{"id":142,"date":"2015-07-30T00:34:13","date_gmt":"2015-07-30T00:34:13","guid":{"rendered":"https:\/\/courses.candelalearning.com\/salesx17xmaster\/?post_type=chapter&p=142"},"modified":"2015-07-30T20:09:32","modified_gmt":"2015-07-30T20:09:32","slug":"12-2-collaborate-to-negotiate","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/cerritos-sales-1\/chapter\/12-2-collaborate-to-negotiate\/","title":{"raw":"Collaborate to Negotiate","rendered":"Collaborate to Negotiate"},"content":{"raw":"
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<\/h2>\r\n
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Learning Objective<\/h3>\r\n
    \r\n\t
  1. Learn how to negotiate so that all parties win.<\/li>\r\n<\/ol>\r\n<\/div>\r\nNow that you have learned about the role of closing in the selling process and techniques to close the sale, it\u2019s time to dig a bit deeper into the process of negotiating. Depending on the product, service, or prospect, some sales might be straightforward like, for example, buying a computer (\u201cI\u2019ll take the MacBook Pro with the fifteen-inch screen\u201d). The price is posted and there is no room for negotiation. However in many situations, especially in business-to-business (B2B) selling, the pricing, length of contract, terms, options, delivery dates, services, and other aspects of the sale can all be negotiated. Negotiation, like selling, is a process. Following the process helps improve your chances of getting what you want.\r\n
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    The Art of Negotiation<\/h2>\r\nSimply put, \u201cnegotiating<\/span><\/span> is the act of discussing an issue between two or more parties with competing interests with the aim of coming to an agreement.\u201d[footnote]\u201cNegotiation,\u201d Entrepreneur<\/em>, http:\/\/www.entrepreneur.com\/encyclopedia\/term\/82556.html<\/a> (accessed November 20, 2009).[\/footnote]<\/span> While that might sound like an impossible task, it is not as difficult as you might think. Even people with differing positions or points of view share a common interest, which becomes the basis for finding common ground. It\u2019s these common interests\u2014security, economic health, personal recognition, control\u2014that motivate people. If you take the time to understand your prospect\u2019s interests in a negotiation, you can successfully collaborate and find a solution that supports the interests of all parties.[footnote]Stephanie Mojica, \u201cThe Art of Sale Negotiation Skills,\u201d Associated Content, December 26, 2008, http:\/\/www.associatedcontent.com\/article\/1313361\/the_art_of_sale_negotiation_skills.html?cat=35<\/a> (accessed November 19, 2009).[\/footnote]<\/span>\r\n\r\nIt is negotiating that provides profit for organizations. The collaboration between parties is what provides companies the opportunity to exchange goods and services for money.\r\n
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    Link<\/h3>\r\nSales Negotiations\r\n\r\nThis series provides insights about how to negotiate in B2B selling.\r\n\r\nWhy negotiate:<\/strong>\r\n\r\nhttp:\/\/www.sellingpower.com\/content\/video\/?date=9\/7\/2007<\/a>\r\n\r\nHow to negotiate using value:<\/strong>\r\n\r\nhttp:\/\/www.sellingpower.com\/content\/video\/?date=9\/10\/2007<\/a>\r\n\r\nWhat makes a good negotiation:<\/strong>\r\n\r\nhttp:\/\/www.sellingpower.com\/content\/video\/?date=9\/11\/2007<\/a>\r\n\r\n<\/div>\r\nIt might be helpful to think about a negotiation like an iceberg. Although you can see the tip of the iceberg, it can be deceiving because it does not tell the entire story. The same is true when you are negotiating; your prospect may say something that appears to be obvious but really wants to achieve other things that are hidden below the surface. Using the process of negotiation to learn more about your prospect\u2019s motivations and interests, you can understand what is below the tip of the iceberg. It\u2019s usually the part of the iceberg that you can\u2019t see that is more substantial and has more impact that the portion that is visible. When you come prepared, listen, and probe during the negotiation process, you can learn a lot about what lies below the tip of the iceberg and use this information to collaborate and eventually reach a common ground on the issues. For example, assume you are selling advertising space for a men\u2019s magazine to the hottest new beer company. Your contact at the beer company wants to get the word out about this new brand but has a very small budget, so he doesn\u2019t want to pay the full published rate for the ads. You don\u2019t want to sell at less than the published rate because that will lower the value of your ad space. The tip of the iceberg shows that this is a price negotiation. However, if you ask the right questions and listen