Management Perspectives

MYTH 1: It’s all about the money
I will often begin my training sessions in negotiation by asking the participants this simple question: “So, what have you already learned about negotiation?” The silence that follows speaks volumes. Finally, when someone does speak up, what they have to say usually reflects a common myth or misconception. One of the most damaging myths sounds like this: “It’s really all about the money.”

Let us say you have presented your proposal or discussed the price of your product and/ or services, and you hear something like this: “That’s too much!” Or: “I’m not going to pay that!” Or: “Your competition is cheaper.” How do you respond?

Of course, they want to get the best deal— just as you would. However, what you need to understand is that this initial reaction is just that—a first move in a bigger game. In fact, it is one of the most common negotiation gambits.

Their job may be to make it about the money. Our job as professional negotiators, however, is very different: to bring the discussion back to the real issue, which is how best to solve their pain or problem with our product or solution.

The first step of the Sandler negotiation process is to acknowledge, reassure, and ask. Here is how that sounds in response to this (very common) gambit: “I appreciate you letting me know that’s how you feel. I can assure you that our solution is going to solve your problem of so-and-so. Let me ask you this: When do you believe you’ll want this issue resolved?” Use a response like this to avoid doing what your counterpart wants you to do: immediately drop your price!

This first, essential countermove is your way of saying ‘no’ without using the word ‘no’. It is your key to keeping the negotiation discussion from focusing exclusively on pricing—rather than on fit and overall value.

MYTH 2: A concession means giving up something
A prospect or buyer asks you to give them something: more product, more licences, more extras, better terms, a more aggressive timeline—whatever.

You knew that was going to happen, yet maybe you were not really prepared for it. Your initial instinct may be to give something up, concede something, in order to win the deal. Instead, why not redefine the whole idea of a concession? Shift your mindset to address the question of what you add to the deal in order to build additional value and a longer-term client. You can concede something other than a price cut or a giveaway!

I will give you an example of what I mean. Occasionally, I will be asked if a client can include another group of people in a training session. This could be sales engineers, account managers, or business development representatives. Instead of simply including them, I offer to provide a session or two specifically and uniquely designed for them. I ‘add’ this concession in a way that allows me to be in front of another group with unique concerns and issues. That training concession, in many cases, ends up leading to more training.

Ask yourself: “What can I add to this deal to enhance it, instead of dropping my price or making compromises on other deliverables?”

MYTH 3: Never give up something without getting something in return
This is one of the most often-quoted negotiation ‘rules’: If I give you X, then you must give me Y. But beware. Words like ‘never’ and ‘always’ are tricky.

Broadly speaking, this principle makes sense, and is a good way to ensure that you are not taken advantage of during a negotiation session. There are some important exceptions to the ‘rule’, however. Early in the encounter with a prospect, giving up something of small value without getting anything in return can go a long way in building the relationship, and can minimise problems later on in the negotiation process… because your counterpart feels comfortable with you and trusts you.

For example, if you can provide a free assessment—something that you usually charge for—that delivers value to a new negotiating counterpart, this may improve the level of trust and comfort in the relationship. It can also help you to uncover more issues and problems, and give the other side further insight into their issues.

MYTH 4: The person who talks first loses
Yes. There is absolutely a time to be silent and let the other person process. And yes, since silence creates a vacuum, some people will fill that vacuum with valuable information.

However, if we operate on the principle that the more information we can uncover from our counterpart the better off we both are, then we also need to understand that a well placed question will keep the focus on the other person. In my experience, the person who is asking the questions is in control of the conversation—not the person who produces the most uncomfortable silences.

To grasp this distinction, it helps to understand the negotiating tactic of anchoring. Anchoring can happen in two ways. If you are a buyer, then it means setting a low anchor, which means you make a first offer that is somewhat lower than what even you believe the other person would accept as realistic.

What this does is make your counterpart start to adjust their pricing downward, gravitating toward your number. Likewise, if you are a seller, you can start with a high anchor, and offer a number that may be somewhat higher than you believe they would be willing to accept. In each case, asking questions about the other person’s response, or lack of response, to your offer is okay.

And of course, you want to keep in mind that both of these moves must be within reason, in order to allow your counterpart some room to manoeuvre and some reason to concede.

MYTH 5: Our people already have a basic understanding of how to negotiate
This is the big one. I work with plenty of senior level executives who are responsible for, among other things, purchasing products and services from vendors and partners. Whether they can describe the gambits or not, these executives are adept at both using and neutralising the most common negotiating manoeuvres (such as ‘your competition is cheaper’).

I also work with sales professionals and leaders responsible for selling the organisation’s products and services. These people have little or no ability to spot and plan for the most common negotiating gambits.

Yet, when I ask the people in the first group about the people in the second group, they typically respond by saying, “Our people already have a basic understanding of how to negotiate.” News flash: They do not. Senior executives may expect the professionals on their sales teams to know how to negotiate, but in fact, most of them have never been taught or trained. And the results bear this out. Margins are routinely, and needlessly, eroded as salespeople lobby to secure discount after discount to ‘close the deal’.

Organisations invest a lot of money in management, leadership, and sales training. Yet most of those same companies do not train their teams how to negotiate! A question I will often ask leaders is: “How much money do you believe your organisation loses annually because of needless discounting?” I help them to do the math. The number gets big quickly! Most sales teams do not know how to negotiate, and developing your team’s negotiating intelligence will improve your bottom line, fast.

By busting these five myths, particularly this last one, you can reverse the knee-jerk discounting that eats away at profitability.