Making smart trade offs and not negotiating alone | How to negotiate
Smart trade offs
You scratch my back and I’ll scratch yours.
I love that. It’s so simple and gets the point across.
How does this apply to negotiating a deal?
In two ways:
- Never give anything away without getting something in return
- Never be the first to give anything away
We’ll look at this in the context of discounts. That’s usually the back scratching prospects want.
With RealtimeCRM we’re happy to give you a discount if you’ve tried the product and you really like it.
On one condition, you make a prepayment for the year. They get their discount but we get a year’s worth of revenue guaranteed and it helps with cash flow.
However, we decide what the discount is and it’s a take it or leave it situation.
What we do not do and what you should avoid doing especially in the context of SaaS is giving one discount to one customer and another potentially bigger discount to another customer.
They’re going to eventually talk and one of them will be really cheesed off with you because they didn’t get the bigger discount.
So standardise your discounting and stick to it!
This neatly follows onto the second point.
You shouldn’t be the first to offer a concession. The prospect will always try to push you to maximise their benefit.
If they’ve not raised the issue then don’t raise it for them. They’ll then treat that as the starting point, obviously you don’t value it so why should they?
This especially applies to discounting and why it’s so important to standardise and to use it sparingly, and definitely not as the first tool.
Your sales team is going to want to use the tool that gets them the deal as easily as possible. We see it all the time with sales people offering discounts off the bat without anyone even asking for them.
Those discounts mean your margin is being eaten into and it’s going to make forecasting your income and cash flow a nightmare.
Make sure you keep discipline amongst your sales team so that they don’t abuse discounting as a selling tool.
Fundamentally, you’re selling the value you provide - make sure everyone on your team knows that.
But they keep pushing
The most pushy people in the world are little kids.
If you give in to them at every turn you’re going to get rotten kids. Prospects are the same way if you give in you’re going to get rotten customers.
Let them huff and puff but hold the line. If your product is a good fit and valuable they’ll stay if not they were always going to go somewhere else anyway.
For the sake of argument, you give in and they get the discount and something extra.
They’re going to hound you about it and make more demands because you taught them that’s how they should deal with you.
Eventually you’re not going to be able to meet the promises made and they’ll walk. You will have wasted your time and resources getting burned taking a bad deal you didn’t want.
Being able to say no and being willing to walk away is your most powerful negotiating tactic.
Don’t negotiate alone
Getting other members of your team to check any prospective deals - you must do this.
You can’t be brilliant in every area and you’re a little compromised. How so?
You’ve been working on this deal from the beginning and you really want to win it. You’ve been dealing with the prospect and you know what they want. You know their objections but you think you can get past them. Because you really want the deal the temptation to sweeten the deal is always there. You’re emotionally invested in it because of all the time and effort you’ve put into it.
That’s why you need your team to review the deal. They need to interrogate it and that’s going to be uncomfortable.
They haven’t really been involved like you so they don’t have that investment. They don’t know the prospect like you do. They don’t care that he’s a nice guy and you both have the same birthdays.
Back in the old days we started doing this because of how badly we had been burned we noticed something that you just had to laugh at.
The member of our team who was primarily negotiating the deal would really take the side of the prospect, arguing hard from their point of view.
That’s great to care about the prospect like that but you’re on our team not theirs.
Look, it happens to everyone. There’s an old joke about the British foreign office.
The Prime Minister listens to one of his ambassadors and exasperated responds “I thought the purpose of the British foreign office was to represent British interests abroad, not foreign interests in Britain”.
Going native can happen to anyone so get neutral team members involved to check that natural tendency. They’ll be able to see where you’ve compromised and question why you’ve done this.
Use your team to bat away awkward requests
You’re in the meeting and the prospect is asking for something that you don’t really want to give but if you say no it’s going to kill the mood, and make it much harder to show the value of your product.
You know if you can get past this you can demonstrate the value.
So how do you take the steam out of that request? Use your team who aren’t there and can’t answer the question.
Just say “Look I’m sorry that’s not something I can give here. I’ll have to discuss this with the rest of my team”.
You’re under pressure but you haven’t said no and you’ve used your peers who aren’t there to take the sting out of it.
If you had said no they could have spent the rest of the time pushing on this and screwing up your game plan. Now you can move on and get them invested in your offer so that you’re in a stronger position to say no down the line.
Not on RealtimeCRM yet? Try it free for 30 days
Instant access No credit card required