more, you will learn that his ultimate objective is to get people to taste the beer because that is the best way to get new customers. If he can get a major sampling opportunity, then he can use it to go to other media partners to get other sampling campaigns. Now you have gotten below the surface of the iceberg and understand his motivations. With this additional information that wasn\u2019t readily visible on the surface, you can offer him an advertising package that includes ads in the magazine in addition to sampling opportunities at three upcoming national events that the magazine sponsors. Now the negotiation is focused on all parties winning by getting something they want, rather than simply negotiating on price. Getting below the surface provides valuable information and insights for negotiating.\r\n
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    Definition of Negotiating<\/h3>\r\nUnderstand that negotiation takes place only before<\/em> you agree to anything: \u201cIf you ask for something before a contract is signed, it\u2019s called \u2018negotiating.\u2019 If you ask for something after a contract is signed, it\u2019s called \u2018begging.\u2019 It\u2019s better to be a good negotiator than an expert beggar.\u201d[footnote]RCM Staff Report, \u201c27 Principles of Negotiating with a Meeting Facility,\u201d MeetingsNet, February 1, 2003, http:\/\/meetingsnet.com\/ar\/meetings_principles_negotiating<\/a> (accessed November 19, 2009).[\/footnote]<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n
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    Negotiate to Win-Win-Win<\/h2>\r\nA successful negotiation can be measured by its ability to deliver a mutually beneficial solution to all parties. Some people believe that negotiation is an act that yields a \u201cwin\u201d for one side and therefore a \u201close\u201d for the other side. The win-lose approach usually ends up in a lose-lose deal that doesn\u2019t work for anyone.[footnote]Robert J. McGarvey, \u201cCovering the Bases,\u201d Entrepreneur<\/em>, June 1997, http:\/\/www.entrepreneur.com\/magazine\/entrepreneur\/1997\/june\/14260.html<\/a> (accessed November 20, 2009).[\/footnote]<\/span> This philosophy of negotiating is selfish and short term. In addition, this approach implies that negotiation includes some kind of confrontation or manipulation to \u201ctrick\u201d one side into doing something that it doesn\u2019t want to do. This is an unethical approach to negotiating which doesn\u2019t have a place in the business world.[footnote]Daniel Roach, \u201c5 Simple Rules for Unbeatable Sales Negotiation,\u201d Associated Content, September 29, 2008, http:\/\/www.associatedcontent.com\/article\/1047808\/5_simple_rules_for_unbeatable_sales.html?cat=3<\/a> (accessed November 19, 2009).[\/footnote]<\/span>\r\n\r\nIn selling, negotiating and closing go hand-in-hand. Just as closing is not a one-time event, negotiating is a process that has both short-term and long-term impacts.[footnote]\u201cNegotiating to Win-Win,\u201d Selling Power Sales Management eNewsletter, January 6, 2003, http:\/\/www.sellingpower.com\/content\/newsletter\/issue.php?pc=248<\/a> (accessed March 16, 2010).[\/footnote]<\/span> The best negotiations are collaborative in nature and focus on delivering mutual satisfaction. According to Leigh Steinberg, lawyer and sports agent, \u201cThe goal is not to destroy the other side. The goal is to find the most profitable way to complete a deal that works for both sides.\u201d[footnote]Alan M. Webber, \u201cHow to Get Them to Show You the Money,\u201d Fast Company<\/em>, October 31, 1998, http:\/\/www.fastcompany.com\/magazine\/19\/showmoney.html<\/a> (accessed November 19, 2009).[\/footnote]<\/span> Effective negotiating is based on respect and is seeded with open communication. Collaborative negotiating is dependent on the following three elements:[footnote]Herb Cohen, You Can Negotiate Anything<\/em> (New York: McGraw-Hill, 1980), 163.[\/footnote]<\/span>\r\n\r\n1. Building trust<\/strong>.[footnote]Herb Cohen, You Can Negotiate Anything<\/em> (New York: McGraw-Hill, 1980), 163.[\/footnote]<\/span> You\u2019ve already learned in Chapter 3 \"The Power of Building Relationships: Putting Adaptive Selling to Work\" that establishing and building trust is key to relationship building. Negotiating is the ultimate extension of a relationship because you and your customer are agreeing to concede on some points to make the relationship go even farther. If your prospect signs a contract with your company for products or services, you are now even more dependent on each other to make the relationship work. It is the true win-win-win relationship. But if your prospect doesn\u2019t trust you, or you don\u2019t trust her, it will be difficult to enter into a negotiation that will work for both of you and both of your companies. Building trust is the precursor to all business transactions, especially negotiating and closing.