespeople overlook: these products or services were created to address a need or want, and the only reason the prospect is talking to you is because they have an unmet need or want, so if you want to sell the product, make sure you know what their need is before you talk about product wonders.

It may be the most intriguing creation on the planet, but if it doesn’t meet the prospect’s need, good luck. Focus first on their needs, and build your bridge from there. And by the way, if you discover that you can’t fill that need, move on. Trying to force a mismatch is a waste of everyone’s time and it could come back to haunt you.

Acting on untested assumptions about buying behaviour

Everyone makes guesses all the time about the reason behind other people’s behaviour; it’s a fact of everyday life.  Making an assumption isn’t the problem – not testing it is. You can’t meet a prospect’s needs if your assumption about why they want to buy the product is wrong. Test out that assumption by saying: ‘Am I correct in assuming the reason you want this product is because…’ If your guess is wrong, then you’re in an excellent position to ask them about why they want it. If your assumption is correct, then the pathway is clear. In either case, you’ll find you’re well on your way to the bank.

Too few questions and not enough listening

Many salespeople are extroverts and love to talk. I understand – I’m an extrovert too!  But here’s the problem: when we’re talking, we’re not learning. ‘But I’m not here to learn; I’m here to sell!’ is what most salespeople say. Fair enough, but as you probably know from experience, it’s hard to sell if you don’t know why someone’s buying. So ask.  

Ask short, open-ended questions like: ‘What’s your concern?’ ‘Can you tell more about that?’ ‘Can you help me understand that better?’  Then be quiet and listen!  By the way, this does not mean “use the time to plan your next brilliant line”. Get curious. Hear them out. Summarise what you think they said to make sure you heard it right. Ask clarifying questions. Then make the sale.

Negotiating against yourself with one-sided concessions

Like life, the sales process is a two-way street. To get, you have to give… especially if you want to have sustainable relationships. But all too often, without even being asked, people in sales offer this incentive and that concession in their eagerness to land the deal. And, if the prospect still isn’t biting, many people keep offering more and more, hoping they’ll eventually secure the sale.

If I’m a buyer and you’re selling to me like this, why would I ever stop you?  Don’t get me wrong; I’m not saying ‘never make concessions,’ but there’s a time and place for them, and you should be getting something in return.

So here’s what I recommend. First, put points 1 to 4 into practice as they will show you exactly where a concession is appropriate. Then, if you want to move forward instead of backwards, ask for something in exchange for your concession.

For example, ask for a tentative commitment – a trial close: ‘If I’m able to make this concession, would that be sufficient to close the deal?’ or ‘If I can give you this concession, will you sign a two year contract instead of one year?’ Then prepare yourself to shake hands, and come out smiling.

Over the past 15 years I’ve worked with salespeople from many different industries and many different countries. While the context varies dramatically, and cultural factors play a big role, the way we sell has clear patterns.

See if you can’t spot the mistakes in your own patterns; then use the strategies I’ve outlined above to correct them. If you do that, you’re well on your way to becoming the kind of salesperson and negotiator you’ve always wanted to be. Here’s to your success!

(The writer is Visiting Professor of Decision Sciences at INSEAD and Founder and CEO of Common Outlook Consulting Inc. – a firm helping Fortune 1000 companies with negotiation, conflict management, and leadership development.)