As a sales leader, when it comes to being involved in the negotiations between your sales team members and their clients, you must know your role. As the stakes of a negotiation rise, so does a sales rep’s desire to pull in their leader in hopes their involvement will generate a better outcome. Sometimes this strategy works, and sometimes it backfires. So, sales leaders need to engage strategically and in a way that supports the deal at hand, the ongoing relationship with the customer, and the sales professional’s long-term development.
Consider these five tips for cultivating effective negotiation practices through leadership excellence:
- Begin with the Right Mindset
Having the right mindset relative to negotiations is the first and most essential step. Negotiation is not about winning or losing; it is about finding solutions that meet the needs of all parties involved. Be sure your team has an appreciation for the impact of effective negotiations, as well as an understanding of your organization’s philosophy and objectives relative to achieving win-win negotiations.
- Take a Strategic Approach
Productive negotiation practices are developed by creating a strategic plan around pricing structure, growth objectives, profitability objectives, and competitive considerations. Have you considered these elements relative to your sales team’s negotiations process? Is sales compensation aligned with these strategies and objectives? If a salesperson’s pay or commission structure does not line up with your company’s plans around growth, profitability, and competitive balance, then your team’s negotiations strategy will be flawed. Make sure, as a leader, you are aligning sales policy and compensation with your strategic goals.
- Strike a Balance Between Empowering and Supporting Your Team
Empower your sales team with the appropriate authority to make offers, accept terms, and reach out when unanticipated issues come up. This is a fine line to walk and probably the most intricate for the sales leader trying to maximize the negotiations potential of every member of their team.
Encourage your sales professionals to call “time out” if an unanticipated issue arises. As a matter of good practice, you should have periodic conversations with your team members about their position with each customer, particularly if they are relatively inexperienced negotiators. On the other hand, you don’t want to create the impression, with your reps or their customers, that sales professionals must check everything with their sales leader. This dynamic frustrates customers in the same way we are frustrated when working with someone not authorized to make decisions.
- Help Your Sales Team Identify Thresholds
A related strategy is to ensure your sales professionals always know their “walk away” – that threshold point at which they will leave the negotiation. They should be aware of this threshold for every account, solution, and negotiation but focus their energy on their goals/objectives. Coach your team members not to get preoccupied with the “walk away” because this could cause a tendency to make concessions too early and too often as long as they’re still above the “walk away” threshold. You should also work with your reps to understand the BATNA (Best Alternative To a Negotiated Agreement) for themselves, their customer counterpart and their competitor(s). Essentially, this is considering and articulating the sales professional’s “plan B” if they cannot reach an agreement with the customer.
- Always Fine-Tune Foundational Selling Skills
The other key consideration in successful sales negotiation is the skill level among your sales team. It is impossible to pursue strong negotiation skills without having foundational selling skills in place: the ability to communicate to build trust, credibility, and rapport and create the kind of personal relationships that cultivate loyalty among your customers. Sales professionals must have exploratory and diagnostic skills to uncover their customers’ needs and motivations. Without these foundational elements and a consistent process in place, it will be impossible to develop effective, productive negotiations throughout your sales organization.
Negotiating is a fundamental skill set for every sales professional, and one which is at work throughout the entire sales process. Just as the most effective time to coach your sales professionals is early in the sales cycle, precisely the same is true for negotiating. Negotiations start from the beginning of the sales cycle. Develop your team’s negotiation practices using these five tips.