\r\n\r\nThe best way to build trust during the negotiation process is to gain trust before the formal negotiation. And then, during the formal negotiation, focus on the ends rather than the means.[footnote]Herb Cohen, You Can Negotiate Anything<\/em> (New York: McGraw-Hill, 1980), 163.[\/footnote]<\/span> In other words, instead of focusing on going head to head on each issue to be negotiated, concentrate on keeping the end goal in mind. Take the time to listen and understand exactly what is motivating your prospect so you can deliver what is important to her. \u201cNegotiation is needs based,\u201d according to the online Selling Power Sales Management Newsletter<\/em>. Understanding what is important to you and to your prospect drives your negotiation.[footnote]\u201cNegotiating to Win-Win,\u201d Selling Power Sales Management eNewsletter, January 6, 2003, http:\/\/www.sellingpower.com\/content\/newsletter\/issue.php?pc=248<\/a> (accessed March 16, 2010).[\/footnote]<\/span>\r\n
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    Power Player: Lessons in Selling from Successful Salespeople<\/h3>\r\nHonesty: The Best Negotiating Tool\r\n\r\nMarty Rodriguez, one of the top real estate brokers worldwide for Century 21, has a simple formula for successful negotiations. She feels strongly that the real estate business isn\u2019t just about closing the deal\u2014it\u2019s about providing honest information to help customers make the decision that\u2019s right for them. She tells prospects everything from the fact that there is structural damage on a property to whether she thinks a deal is out of their price range. \u201cWhen you treat people that way they\u2019re not only happy to give you a commission\u2014they become raving fans,\u201d according to Rodriguez.[footnote]Polly LaBarre, \u201cSaleswoman for the 21st Century,\u201d Fast Company<\/em>, December 18, 2007, http:\/\/www.fastcompany.com\/node\/36271\/print<\/a> (accessed November 18, 2009).[\/footnote]<\/span>\r\n\r\n<\/div>\r\n2. Gaining commitment<\/strong>.[footnote]Herb Cohen, You Can Negotiate Anything<\/em> (New York: McGraw-Hill, 1980), 163.[\/footnote]<\/span> Part of the process of closing is gaining commitment on every specific element of the sale. To do that effectively, strive to gain commitment long before you begin the formal negotiation. That means using every touch point you have at the company to help you. While you might think it is impossible to enlist others in your prospect\u2019s company to help you sell, consider the creativity of Art Fry, the creator of 3M Post-it notes. Fry stumbled upon the semisticky adhesive years before the product was introduced after creating the first version of the product as a way to mark hymns in his hymnal at church, he started giving his new invention to secretaries and coworkers at 3M. Soon secretaries were taking the pilgrimage between buildings on the 3M corporate campus just to get more of the sticky note pads. It was the demand from the people who used the product that ultimately generated interest in marketing the product to consumers. Fry successfully gained commitment from others in the company as a way to \u201csell\u201d his new invention as a marketable product.[footnote]Greg Beato, \u201cTwenty-Five Years of Post-it Notes,\u201d March 24, 2005, http:\/\/archives.secretsofthecity.com\/magazine\/reporting\/features\/twenty-five-years-post-it-notes-0<\/a> (accessed November 20, 2009).[\/footnote]<\/span>\r\n\r\n3. Managing opposition<\/strong>.[footnote]Herb Cohen, You Can Negotiate Anything<\/em> (New York: McGraw-Hill, 1980), 183.[\/footnote]<\/span> It\u2019s true that although a negotiation is a collaborative effort, it is inherently a situation that addresses opposing views. The best way to manage this is to be prepared and know what\u2019s important to you and your prospect.\r\n
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    Power Selling: Lessons in Selling from Successful Companies<\/h3>\r\nSearching for Common Ground\r\n\r\nMicrosoft wanted to be more dominant in the Internet search business and saw the acquisition of Yahoo! and the development of a new search engine named Bing as the way to gain market share quickly. Although Microsoft made a bid to buy Yahoo! in early 2008, it wasn\u2019t until July 2009 that a deal was closed. The original $45 billion takeover bid was shunned by Yahoo! much to the dismay and dissatisfaction of the shareholders because senior management wanted the company to remain a separate company.[footnote]Peter Burrows and Robert D. Hof, \u201cYahoo Gives in to Microsoft, Gives Up on Search,\u201d BusinessWeek<\/em>, July 29, 2009, http:\/\/www.businessweek.com\/technology\/content\/jul2009\/tc20090728_826397.htm<\/a> (accessed January 7, 2010).