This is the first in a three part series about The Science and Process of Negotiating, co-authored by Philippe Lavie and Rob Gullett. Today we’ll be talking about possible results in any negotiation and the three stages in negotiation within a sales cycle.
Negotiation is both a strategy and a science; when followed correctly negotiating is a defined process, which meets the needs of both the buyer and the seller.
More precisely, negotiation is a set of interactions between two or more parties, intended to resolve a point of difference, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy specific interests. Negotiation is a process where each party involved tries to gain an advantage for themselves by the end of the dialog; therefore it is intended to aim at compromise. The purpose of this blog post is to reveal and analyze negotiations from the perspective of the sales cycle, and to illustrate how buyers make purchasing decisions.
Sales people often believe that negotiations occur only at the end of the buying cycle, once the buyer is selecting a seller’s solution. But this couldn’t be further from the truth! Negotiating should occur throughout the entire buying process. All buyers ask for information, whitepapers, demos, case studies, references or proof- of-concept, before selecting a solution. So shouldn’t sellers ask for, negotiate for, something of value in exchange? And Is it true in sales that there are winners and losers in negotiations?
The results of any negotiation can be designated into one of the following groups:
- Lose/Lose (all parties lose)
- Win/Lose (1 party wins and the other loses)
- Lose/Win (1 party loses and the other wins)
- Win/Win (both parties win, but sometimes this is a compromise)
Although we accept that a win/win viewpoint is the only practical means to achieve a competitive advantage, it is equally important that this approach be applied in an appropriate manner for today’s global marketplace. It would be near-sighted to presume that all negotiated agreements are mutually equitable.
There are three stages in negotiation within a sales cycle.
- During the buying cycle and throughout the selling engagement
- As the selection step when the buyer has chosen a seller’s solution
- In a situation where renegotiation has become a necessity
During the buying cycle and the selling engagement, negotiation is based on the core concept of “Quid Pro Quo”. From the seller’s point of view, this means that the seller should receive something from the buyer before the seller fulfills the buyer’s request.
For example: A buyer calls and asks to get product information and pricing from the seller. The seller acknowledges what the buyer is asking, but before agreeing to send the requested information, the seller asks a series of questions that will help the seller understand the buyer’s situation. The seller also asks with what the motivation, initiative, or project the buyer is involved. Once the seller receives the answers, they can provide the requested materials, modified to fit the valuable new information from the buyer.
The second stage in negotiation is the final step within the buying cycle, when the buyer has chosen the seller. The seller should once more confirm that he is the vendor of choice using a sentence like: Before we start our contract or pricing negotiation, let me ask you if we are the chosen vendor and pricing is your only concern? If confirmed, then the pricing or contract negotiation can start. There are many elements within this phase.
In our next blog post, we will break down the elements of the contract negotiation phase.
Copyright © KeyRoad Enterprises, LLC 2011 – co-authored by Philippe Lavie and Rob Gullett