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The Strategic Convergence of Negotiation and Sales
Why Selling on Value – and negotiating on price – does not work
Like many account executives, we can look back on many training sessions in which we were urged to sell value. One course that one of the authors attended had the descriptive (if not imaginative) title "How to sell at higher prices than your competitor." While some of my professional development experiences were enjoyable and seemed highly valuable – at least while I was in the classroom – much training seemed ultimately irrelevant or ineffective when it came to my "real world" challenges. There was something good and proper about account managers discussing value, but it got ugly when the discussion turned to the N-word: negotiation. Before you continue reading, let’s try to insert a bit of interactivity into your reading experience: please write down your answer to the following question before reading further.
"In my sales and account management work, I negotiate (fill in when or under what circumstances you define your work as negotiation)." Now hold that thought. We’ll come back to it.
A lot of traditional sales thinking holds that negotiation is all about reaching final agreement on price and terms. In order to get to that final agreement, you are supposed to use a combination of haggling, conceding and discounting, with the occasional manipulative tactic thrown in for good measure. "We are all ready to sign this Master Purchasing Agreement today, and we want to thank you for having invested four months with us to develop the terms. Now, the only thing I need you to do for me is to discount the final contract figure by 10% and it’s a done deal." What’s your response to that time-tested classic? Seasoned sales executives know from long experience that haggling on price and terms can be a costly tactical and ultimately strategic error most of the time. And the most senior executives understand that this is true especially during economic downturns.
You might be saying to yourself (as many diligent account managers do): "Hey, during recessions and other slow sales periods, I still have lots of pressure to make my numbers. That’s when customers demand the most in terms of discounts and special treatment. With competition fierce, what are my choices?" Yet, there is often a paradox involved in selling during tough times: Focusing too much on price and terms can end up shrinking deal size, creativity, and ultimately, profitability. In addition, this type of selling behavior can actually hurt our most valuable customer relationships. Some in our profession act as if there were an unwritten rule that accompanies our sales binders and portfolios. We can call it the "us versus them" approach to doing business – with customers, suppliers, government agencies and the communities in which our businesses operate. Under pressure, people feel they have to be tough and "take no prisoners."
In our decades of practice and research, we’ve found that haggling can quickly become a self-destructive behavior for account managers. The most experienced among them consistently demonstrate that they understand how to avoid falling victim to a self-fulfilling prophecy: they know that if you assume your customer is an adversary, the customer will quickly become an adversary. Damaged relationships are certainly not good for business. It’s hard not to assume your customer is an adversary when listening to comments like these that we’ve heard from our colleagues:
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Copyright © 2002 Grande Lum, Anthony Wanis-St.John and Andy Ayers
Copyright © 2002, The Negotiator Magazine