[\/footnote]<\/span> Then, newly appointed Yahoo! CEO Carol Bartz saw an opportunity for common ground and negotiated a deal that was a win for everyone. Under the ten-year agreement, Microsoft\u2019s Bing will be used to power Yahoo! searches. Yahoo! will receive 88 percent of the revenue from all searches done on Yahoo! Web sites. Customers and advertisers now have a viable alternative to Google. Negotiating a solution that lets everyone win, including the customer, takes creativity and time.[footnote]David Goldman, \u201cMicrosoft and Yahoo: Search Partners,\u201d CNNMoney.com<\/em>, July 29, 2009, http:\/\/money.cnn.com\/2009\/07\/29\/technology\/microsoft_yahoo\/index.htm<\/a> (accessed January 7, 2010).[\/footnote]<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n
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    The Three Elements of Negotiation<\/h2>\r\nEvery negotiation, whether it is in business, politics, or your personal life, includes three critical elements. Understanding the role of these elements can help make you a better negotiator.\r\n
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    1. Information<\/strong>. When you do your homework, research, and ask questions about what is important to your prospect, you may be able to avoid negotiating on price all together. If you have information, and share information at the appropriate time, you can make a negotiation a huge win for everyone.[footnote]Herb Cohen, You Can Negotiate Anything<\/em> (New York: McGraw-Hill, 1980), 19.[\/footnote]<\/span><\/li>\r\n\t
    2. Power<\/strong>. According to Herb Cohen, known as the world\u2019s best negotiator, power is based on perception. If you perceive you have the power to influence your situation, you do (conversely, if you don\u2019t believe you have the power, you don\u2019t).[footnote]Herb Cohen, You Can Negotiate Anything<\/em> (New York: McGraw-Hill, 1980), 20.[\/footnote]<\/span><\/li>\r\n\t
    3. Time<\/strong>. Time is the great negotiator. Ninety percent of all negotiating occurs during the last 10 percent of the set time frame. Deadlines force decisions to be made and negotiations to come to fruition. Use time to your advantage by never revealing your deadline. Don\u2019t negotiate when you\u2019re in a hurry; chances are you won\u2019t get the result you want.[footnote]RCM Staff Report, \u201c27 Principles of Negotiating with a Meeting Facility,\u201d MeetingsNet, February 1, 2003, http:\/\/meetingsnet.com\/ar\/meetings_principles_negotiating<\/a> (accessed November 19, 2009).[\/footnote]<\/span><\/li>\r\n<\/ol>\r\n<\/div>\r\n
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      Everything Is Negotiable<\/h2>\r\nMany salespeople are afraid of negotiating. They are worried that they won\u2019t be up to the challenge to persuade someone to do what they want or to pay their price. Confidence and preparation go a long way to achieving a satisfactory result on both sides. Negotiating and closing are ways of gaining agreement. The old saying goes, \u201cEverything is negotiable,\u201d and it\u2019s true. Your prospect believes the same thing so be prepared to negotiate about virtually every aspect of the sale. For less complex sales, the close might come as a result of a simple question at the end of the presentation. However, for more complex sales, there are various elements of the sale that must be agreed upon to close the sale. Elements such as price, length of contract, service, terms, and options are common points to be negotiated as part of the close.\r\n
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      One for All<\/h3>\r\nNegotiations in B2B selling usually require multiple parties to be involved from both companies. You may find yourself negotiating one-on-one with a prospect or being a member of a negotiating team that works with a prospect team to negotiate a deal. Either way, the same principles of negotiating apply.\r\n\r\n<\/div>\r\nMany salespeople are concerned about negotiating price. They think that lowering the price will make the sale. In fact, price is rarely the motivating factor behind any purchase. That\u2019s not to say that price isn\u2019t important, but customers buy value<\/em>, not price. If price were always the determining factor in purchases, premium brand such as Porsche, Apple, and Neiman Marcus would not exist. If you\u2019ve ever shopped at Nordstrom, Banana Republic, or Abercrombie & Fitch, you decided that those retailers offered more value than Old Navy, eBay, or Wal-Mart for the item you bought. Price is a part of the value equation but not all of it. According to author Kelley Robertson, \u201cEverything you say and do from the first contact with a prospect affects the value of your product or service in their mind.