Skillful Negotiation

You do not get what you deserve, but get what you negotiate. ­ - Anonymous

‘Negotiation is a process for resolving conflict between two or more parties, whereby both or all modify their demands to achieve a mutually acceptable situation.’ - Gavin Kennedy

The Perfect negotiation:

Negotiation is an integral part of life whether getting a job, asking for a promotion, going for a date, or even asking your child to study.

A need for negotiation happens when you may not have a complete control over the other person. You may have direct control but not complete control. In a democratic setup, where we need to get things done, effective negotiation is an important tool.

Three Phase of Negotiation

The process of negotiation can be briefly categorized into three phase:

1. The Preparation Phase

2. The Middle Phase

3. The Closing Phase

1. The Preparation Phase: This is the planning that you need to do in your office before going for negotiation. Preparation is an integral part of negotiation and should start well in advance.

Some of the key indicators are:

a) What is the outcome you want from this transaction?
During our training programs, quite often the executive replies, “I want this order at any cost.” Now the moment you say that you need the order at any cost and the customer happens to know that, your position becomes quite precarious. The different outcomes that can be defined are as follows:

  1. To get this order at a good margin
  2. To get a breakthrough in the competitor’s territory
  3. Not to allow the competitor to get into my territory even if I have to take the order without any margins.
  4. To have a prestigious installation in this territory which can act as a reference point.To help me meet the crucial target for this quarter.

b) Does the other party have an authority?
Sometimes you may be discussing with a purchase officer, who may ask all the concessions from you but may not have the authority to take the decision. In some organizations, executives have an authority to take decisions till a specific order value. Nobody is going to tell you that upfront. Your job is to find out the same, nonetheless.

C) What is the risk the other party may take?
Remember, a certain amount of risk is involved in any negotiation. For example, if you want to get an entry into a competitor’s account and the customer is totally averse to risk, the chances are very low for negotiation. Under such circumstances, you have to think about the price at which the customer would think of switching in your favour.
Negotiation is a give-and-take process. If as a salesman, you only give and do not take anything in return, it is a one-way transaction and not negotiation.

A Salesman from a renowned lift manufacturing company from Chennai approached a customer notorious for not paying his suppliers. The conversation proceeded as follows:

  S: “sir, we are selling lifts, would you like to buy one?”

  c: “But we cannot give you an advance. We have a cash flow problem.”

  S: “Sir, do not worry. We’ll see that later. You can place the order without advance, you can pay later.”

  c: “Please go ahead, our customers are not paying us. So, we cannot pay unless the complex is complete and our customers pay us fully.”

  s: “That is fine. Take your time. We have been told customer is the king.”

  The installation team arrives and installs the lift.

  Now whenever the salesman goes for following up the payment, he gets a standard response:

  c: “Sorry, no money.”

If you analyze this situation, was this negotiation? It was an act of charity, due to the following reasons:

- When the order was collected, the salesman did not ask for advance. There has been commitment from the vendor but not from the customer.

- When the lift had arrived at the construction site, there was a commitment only from one side. At this juncture, if he were to ask for at least 80% against the material, it would have been called as negotiation. Let us assume that even if the customer were not to take the delivery, there was an option to divert the same for other customers.

- As the lift gets installed without getting a single penny from the customer, the vendor’s position becomes quite risky. Now he neither has the product nor the payment and may not be able to collect back the product if the customer refuses to honour the commitment.

d) Crucial information of the other party:
If you happen to know that the competitor’s price is higher than yours or his earlier machine is malfunctioning or the service support has been poor, such crucial information can become a strong point in negotiation. (Excerpts from Contextual Selling – A New Paradigm for the 21st Century by Rajan Parulekar)

For high-Value project sales you need to have a Consultative Selling approach which is relevant for Manufacturing and Industrial Sales Training.

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