Aggressive Negotiations Are Still Key to Sales Success
A lot of sales leaders tout the value of a “win-win” strategy, but top sales performers don’t follow that mantra, according to new research from the RAIN Group, a global sales training company.
“Negotiation is different than it was even just a decade ago,” says Mike Schultz, president of RAIN Group and director of the RAIN Center for Sales Research.
In its Top Performance in Sales Negotiation study, RAIN looked at what top performers in sales negotiation do differently from the rest, the negotiation tactics used by both buyers and sellers, what buyers want, the role of price, and the impact of negotiation training.
A few of the other findings include the following:
- Top performers are 3.1 times more likely than the rest to achieve pricing targets.
- Top performers are 12.5 times more likely than the rest to be very satisfied with the outcome of their negotiations.
- Top performers are 3.5 times more likely than the rest to be extremely confident participating in negotiations.
- The top factor most separating top performers from the rest is understanding the power and leverage held by each side in negotiations.
Sellers have enough power to command higher prices, but most don’t realize it, Schultz argues, noting that many cave in at the slightest sign of resistance from buyers.
The seller needs to be the one willing to walk away from a deal if it isn’t right, he notes, pointing out that top performers are 2.2 times more likely to walk away from deals.
“To achieve the greatest sales success, your team needs to know which tactics to expect and which strategies are actually going to work,” Schultz adds.
Top performers are also more than three times as likely to use a “distributive approach,” according to Schultz, who describes that approach as the direct opposite of win-win. Sellers who go down the win-win path tend to lose, accepting a lower price or other concessions out of an eagerness to make the sale.
Top sales performers also don’t let up when potential buyers claim that budgets limit them to paying a certain price, Schultz said. Sixty-two percent of buyers said they have the flexibility to pay more if the supplier demonstrates why doing so is worth it, so salespeople shouldn’t accept budget as the last word in negotiations.
“The seller needs to make the case for a higher price,” Schultz states. “Buyers will always tell you what their budget is, then lean on it like a crutch.
Similarly, too often (88 percent of the time) negotiations end with the seller making a final concession, according to Schultz. No concessions should be made unless the terms of the deal change as well (i.e., lower quantity, fewer features, etc.). He also recommends that sellers look to build value during negotiations, using approaches like brainstorming between buyer and seller to develop new ideas and expand their business relationships.
Other findings in the report include the following:
- Effective sales reps can affect buyer emotions.
- Effective sales reps maintain the lead in negotiations rather that ceding the power to buyers.
- Effective reps are prepared to negotiate, while those who aren’t get blind-sided.
- Top performers are 1.7 times more likely to find coming in high on price and negotiating down a very effective approach vs. coming in at a set price and holding firm.
- Only one in five buyers believe that sellers deeply understand their ROI case.
- Only 19 percent of buyers strongly agree that sellers provide ideas during the sales process.
- Buyers are 1.5 times more likely than sellers to have received extremely effective negotiation training.
- Top performers are 9.3 times more likely to receive extremely effective negotiation training than the rest.
But ultimately, while it helps if both parties in a sales negotiation come out with a win, in the end, top sales reps “plan to win,” Schultz points out.