Don’t Negotiate With Yourself!

How Not to Destroy
Your Deal Size
When Negotiating Price!

Most sales professionals do not go into a sales cycle thinking, “What is the best way that I can completely destroy the value of this sale?” This would be self-destructive and totally counterintuitive. Nevertheless, a huge number of sales professionals engage regularly in the one activity that is the most likely to do just this. They negotiate with themselves.

An Example of Self-Negotiation

A prospective customer has expressed interest in your products and you are going into your first sales meeting. You start by explaining to your prospect what your product does, how it can help the company, and why it is valuable. So far so good. But then, you say something like, “The list price for this package is $15,000 but this is by no means non-negotiable. We can usually knock of ten or fifteen percent.”

Using the phrases marked in italics above during a sales negotiation is akin to handing out two inch thick bundles of twenty dollar bills to strangers on the street. You’re just giving money away. The customer has not even asked you for a discount yet, and you are already giving it to them. You are negotiating with yourself.

Your prospect will think, “Wow, if they’ll bring the price down by twenty-two hundred dollars without me even asking, I should be able to get them to come down even more once I start bargaining.” This is obviously the wrong kind of impression to give the customer. Either you will be forced to destroy the sale by bringing the price down far below an acceptable level, or if you refuse to bring the price down further, the customer will feel like they aren’t really getting a good deal since their bargaining efforts have proven fruitless.

Proper Negotiation

When you first go in to talk to the prospect, forget that you even know the words “discount” and “negotiation.” Erase them from your vocabulary. If the prospect starts trying to bring these terms into the sales discussion, you should act like they are a totally foreign concept. When you do finally consent to giving a discount, the customer should feel like your are doing something that you don’t normally do. This will make them feel special, like they are getting a good deal as a result of their own bargaining prowess. Psychologically, this is what a buyer needs to feel in order to perceive that the deal has gone favorably.

In order to really make the customer happy, you need to go through a rather arduous negotiation process. Your initially reluctance should segue (only at the customer’s persistent prompting) into very small and measured gradual concessions. Each concession should be smaller than the last. If you knock off 10% in the first round, give only 5% in the second and so forth. By the end you will have made it crystal clear to the customer that you absolutely, cannot go any lower. The customer will see your pain, and feel that they have pushed you to the limit. In effect, they will feel that they have done their job properly. Everyone wins.

Although this is one of the biggest mistakes that sales professionals make during the negotiation process, it is by no means the only one. As a sales professional, your primary defense against mistakes like this is information. If you keep yourself constantly educated about effective sales methodology, you are guaranteed to perform better than your ad hoc counterparts on a regular basis. There are plenty of resources both on- and offline that you can hook into to get this process of self-education started. One resource that you might want to check out (which is absolutely free, We might add) is The SalesRoundup Podcast. We run a weekly podcast on all things related to complex sales. You should also reach out to seasoned sales veterans in your own organization. The point is to get as much information as you can from people who know complex sales.

This post was inspired by the SalesRoundup Podcast episode titled “Deal or no Deal Negotiating with Yourself, NOT a Good Idea.

Good Selling
Mike & Joe
SalesRoundup Podcast

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24 comments for “Don’t Negotiate With Yourself!

  1. John G
    February 20, 2009 at 9:21 am

    Joe and Mike,

    Love the show. I can’t tell you how many times I have seen this happen. Even the operations managers that come along on a call, (you know the ones who are concerned about the profit) give it away. I sometimes wonder if selling has become a way to give it away.

    The way I was trained was, go in with the idea that they are going to negotiate and have your negotiating points chosen in advance. To have a strategy for asking for something in return, You need a discount, How about you program to my spec’s? YOu want delivery in 30 days, Can you pay for Freight? you guys get it.

    Keep up the good work.

    Just kidding.

  2. Jonathan Wiener
    March 2, 2009 at 11:31 am

    Joe and Mike,

    You guys are rapidly becoming my favorite source of sales insight. Once again, another topic that is right on the mark. As you said, lots of great articles on-line concerning basic negotiation strategies. But as a start I always suggest the following:
    1. Prepare a blue print of your strategy. That blue print starts with a solid understanding of your range. (starting point and ending point). The starting point must be market competitive for you to be credible. The ending point must be firmly grounded in your understanding of margins. If not, you are in trouble before you begin.
    2. Consider other points you can give aside from price. i.e. accelerated delivery dates, additional implementation resouorces, customized support extras, product enhancements, etc. You would be surprised how much these things can matter to a customer in the negotiation process.
    3. Before doing 2, make sure you understand what is meaningful to your buying influences. For example, if they are on a tight time frame to implement, delivery dates and implementation resources will have more meaning to them.
    4. Value yourself in these negotiations. In other words, don’t give without trying to get something in return. It’s more than acceptable, it’s expected and respected.
    5. Never, ever, ever substitute negotiation for selling. The biggest mistake I see sales people make is that they negotiate before closing on value. Remember, the best negotiation leverage you will ever have is the customers perception of your unique economic value.
    6. Come from a place of good will and respect. Trust me, it will help.

    Good luck to everyone!! Go get em.

  3. July 31, 2009 at 2:32 pm

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