Although objection handling, negotiation and closing are some of the most critical areas of the sales process, it is not uncommon to encounter sales reps and business owners who lack the attitude, skills and knowledge necessary to be successful in these stages of the sales cycle, particularly when it comes to negotiation.
It could be because they're not used to negotiation. It could be that they're naive to the tricks that the other side can play. Or it could be that they're desperate for an order and will cave in to any demand. But whatever the reason, without some element of knowledge of the negotiation process, your business is going to continue to struggle.
So How Do the Egyptians Come Into This?
Over Christmas, I was working in Egypt with a well-known, multi-national IT company. On the last afternoon of the course, we went into Cairo Old Town. The section o town is well-known for being a kind of market—a trading zone where there are many independently owned shops selling local goods, gifts and souvenirs. The main business in the area is tourism, so therefore the shopkeepers are pretty wel-practiced at getting tourists into the shop and trying to sell everything in the shop to them at the highest price possible.
Watching these business owners operate is like watching masters at work! It's fascinating. They are "old hands" at bartering, trading and negotiating. They do it every day. They know what their potential buyers are going to say often before it comes out of their mouths. Everything they say and do is well-practiced and designed to give them the upper hand.
The Egyptian store owners are used to the things that happen in a negotiation—the things that you say that can make or break a deal. So what lessons can we learn?
1. Be Prepared for the Negotiation. How prepared do you think those Egyptian traders were for their negotiations? How prepared are you for yours? If your answer is probably something like "fairly prepared," think again. Has there ever been a time when someone has asked you about price that you did not handle with confidence and certainty? How often have you mumbled a price? Or worse still, gone in at a lower price than you wanted to charge, and justified it to yourself because you need the business? You've just found yourself in the middle of a price negotiation…unprepared.
2. Think About What You Want. This is essential before going into any negotiation. How often do you find yourself in the middle of a negotiation without any idea of what you actually want from it? And I don't mean what you’d like to have; I mean a solid tangible outcome that you want to achieve. What is your minimum expectation from the negotiation, otherwise you walk away? What is your anticipated outcome, and why should the other side should agree to that?
If you haven't got this sorted before your negotiation starts, you’re setting yourself up to fail, not to mention giving the other side everything they want at your expense.
3. Think About What They Might Want. When you negotiate with the Egyptian traders, they've already thought about what you might want. They've asked you questions about what you're looking for. They find it (and if they don't have it, they'll get it off another stall to sell it to you). They make sure to be in a very strong negotiation position. They've asked you what you want, provided it and now all they have to do is achieve the price they want. Simple!
In negotiation, you should not only be thinking about what you want, but also what the other side might want. What do you know about them so far? What might they be looking for from this negotiation? What have they been tasked with achieving by their bosses?
Another thing worth thinking about is what are your prospects' alternatives to dealing with you, or continuing dealing with you? Far too often business owners go into a negotiation without thinking what the other side's possible options are and end up agreeing to something that they never should have done.
4. Use Time to Your Advantage. The Egyptian traders are great at this. They know you don't have a lot of time to shop at ALL the different places in the market. They know that you have more than likely come to the market to buy souvenirs. They know that you don’t want to go home empty-handed, so if they make it easy for you, you will buy.
Time can be a big advantage to you in a negotiation—if you use it wisely. You can speed things up to put pressure on the other side. You can slow things down to give you the advantage, if the other side has some time pressure to conclude the negotiations (think car salesperson at the end of the month). Alternatively, don’t be afraid to postpone negotiations if you feel you're not ready.
Columnist's Note: Any questions on negotiation? Go to www.andy-preston.com and click on the "ask andy" icon. We're happy to help!
S&MM online columnist Andy Preston is a leading expert on Sales and selling for small businesses. You can see more about Andy at www.andy-preston.com. You can also see more about Andy's bite-sized training for small businesses at www.salestrainingbreakfastclub.com.