Things you should know before negotiating your sales
The last phase of the sale before closing is negotiation. While it is true that on the product you sell and sometimes not exist when the conditions closed.The higher the turnover associated with a sale more important will be the negotiation phase; This can be critical for sale come to fruition and also generate profitability we want.
The negotiation phase must be properly planned in advance and will be part of the product design. If this is not done well it could be that a sale was highly interesting priori catastrophic, for example by not being able to finance the manufacture of the product, or to reduce prices so that subsequent difficulties in developing the service lead us to loss.
Negotiate sales: principles
The work of our customer is getting our economic services as possible and our job is to maximize the benefits of our company. Of course both must be kept within reasonable and fair margins. If the buyer has excessive bargaining power and abuses his position could eventually smother your provider; and conversely, if as sellers have the upper hand, and make excessive use of our advantage, this could damage the relationship with our client and get to lose, possibly generating negative references also highly pernicious.
Negotiating is thus reach a compromise that benefits both parties. The basis of any negotiation is knowledge: knowledge of ourselves, our customers and other boundary conditions set by the market or other socio-economic and political.
In particular, our goal as negotiators is to know the breaking point of the other party. One point that can or is willing to go, for example in the price, financing terms, or other aspects of the service such as support or logistics issues. Sometimes there are negotiations that have no meeting point, the breakpoints of both parties are outside of acceptable conditions; for example if the buyer is not willing to pay more than 100 and the minimum price the seller is 120, you will not be found. We have set a very clear example, but there may be breakpoints in other areas. As the cards are not usually, if breakpoints do not overlap, we will be wasting time in a negotiation you never have positive results. Managing information can help prevent these situations.
A basic principle of any negotiation is not offering anything without getting something in return. We must get counterparties for any benefits that we add to our offer. Otherwise we will be taken by the whistle serene and give a very bad impression, showing little preparation and lack of professionalism. If I tell someone that my product is worth 100, this protest saying that it is very expensive (objection that almost always appears regardless of price), and I’m no more and I say it to 90, I’m opening the doors to my client begins to squeeze me everywhere until harte. This situation, which told it seems obvious, it is unfortunately happen every day, making sellers lose profitability. It is even common to see upfront discounts are offered without even come to negotiate. Something that in some sectors is entrenched and is a joke. For example in advertising sales. I offer this to 100 when we both know that the market is paying to 10, and start your pretty face with a discount of 92%. It makes me laugh.
If we offer some benefit we must first compare and obtain sufficient information confirming that this benefit will be relevant to the customer.We will go back if we offer things that leave totally cold because our client will not serve to anything.
As we said, knowledge is critical in successfully negotiating power. There will be things that our client we do not want to reveal, but there are many others that we know him directly through questions. For example it will help us greatly to know in detail how you want to use our product, as you want to apply to your particular case. So we can offering him an best suited to their needs version that can reduce the cost and put it inside their breaking point.
Some aspects and negotiation techniques to consider
We have to start well prepared negotiation. I review some relevant aspects and comment some negotiation techniques with which you can find.
- Our technology and competition, our strengths and weaknesses. The buyer will always attack on our weaknesses Confronting with our competition and try to minimize our strengths, comparisons that may not be fair, and can make us waver. You might have a technological advantage that we apply a particular cheaper solution for our customer than the competition. Or vice versa. I once participated in a negotiation electronic telecommunications; My team conducted simulations to adapt the solution to our needs suppliers. We warn that a supplier was offering a technology that was not leading and generated significant cost overruns in our particular case compared with the most advanced technology of its competence.This supplier had no choice but to offer a discount of about 50% in this product, to generate a price competitive solution. The savings was about 5 million.
- The development plans of our client, the real needs you may have. A technique to negotiate price is to start with a smaller order of the real, squeeze everything we can to erode the price, and then try to renegotiate again with the amounts actual much higher, obtaining a better estimate of where the breaking point is the seller.
- Margins that I can sell and the financial capacity of the company , at the time of offering better or worse our buyer.These parameters may vary over time so it is critical to make good management to have updated these conditions.
- Have fixed prices and conditions beforehand and a negotiation strategy. I have to know my own breakpoints. Thus I show safe and secure in the negotiation, and the other part willtend to think that what I ‘m offering is backed by compelling reasons. For example, I can have specified price discounts if my buyer uses a method of payment that results me more advantageous.
- Sales volumes related to my capacity. Not necessarily a higher purchase volume has to make the price down. It is possible to produce a certain volume of product needs additional funding to be much more expensive than they need for a smaller volume.That if I can access new funding. An investment in new machinery or other resources might be needed.
- Be patient and never show anxiety sale. If the customer sees us nervous, anxious to close the deal, you think we have some weakness. This can erode their confidence in us or make us tighten even more, thinking that this sale is very important and we do not want to lose under any circumstances. Extreme negotiation technique is wearying the seller until he exhausted, tighten to infinity, and when it has already given the OK and the contract is on the table pending signature, or even signed, breaking off the negotiations, demanding new benefits. The seller can then lose the nerves and deliver what should not.
In a negotiation it is critical therefore handle the widest possible set of information and work to expand the extent of our abilities. Negotiate without information is put ourselves in the hands of the other party. In this case the first firing is at a disadvantage because it is giving information strategy.
What other aspects prepare yourself before a sales negotiation?