\u201d[footnote]Kelley Robertson, \u201cLet\u2019s Make a Deal: Negotiating Techniques,\u201d The EyesOnSales Blog, January 18, 2008, http:\/\/www.eyesonsales.com\/content\/article\/lets_make_a_deal_negotiating_techniques<\/a> (accessed November 19, 2009).[\/footnote]<\/span> That means establishing value with your presentation, demonstration, testimonials, follow-up, and everything that comes before the actual negotiation. How is your product or service different? What advantage does it offer? What is the most important problem it will solve for your prospect?[footnote]Kelley Robertson, \u201cLet\u2019s Make a Deal: Negotiating Techniques,\u201d The EyesOnSales Blog, January 18, 2008, http:\/\/www.eyesonsales.com\/content\/article\/lets_make_a_deal_negotiating_techniques<\/a> (accessed November 19, 2009).[\/footnote]<\/span>\r\n
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      Holding Firm<\/h3>\r\nForty percent of customers ask for a price concession not because they want it to close the sale but because \u201cthey had to ask.\u201d\r\n\r\nFifty percent of salespeople give price concessions on the first request.\r\n\r\nThe best salespeople negotiate on value, not price, and use creative negotiating to find common ground.[footnote]Colleen Francis, \u201cNegotiation Quick Hits,\u201d The EyesOnSales Blog, November 13, 2008, http:\/\/www.eyesonsales.com\/content\/article\/negotiation_quick_hits<\/a> (accessed November 19, 2009).[\/footnote]<\/span>\r\n\r\n<\/div>\r\nIf your prospect wants to negotiate on price, use your creative problem solving skills to get to the end that will work for all parties. Use concessions<\/span><\/span>, something that you are willing to compromise, to create value during the negotiation. For example, use length of the contract, payment terms, service, delivery date, training, or other elements to demonstrate to your prospect that you are willing to work with him and give him something that has value to him.\r\n\r\n \r\n

      You<\/strong>:\r\nI\u2019m not able to meet that price, but I can offer you three months of training worth $3,000 at no charge.<\/p>\r\n

      Prospect<\/strong>:\r\nHow many employees would be included in the training?<\/p>\r\n \r\n\r\n<\/div>\r\nThe following is another example:\r\n\r\n \r\n

      You<\/strong>:\r\nThat pricing is only available if you carry the entire product line. If you add all ten of the products into all your stores, I can meet that pricing.<\/p>\r\n

      Prospect<\/strong>:\r\nWe can take a look at that.<\/p>\r\n \r\n\r\n<\/div>\r\nThe bottom line is that it\u2019s best not to make a concession without getting a concession. In these examples, the salesperson always used another part of the deal to give something and get something in return. This win-win-win approach helps reach common ground and close the sale faster.[footnote]RCM Staff Report, \u201c27 Principles of Negotiating with a Meeting Facility,\u201d MeetingsNet, February 1, 2003, http:\/\/meetingsnet.com\/ar\/meetings_principles_negotiating<\/a> (accessed November 19, 2009).[\/footnote]<\/span>\r\n

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      Steps of the Negotiation Process<\/h2>\r\nWhile negotiation has some elements of being an art, there are three specific steps that can be followed to help ensure success with each negotiation.\r\n
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      Three Steps of the Negotiation Process<\/h3>\r\n
      \r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n
      Steps<\/th>\r\nActivities<\/th>\r\n<\/tr>\r\n<\/thead>\r\n
      1.\u00a0Prenegotiation<\/td>\r\n\r\n
        \r\n\t
      • Get in the right frame of mind; be confident about the value of your product.<\/li>\r\n\t
      • Do your homework; know who\u2019s sitting on the other side of the table and what\u2019s important to him.<\/li>\r\n\t
      • Set prenegotiation goals; identify the minimum that you will accept for the deal and be ready to walk away if you can\u2019t get it.<\/li>\r\n\t
      • Identify an offer that is higher than your prenegotiation goals to allow some room for negotiating.<\/li>\r\n<\/ul>\r\n<\/td>\r\n<\/tr>\r\n
      2.\u00a0Negotiation<\/td>\r\n\r\n
        \r\n\t
      • Make your initial offer and hold firm.<\/li>\r\n\t
      • Identify other \u201ccurrencies\u201d with which to negotiate to reach common ground.<\/li>\r\n\t
      • Be specific and identify every element of the deal in detail; put it on paper to avoid surprises later.<\/li>\r\n\t
      • If you encounter a deadlock, put the issue aside and come back to it at a later time in the negotiation.<\/li>\r\n\t
      • Avoid getting emotionally involved; be ready to walk away if you can\u2019t make a deal that is mutually beneficial.<\/li>\r\n<\/ul>\r\n<\/td>\r\n<\/tr>\r\n
      3.\u00a0Postnegotiation<\/td>\r\n\r\n