Robert Louis Stephenson said, “Don’t judge each day by the harvest you reap, but by the seeds that you plant.” According to a 2015 study by invesp.com, it costs five times as much to get a new customer as it does to retain one. You should negotiate carefully if you intend to grow your business.
It used to be thought that negotiating meant compromise. Let’s dig deeper. Negotiating is about reaching an agreement, which might be achieved through compromise. But compromise implies that both parties have to give in to reach an agreement and neither is particularly satisfied with the results. In that case, compromise is not a successful negotiation. If you want to acquire and retain customers, it needs to be a win-win, and everyone needs to be satisfied.
Here are some tips to achieve a successful negotiation while avoiding compromise:
Learn to love negotiating
People who hate negotiating aren’t very good at it. Life is full of negotiations, from childhood with our parents through business in the boardroom. Accept it and embrace it. It’s not combat, it’s conversation.
The purpose of negotiating is satisfaction
Be fair and honest. If you intend to achieve a win-win, you need certain criteria satisfied and you must know the other party’s criteria, as well. In order to learn what your client/customer needs, you need to ask good investigative questions, but more than that you need to listen. Listening requires silence on your part at times. Negotiating isn’t about talking, it’s about listening.
Prepare and learn
Do your homework, research the prospect, and speak with others who have done business with them. Make sure you have performed a proper needs analysis before negotiating. Be clear on how your solution answers their problem. Become an expert in your field and in their eyes. And becoming an expert doesn’t mean showing everyone how smart you are by regurgitating data, facts, and trends, it means listening to your prospects needs and addressing them one by one, and then with quiet confidence (not cockiness) asking, “What else…?” If you do this during the sales cycle in a thorough and thoughtful manner, the negotiation will go much more smoothly and quickly.
Never take a “No” from someone who can’t say “Yes”
Validate that you are negotiating with the decision-maker, and that they have the authority to alter price, terms, and other details. If it takes two people to make those calls, have them both at the table during negotiations. A good question to ask might be, “How are purchasing decisions made here?” Never ask, “Do you have purchasing authority?” They will almost always answer, “Yes,” so that they continue to look good enough to you to keep investigating your offering, because if they answer, “No,” that doesn’t make them look or feel good.
Some customers will haggle as a matter of habit, no matter how good your deal is. Resist offering early concessions. The longer you wait to negotiate, the better your position to achieve a successful outcome. Early concessions hurt you in several ways. It sends a message about how much you value what you’re selling, and anything offered too early sets a precedent that you will bend even more when the real negotiations begin.
Don’t assume you have to negotiate
Only negotiate when it is necessary to get the sale. Your price may fit their budget right out of the gate. Ask questions and listen. Resist the urge to go in with “crazy deals” from the get-go. You risk giving away things that you may not need to in order to win the business and satisfy your customer.
Negotiate for tomorrow
When you negotiate, do so from a place of finding benefit for both parties. Negotiate to build a long-term relationship with your customer. A successful negotiation is a new customer who becomes a long-term customer. If you beat someone into submission during a tough negotiation, you may win the deal for today, but you could risk losing a repeat customer, an advocate, and a referral source for future customers.