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The Decisions of Negotiation
Last-minute conflicts often lead to a no-sale. Why risk it when you don't have to?
For the rest of the August 2007 issue of CRM magazine please click here
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It's an enduring myth that negotiation requires a back-and-forth struggle during the closing stage of a sale. But negotiation at its best comprises honest and straightforward communication based on mutual respect and trust, beginning with the very first conversation and continuing throughout the relationship: There's no high-stress haggling; there are few if any objections; and there is no need for arm-wrestling in the 11th hour.

Communication and collaboration produce a continual series of mutual agreements and understandings. This eliminates the dependency on traditional objection-handling. By the time a customer receives your proposal, you and she understand all the key elements that would otherwise be subject to objection or negotiation in the 11th hour. You will have agreed on the financial impact of the problem, the selection criteria for a high-quality solution, and the financial value of that solution. In short, the customer will have approved the decision process and won't see any new (or potentially objectionable) terms in the proposal.

The first decision element revolves around the customer recognizing the value your solution could provide. Consider the aspect of your solution that you believe provides the most value and strongest competitive strength. Ask yourself, "What is the customer experiencing without this feature?" The pain point either exists in your customer's business or it doesn't. You and she will reach agreement on that quickly.

Then you move on to the next decision: determining financial impact. If your customer can't measure the financial impact of the problem, she won't be able to measure the value of your solution. Without seeing the value, she very likely won't want to pay the price you're asking, and may not want to buy your solution at all.

Once you've agreed on the cost of the problem, the next decision is, "Is this cost high enough to require action?" Have the customer compare this problem and its costs against other problems (or against opportunities she has to invest in). Where does this one stack up on the priority scale?

Once this, too, has been mutually agreed upon, you've negotiated away a high percentage of the objections that might traditionally lead to a no-sale. Many objections occur because the customer receives a presentation or proposal before these decisions are made--a premature proposal.

Think about the times you've made a proposal prematurely. That could be a customer who hadn't yet decided she really had a problem. Or one who said she had the kind of problem you solve, but hadn't decided how much that problem was costing her. Or one who had the problem and knew its cost, but hadn't yet decided that it was a top priority to address.

Only when these decisions are made is the customer truly ready to take action. Only then is it time to codesign a solution--one that you and your customer will need to agree upon together ahead of time. You and she will need to define the following: her expectations; the best approach to meet or exceed these expectations; the investment cost required to meet or exceed these expectations; the post-solution situation; the extent to which that solution (or that situation) will reduce the financial impact of the problem; and the metrics required to ensure the solution will work.

These decisions are made in order: Each decision provides a foundation that supports the next one. Each creates a clarity that precludes random objections from popping up at the last minute. You are working toward an equitable exchange of value and a continuing relationship. It's easier to reach clarity and agreement on many small points than a single summary of all those points.

Using this decision process--rather than a traditional sales process--will help you avoid premature presentation, and likely prevent those 11th-hour negotiations.

Jeff Thull is president and CEO of Prime Resource Group. Please visit www.primeresource.com.

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To contact the editors, please email editor@destinationCRM.com
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