There are a lot of books and programs about negotiating, and you can learn something useful from any of them, but many of the strategies and tactics are not designed for sales negotiations. In B2B sales, we do not find ourselves in high-stakes geopolitical affairs that would require Henry Kissinger, or hostage rescues that might require Chris Voss. Most of the time, our sales negotiations center on the price of what we sell, with occasional negotiations around indemnifications.
The reason your prospective clients ask you for a price concession is because they want to do what is right for their company and because they don't always know what a fair price is. Expect and be prepared for a negotiation with your prospective clients.
Here are five powerful sales negotiation tactics that will help you in conversations with clients:
- Retain the ability to walk away.
- Reveal your higher price early.
- Ensure you have been chosen.
- Justify the delta.
- Trade for something of equal or greater value.
Retain the Ability to Walk Away
The first and most important sales negotiation tactic is to retain the ability to walk away from a bad deal. The dynamic to be aware of here is who has the greater need. There are plenty of sales organizations that will happily provide your client with a deep discount to win their business. The only way to shift the balance of power in your direction is to create greater value in the sales conversation, causing your prospective client to want to buy from you.
When your prospective clients believe you will produce better results than your competitors, you give yourself a better base from which to negotiate. If you produce greater results but your prospective client is unwilling to pay for them, you need to be able to recognize a bad deal and walk away. The only way you can do this is by having enough other opportunities. But before you turn your back on your prospective client, you can make it easier to sell with a higher price.
Reveal Your Higher Price Early
Too many salespeople fear having a higher price than their competitors. Sales leaders rarely arm their team with the list of investments their company makes to ensure they deliver better outcomes than other companies that don’t make those investments. Instead of waiting until the end of the sales conversation to share your higher price, you are better served by revealing it in the sales conversation. This is also a good starting point for differentiating your company and your approach.
This sales negotiation tactic lets you use the entire sales conversation to create value for your client and explain why your price is higher than your competitors and how you invest the difference to prevent the problems and challenges your prospective clients has—and will continue to have without spending more. By setting up the differentiated value, you set up a better starting point of a negotiation. But before you engage in any negotiation, consider the following tactic.
Ensure You Have Been Chosen
There are two sales negotiations you will encounter: those with your competitor and those with your prospective client. When your contact tells you they prefer you but that you have a higher price and need to sharpen your pencil, it’s a hint that you may not have been chosen and a competitor is in the deal.
One helpful negotiation tactic is to ask your contact if they have chosen you before you negotiate. You need good talk tracks for this conversation, saying something like, "We believe that we are the best choice for the results you need. If we are the right choice, I am confident we'll reach an agreement. If you are not sure we are the right choice, we should make sure you're one hundred percent certain we are the right partner." You will only have the courage to do this if you can walk away having created greater value. This tactic may help you improve your negotiation sales skills and improve your average win rates.
Justify the Delta
Because you have disclosed your higher price and differentiated your result from your competitors’ throughout the sales conversation, you are ready to justify the price delta between you and your competitors. You may have to remind your contacts in a negotiation that your model requires a greater investment to produce better results and how it eliminates the concessions other models impose on their clients because they lack the money to make the investments your company makes.
If your contact can't articulate why they are paying more to buy from you, you make it difficult for them to justify the greater investment. By justifying the delta, you increase your chances of getting the investment you need to deliver the results your contacts need.
Trade for Something of Equal or Greater Value
Here is a truth most sales managers and sales leaders don't recognize: Salespeople don't negotiate with their prospective clients. Instead, they run back to their manager and negotiate with them because it’s easier. After all, managers want the deal as much as the salesperson does.
The best way to negotiate is to say yes to the request for a discounted price and ask for something of equal or greater value or to simply say, "No. We can't do that." Once a client asks for something, you are already negotiating. In sales negotiations, you want your negotiation to conclude in a single round.
Five Powerful Sales Negotiation Tactics
These five powerful sales negotiation tactics will help you stay on your front foot and reduce the price concessions you make to win clients.