Don’t Negotiate – Have a Conversation Instead
I don’t really like the word negotiate. Actually, I hate it. The minute you start negotiating a deal or negotiating with a prospect, people generally have a confrontational mindset and the goal becomes trying to win instead of making your prospect happy. In my experience, it’s much better to have a conversation about something – price, timeline, the team, etc. – rather than trying to negotiate.
There are two focus areas I recommend if you need to have this type of conversation. The goal is to identify with your prospect the business value of your product or service and then agree on fair compensation for that value.
Understand the business value
Get your prospect to think of you as a partner adding value instead of a vendor providing a service. Good salespeople understand this thinking and to communicate with your prospect as a partner you need to really understand their business and the value that you can bring. Have discussions around their pain and what problems or challenges you can solve. If you can get them to think more about the value your product or service will add to their business then they will likely focus more on how to bring you on board as a partner rather than just focusing on your fees.
Identify how the engagement impacts the bottom line
Make them money or save them money are really the only two things that matter. As you are understanding the business value you bring, you’ll need to figure out which side of this coin you are on.
Regarding making them money – can you help them bring in more customers, or larger projects? Regarding saving them money – are you helping them be more efficient and save their employees time?
Be prepared to explain these things to your prospect with hard data. It goes hand in hand with the value, but once they fully understand the value that you bring and how your product or service can impact their bottom line, you can consider that a real partnership on the way to a win.
Remember if you try to negotiate too early, the conversation becomes very price based and in the end, you will likely not win. In fact, you will lose because you will probably cut your price lower than you need to. When you have the typical back and forth of a negotiation, trust me, your prospect isn’t enjoying it and is viewing you like any other vendor. I would say that’s a lose-lose – you might get the business, but the relationship isn’t going to start out on a positive note. However, if you just start having partner conversations early on and make those conversations value based, your likelihood of winning increases, your prospect will feel like they’ve won by building a new partner relationship and the engagement will start off positively.