On the big screen, negotiation looks like an elegant game of witty words, but in real life the situation is often less graceful. Even the most client-oriented sales approach might end up in a cringing moment when your company has to choose between a non-profitable deal or no deal at all. When they reach that point, inexperienced sellers immediately offer a discount to a problematic buyer who insists that a competitor’s deal comes at a much lower price. But the problem with discounts is that they become a norm rather than an exception and the company’s margins are getting thinner and thinner in time.
So how can you settle a fair deal with a hard ball client without making dangerous concessions? How can you win a manipulative and experienced buyer? Below are few tips to get you through the hardest negotiations.
Train for the Big Game
Being able to negotiate is important in business, but while some people study the theory behind negotiating in school, a lot of them don’t have the opportunity to practice negotiation skills in simulations.
Speech lessons will help you train your phrasing and the tone of your voice, sales workshops will improve your tactics, while NLP courses will make you better at understanding other people and yourself. But if you don’t have time for extra classes, use your team and colleagues to train.
Pick up negotiation scenarios and put them into practice, but don’t forget to improvise during the act in order to surprise each other and make the learning process truly challenging. A blog such as this one about debt collection is going to be heavy on negotiation stories. You can also introduce a referee to your practice, who can point out at the end each of the participants’ strong and low points.
Do Your Homework
Salespeople, account managers, and entrepreneurs have a lot of negotiations programmed each week and they might not be able to think a personalized strategy for every possible buyer. But when it comes to clients you can’t afford to lose, you need to do some serious research. Not only about your client and their previous providers, but also about your place in the market. Check out the pricing for services and products similar to yours, review your previous quotations and packages and ask a colleague how would they build the offer in a similar situation.
Moreover, find out if your company and the client’s one have similar values. For example. If your customer’s business values include sustainability, the fact that you buy local raw materials, supporting the local community and reducing pollution resulted from transportation might be an argument over competitors.
Prepare Many Variables
First of all, know your own boundaries. What is the real cost of the project for you and what are risks that can cause money leaks? What is the least you will accept for the work? Are you in a position to offer trades? Then, think about some possible scenarios for the upcoming negotiation and build a mix of solutions to prevent the deal from slipping through your fingers.
To begin with, even the compromise of giving a discount can work in your favor. But it should be a reward for a merit, like paying up in advance for a year-long contract or bringing you a series of projects and getting a big reduction for the final one. Further on, if your margins are really tight, negotiate up by including a freebie that you can afford or by building a package deal. Package deals are a great way of seizing more services from a single client and combining them with a cash up a front discount or a friendly payment timeline might just be that thing to swipe clients off their feet.
However, if your client has a low and fluctuating cash flow, you can also design some attractive options by offering flexible due dates. For example, you can offer a discount if the bill is paid before the end of the project, allow them to pay later if they also give you more time to finish the work, or invoice every stage of the project separately and let them decide when they afford to start the next phase.
Taking everything into account, I can define negotiation like Thomas Edison defined genius: “1% inspiration and 99% perspiration”. So instead of waiting for a flash of insight, prepare thoroughly and you’re more likely to settle a good deal.