Med One Blog

Sales Negotiation can be a beautiful dance—or it can be a disaster.

Dancing Couple

By Ibby Smith Stofer

If you don’t know what music is going to be played, how can you know how to dance? It will be less of a dance and more of a comedy movie if you don’t know what steps your partner prefers or what your own maneuvers can be. Would you want to engage in a dance full of uncoordinated moves that sometime appear war-like, circular, repetitive or worse?

I am sure anyone close to the sales process can entertain friends and family with what is often referred to as “war stories” of the deal that didn’t go the way they thought it would have, should have, or worse yet, that never went anywhere.

So what went wrong when the sales process reached the critical stage of negotiations but then didn’t end as expected?

Nearly every customer’s purchase decision includes this “critical” step. No longer do customers assume that the deal they were dealt is the best one to be had. Let’s explore some of these potential moves from the view of the buyer and think about what the sales person could have done differently.

Scenario: After getting the call or email asking to discuss some things with you, the rep (and the manager) begin to ponder and may feel defensive, bewildered or anxious. They think back and run through a mental check list.

  • The selection process has gone quite well.
  • We met with all the key decision makers.
  • We know what their goal is.
  • We know what their pain is.
  • We know what our solution will do to meet those targets.

So why do they want to discuss a few things?

The conversation begins cordially. Your customer states: “We are close to our decision but there are a few items we want to nail down.”

Mr. or Mrs. Sales jumps right in asking something like: “What’s on your mind?”

“Well, price for one,” volunteers the customer.

Like a true professional Mr. or Mrs. Sales immediately says: “What do you have in mind?” Or defensively, “I have given you all that I can. It is the best deal I have ever seen.”

The customer pursues a discount. “Our research indicated that you are somewhat high in price. We would need a reduction of, say, 15-25% to make it worth our while.”

With a look to the manager, the rep squirms for a few moments but then says: “Ok, but we can only give something in the range of 5 to 7%.”

Let’s stop here for a moment and review what has happened and consider what the rep should have expected following some fundamental negotiation guidance.

  • First, know that the customer will expect more–it’s part of the process.
  • Know that the customer has been trained to negotiate just as you (hopefully) have been trained.
  • Understand that there are resources for tracking your company’s pricing and terms offered to similar transactions, and that most likely the customer has learned this (or is a good poker player and is calling your bluff).
  • Ranges are never good since no one will likely settle on the low end of the range once they know your flexibility.
  • Cutting a request in half will likely cost you more than necessary. Offer a smaller discount and it will often be accepted.

As the conversation continues, the customer’s lists of the “few items” begins to feel endless.

  • Shipping charges included
  • 24-7 training for staff for minimum of 2 weeks
  • Future upgrade costs cap
  • 24-7 technical support via phone and internet
  • Software updates provided and installed at no costs

I am sure that you can add more to this list based on your experience and industry offerings. But you get the idea. This dance has become out of control.

Sales Negotiation

There is much research publically available on sales and customer negotiations via the Internet, books and magazines. They all offer good advice but to me there are three or four “must-do’s” to prepare for the inevitable round of negotiations.

Based on my experience with the acute care customers that buy medical devices I find that the keys to success include the following:

Prepare.

Know what the customer is likely to ask from you and know what you are able and willing to provide in advance of any discussion.

  • Get something for every give.
  • If you agree to pay shipping, that is a direct cost to your company and the profitability of the deal. Know what the concessions costs are to provide a winning outcome.

Proceed cautiously.
  • Before you jump in, know everything they are asking for before you start to make concessions.
  • Speak last and slowly. Make a list of all the customers requests.

Facilitate Give and Take
  • Review the list with the customer and then ask them to prioritize. You can do this by indicating that there are several important points in their request and while you can meet some, you most likely will not be able to meet all of them. It is important that both parties know the priorities.
  • Ask the customer to give you their top one or two that they absolutely have to have in order to close the deal.
  • Take a short “time out” so both parties can discuss what the must-haves are for the customer and what the company will be willing and able to offer.
  • Be honest and advise them that either you can or cannot do what they are asking or advise that in order to meet their request you need to bring back something to the company. For example:
    • They need to agree to a sole supplier arrangement for your products
    • Will need to close by a specific date
    • Will need to be a regional reference site
    • Will sponsor you with there GPO or regional purchasing group

The list will vary and it may require you to seek higher approval. Don’t promise more than you can deliver but do confirm the outcome in a very timely manner. Do not leave the customer wondering what your company will do for them. Uncertainty will undo all the good things that have been done to date.

One of the lessons in negotiation that has stuck with me and also helped me to delight the customer following some difficult and drawn out sessions, is to treat negotiations as you would that wonderful treat of the Nestle Drumstick ice cream cone with nuts on top and chocolate in the bottom tip.

Drumstick Icecream

Your larger concessions will happen first, but always save a little something to give in the end. Like Nestle, temptation and reward begins with the ice cream we crave, and that chocolate bite in the end is an added reward. It certainly has built many loyal customers for them, including an ice cream junkie like me!

I would like to recommend a couple of online references that you may find useful as you prepare for your next negotiation.

Linked In article by author Chris Murray titled “The Negotiation Secrets of the Professional Buyer” (www.linkedin.com/pulse/secrets-professional-buyers-learn-negotiation-courses-chris-murray)

Ten Essential Negotiation Skills for Sales People from the Hubspots.com sales blog (blog.hubspot.com/sales/essential-negotiation-skills-for-salespeople)