Sales are not negotiations, and negotiations are not sales, and you can be a perfectly good seller without being a great negotiator. However, it can’t hurt to be better at getting the specific deal you want. More to the point, many of the skills that great negotiators learn double as excellent skills for sellers.
Although you could spend years studying negotiation and learning how to handle individual situations, I would like to give you a bit of a cliff notes version of the topic specifically focusing on negotiation skills for sellers. I would like to do this with the help of three books, a good amount of summarizing, a bit of melding of ideas, and some color of my own.
The first book I’d like to reference is “Negotiation Genius” by Deepak Malhotra and Max Bazerman. Side note: I have had the pleasure of attending seminars on negotiation by Malhotra, as well, and he uses the sound of his wedding ring clanging against surfaces to get attention, and for emphasis, better than anyone I have come across.
“Negotiation Genius” is an excellent and clear read, and I highly recommend it. It focuses on the science and information of a negotiation as well as the preparation. It works the reader through theories on information imbalances, incentives, acceptable outcome agreement, and I guess the best way to put it is, the geometry of a deal. This means that there are two dimensional areas that contain potential deal outcomes and dictate where the deal can end up across the plain of potential outcomes.
The three most important points that I would urge a reader to think about when it comes to this writing, are as follows:
- Prepare for negotiation sessions thoroughly by gathering an internal team of individuals who can talk through all of the issues that matter to your business, and all of the issues that you believe matter to their business. Rank them and assign values to them so that when you are negotiating you understand the relative value of negotiation points. Research the other side to understand their options and reliance on a deal, and do your best to rank and value their issues as well as your own.
- Understand your own ‘best alternative to no agreement’ (BATNA), and do your very best to understand theirs. If you will be just fine with no deal, and they will experience business issues, then you are in a strong position. The issues become perception and information imbalance. Try to prepare by gathering as much information as possible so that those imbalances are in your favor. Then, work to understand the ‘zone of potential agreements’ (ZOPA), this is the area where a deal can land. In other words, if you understand their limits, and you know your limits, you have a pretty good set of information, and you can push the boundaries of what is possible and work towards claiming as much value as possible.
- Mindset is key. Look for opportunities to create value, because a bigger pie means that there are more potential deal points that are beneficial to both parties. The first task is to create value, and the second task is to claim as much as possible. Focus on what happens to the other side with no deal. This will help you conceptualize value that can be created. Further, negotiators who focus on what happens to them with no deal achieve systematically better outcomes than the ones who focus on what happens to us with no deal. This is because worrying about your worst outcomes instills and projects neediness which leads to bad decisions, and more aggressive behavior on the part of your counterparts.
The second book that I would like to discuss is a book that I have referenced before in my writings. It is called “Start With No”, and it encompasses the ideas of Jim Camp, and is written by Robert Jordan. This book is as much a sales book as it is a negotiation book. I highly recommend it. The book talks about power dynamics in negotiations, and how to build consensus, working backwards from a place where consensus cannot happen. There is really one key takeaway from this book, and it is as follows:
- Say “no” candidly, quickly, and early when a deal does not work for you, and seek out situations to make an ask that your client will have to say “no” to early on in the process as well. Establishing a “no” is one of the best ways to set boundaries and draw out discussions around why that “no” is in fact a “no”. Once you and your counterpart understand the boundary and the reasons for the boundary, it becomes much easier to speak candidly about the possible scope of deals that make sense. Don’t express any neediness, but display empathy, and speak in your clients terms. Do your best to make your adversary feel comfortable, even displaying some clumsiness; this will give them the mental ease to say “no”, and to be candid about why. Then the conversation can start.
The last work I would like to call attention to on the topic is “You Can Negotiate Anything” by Herb Cohen. Cohen talks about three paradigms that exist within a negotiation that many negotiators don’t spend enough time thinking about how to leverage. Here are the main ideas.
- Time: be prepared to be more patient than the other party. Deals tend to get done close to deadlines, and where symmetry does not exist, the party with the longer timeline, or the perceived longer timeline, has an advantage. Everyone has a deadline, but the importance of missed deadlines can vary, so it is important to factor in risk by creating situations where you can push your own deadlines, and focus on ways to learn about your clients deadlines. Proposals close to a deadline have greater credibility, so remain calm as deadlines approach. Deadlocks are almost always only temporary stalemates. Patience is key.
- Information: information is leverage. Give people only the information you want to, and give them information before they have any expectations about what you are going to say. Get information by asking questions, and ask questions that get people in the habit of saying yes. The side with more information almost always claims more value.
- Power: Power is your ability to shape the perception and cognition of others, and we have spent much time in this book discussing it. The principles of power in sales are almost identical to those in business negotiations. We all have more power than we think we have; only you have to believe it. Believe you have power, and it will shine through.
Human beings are mentally lazy when it comes to most things in the business world because we are evolutionarily, and naturally trained to disregard most stimuli in order to focus as much of our finite mental and physical energy as possible on only the things that are vital to our survival and advancement as people. Basically, this means that we do not engage with things that demand mental energy exertion. This is important because a willing negotiation adversary has to be able to at least consider things from your point of view and more importantly, believe that you are considering things from theirs. For this reason, driving true engagement is the hallmark of a great negotiator and the hallmark of a great seller.
This means that skills like speaking in the terms of the buyer, displaying empathy, and understanding of the problem, repeatedly going back to the problem, social proof, and focusing on outcomes and value over solutions are all key to successful negotiations for the same reasons that they are key to successful sales.
In addition to these skills there are a few things that you may have noticed as themes across all three of the books that we discussed.
- All three focused on information and information asymmetry. It is incredibly important to research, prepare, and learn as much information as possible before your negotiations, and after your negotiations as the side with more information almost always wins.
- All three talked about perception and how it is more important than reality. For example, if one side has a deadline that is much farther in the future than the other side, they should be able to wait them out. But, if they believe that the other side’s deadline is farther out than theirs, they will likely be forced into an error and make a deal that is more beneficial to the other side than need be.
- All three books also focus on power dynamics, but in very different ways. Remaining calm, not displaying neediness, making your clients feel comfortable, and negotiating with the proper mindset are all key factors in determining how good your outcomes will be.
One last note that is particularly important for sellers. Sell the vision, not the price point. The more you talk about price, the worse the outcome will be for you. All sales are inherently trades. You give them a solution, and they give you money. Conceptually, the money they give you has about the same value as the solution you give them. If the conversation is constantly about the thing they are giving you, and never about the thing you are giving them, the scrutiny will all be going in one direction. Remember that they have the problem that needs solving, and you have other clients that have the same problem. There are only a few ways to get your solution, but many avenues to find clients who have similar problems. Reframe and go back to selling the outcome and the value whenever you get stuck in a pricing conversation prematurely.
