David’s article originally published on the Salesforce.com blog
I’ve learned so much about sales from being a father — not the least of which is the tactful art of negotiation.
From after-school snacks, to TV time, to bedtime routines, not a day goes by where my kids don’t challenge the house rules to better their personal situation.
“Daddy?” [holding a bag of chocolates] “Can I have these chocolates?”
“The whole bag?!? No.”
“Can I have five?” [holding a handful]
“No, you can have one.”
“Four?” [still holding a handful]
“Aw, c’mon!” [already stuffing chocolates into their mouth]
What is it about kids that makes them killer negotiators? What enables them to relentlessly pursue the most personally advantageous end state while still operating within a perceived negotiating framework?
After many years working with and coaching professional salespeople — and of course, being a dad — the answer has become clear: Children are the best negotiators because they’re enormously persistent and have little to no awareness what a reasonable outcome is.
Think about it. In business negotiations, we have rules and constraints like operating margins, payment terms, legal requirements, and we come to the table with complex discount and approval matrices for our products and services. As a sales rep, when it comes to negotiating, you know what these parameters are and you do your best to work within them. But what happens when we become too familiar with these constraints?
Consider the example of one of my reps who had been with the organization for a number of years. Having been through many deal cycles and associated negotiations, he knew that under most circumstances he had the ability to offer a 25% discount on a particular product line with semi-annual payment terms. Over time, he would often let customers quickly negotiate him to this position before pushing back. Not surprisingly, most of his deals tended to conclude with these parameters.
On the other hand, one of my newer reps, less familiar with selling the very same product line, operated under a different set of directives. Her goal was simply to maximize the revenue and payments of each opportunity. She operated under the assumption that a 10% discount with standard annual payment terms was more than generous and negotiated to that end with her clients. Over time, she was able to secure those more beneficial terms consistently.
Bottom line: in a negotiation, we’re often encumbered by our own experiences and knowledge of a what a good deal looks like. This applies not only to prices for goods and services but also to secondary constraints like delivery timelines, and terms and conditions. We also (especially in North America) tend to negotiate with an innate sense of fairness, even though our clients are often unaware of what our business constraints are. Negotiation is, to a large degree, rooted in satisfaction, and in most cases, clients are simply looking for concessions (e.g. a discount without a prescribed magnitude) to fuel that sense of satisfaction. They simply want to feel as though they got a good deal.
For example, instead of moving to a 15% discount off the bat, start with a 5% discount and operate with the legitimacy that a 5% discount is considered a good deal (and indeed it might very well be). If you do need to provide concessions, give them slowly and deliberately, thereby building your client’s degree of satisfaction.
Negotiating in good faith and helping your clients reach a mutually satisfying agreement is the hallmark of any top-notch sales rep. But if you’re looking to do as best you can for yourself and your organization in your next negotiation, taking a lesson from our children and forgetting everything you know about what a reasonable outcome may be your killer strategy!
Now, if you’ll excuse me, my 9-year-old just asked to watch an all-night Quentin Tarantino marathon while eating a tub of ice cream…for the tenth time.