Categories: Sales Process | Sales Negotiation
A well-defined negotiation strategy is a critical component of an organization’s success. A great negotiation strategy goes beyond individual seller skills - leaders should create a repeatable framework to ensure negotiation is being executed consistently across all deals to ensure maximum revenue. If your team repeatedly loses margin on deals, loses to competitors based on price or struggles to expand deal sizes, it may be time to assess your negotiation strategy.
Keno Helmi, five-time CRO most recently of Espressive, recently joined John Kaplan and John McMahon on the Revenue Builders Podcast to discuss his approach to value-based sales negotiation. From that conversation, we'll explore three often-overlooked elements leaders should consider adding or reinforcing in their team's negotiation strategy.
Keep reading for our takeaways, then visit our Sales Negotiation resource hub for more strategies to implement with your team.
1. Starting Negotiation Early in the Sales Process
Negotiation is all about the exchange of value. Sellers can have greater control over the customer's perceived value of your solution by characterizing your product as a premium brand from the first conversation. When companies treat negotiation as an end-of-cycle event, they open themselves up to price-based negotiations in a purely competitive market where price is the only differentiator. To protect margin, ensure negotiation happens early and often.
Enable your team to negotiate on value by laying out ways to include differentiation from the start of the sales process. While you don't want them to set a price expectation early on, you do want them to set a value expectation. "You are not [anchoring] with a number, but with a perception," says Keno. This can be done with statements like: 'If you're just looking for the cheapest solution, we probably won't be a fit, but we are the best at solving your problem.'
Provide your team with clear differentiators and coach them on how to align that differentiation with the customer's desired outcomes. As they move through discovery, they can leverage this position to stack customer requirements in your favor. Executed effectively, this negotiation process will save you from making last-minute price slashes or losing to a customer who undercut your price, because you have validated a premium price from the start.
2. Leveraging Non-Price Elements in Negotiations
Although we often associate negotiations with price, it's also critical to align your teams on how they negotiate non-price elements like deal timing, contract length, and marketing support. Remember that negotiation is an exchange of value; non-price elements can help to build trust and goodwill, and your team can leverage their position to gain value in other areas that benefit your business. Keno suggests building referrals or case study metrics into your team's negotiation toolkit, enabling each deal to fuel further growth.
Leveraging non-price elements can also help you to get the best possible price in the deal. If certain non-price elements are presented at the counteroffer stage, it can allow sellers to present these as concessions to avoid back-and-forth on price. "There's a whole lot of things that represent value to us that may not necessarily cost you anything that we can use as justification to improve the price," says Keno. By starting negotiations high, sellers leave room to negotiate on these elements as a condition of lowering the price.
Finally, ensure that your sellers are capable of negotiating and qualifying the timeline of their deals. Commitment to close should be a condition of continuing negotiations. As Keno advises in the podcast discussion: "Do not negotiate until they put you in front of the man or the woman that you can have confidence that once we settle, this is it. There's not going to be the procurement agent coming in over the top asking for an incremental 10."
3. Implementing a Structured Negotiation Protocol
To ensure maximum value in every deal (for both your company and the customer,) it's critical that leaders establish a repeatable framework for negotiation. A framework gives sellers a clear idea of what success looks like, while providing managers with a standard to coach to. Elite leaders set company-wide expectations and standards for the following activities - when they begin and end, who is involved, and how they will be executed.
- Early discovery stage negotiation and differentiation
- Qualification of prospect parties to be negotiated with and their influence over budget
- When to discuss price, how to avoid discussing price early and price objection handling
- Establishing and testing a business case and ROI
- Presenting an initial budgetary proposal and handling counter-proposals
- Dealing with procurement and ensuring the deal is solid before it goes to procurement or other end-sale parties
Ultimately, a negotiation protocol will help your sellers know where they stand, giving managers and leaders greater visibility into the forecast and objections in the field. As Keno Helmi puts it: "The million dollar question is: How much separation have I put between me and plan B? Plan B could be the competitors pricing, Plan B could be build it yourself or plan B could be do nothing. You won't figure out or be able to figure out what kind of a premium you can get until you understand how big the gap is between your solution and the alternatives."
Secure Repeatable Revenue with a Universal Negotiation Strategy
Creating and training on a company-wide negotiation framework can help your organization achieve growth goals by strengthening margin, improving upsell opportunities and making you more competitive. When ClickSoftware implemented Value Negotiation training alongside their messaging initiative, they saw 100% forecast accuracy for 8 quarters straight, as well as record annual revenues and an increase in new logos won. Read more about the impact that a negotiation initiative had for Click.
