Wednesday, October 15, 2014

The 1st Immutable Rule Of Sales Negotiation To Remember

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After several years of working around sales negotiation, I have come to realize 2 essential rules of sales negotiation which I want to share with you.

In this article, I am going to reveal the 1st immutable rule of sales negotiation. Let’s begin the journey towards achieving a win-win negotiation deal! (You can attend our seminar on “Effective Professional Selling Techniques” & Become a Sales Superstar! | Know more)

Note- This is also applicable to all kinds of business negotiations including sales negotiation.

After reading this article which includes easy-to-understand illustrations you’ll be able to achieve a win-win negotiation deal!

#Law 1- Prior to beginning any negotiation, ask yourself, “Am I or Are We the buyer’s top choice?

Never start your negotiations until you’re sure that you’re the buyer's top and foremost choice. This is the golden rule to remember, why? It’s because you cannot simply drive your way to the number one preference merely by quoting lower price. Also you should not! If you do then it will become a race towards the bottom. This is because there will always be several competitors who will be willing to offer at lower price tags. However, if you also take the same road it will put a dent in your profitability and margins. Hence, you will end up in a win-lose situation where you’ll be the loser!

·        If you are not their 1st preference, the buyer is only using you to achieve a lowered price compared to the cost of their top preference– your competitor. 
·        If you’re the top preference– you enjoy the right to quote a price premium.

How to position yourself as the buyer’s top preference?

An important fact relating to sales negotiation or any kind of negotiation-

People don’t buy price, they buy risk!
Hence, don’t focus on cutting your price but focus on the other party’s risk factors, both business as well as personal. Embark on methods on how you can reduce them and give the party a comprehensive solution.

Taking the business perspective, while evaluating solutions, the client is focused on risk factors like, “If we choose a particular party and its solution fails then…”
  • Will it negatively affect our profits?
  • Will it hamper our relationship with shareholders and employees? 
  • Will we lose out on valuable customers to the competition? 
  • Will it make us uncompetitive in the market?   

Now talking from a personal perspective, your client is more likely to ask himself, “If we happen to choose this party and our relationship fails then… ”   
  •       Will I be fired? 
  •       Will this put a dent in my 10-year stint at the company? 
  •       Will it affect my appraisal or bonus? 

Understand what the client actually wants?

As per my experience, there are few buyers who worry about marginal differences in costs which exist between you and competition. However, if they are assured of the best solution from you, you’ve just cracked the sales negotiation or any other business negotiation pretty well!

Note- The best solution garners protection from the several risks of the negotiating party which we just discussed.

Remember- No one would want to risk their personal careers, business profile and bonus to take care of families just to save a few company dollars!

#Concluding note- Focus on re-affirming the negotiating party of securing their risk factors. This will place you in a better position than competitors and you can then command a price premium! 

In the next article, I will be revealing The 2nd Immutable Rule of Sales Negotiation to Remember. Till then stay tuned and have a look at other useful business and management related articles to get insights to enhance your business related skills and management efficiency.

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