Be a Better Negotiator by Forgetting Everything You Know
Some of my most memorable sales lessons have come from being a proud father of three — not the least of which is the art of negotiation.
From after-school snacks and screentime, to bedtime routines and lifts to friends’ houses, every single day my kids attempt to live their best lives by trying to squeeze me for concessions.
Kid: “Dad?” [holding a bag of chocolates] “Can I have these chocolates?”
Me: “The whole bag?!? No.”
Kid: “Can I have five?” [holding a handful]
Me: “No, you can have ONE.”
Kid: “Four?” [still holding a handful]
Kid: “Aw, c’mon!” [already stuffing chocolates into their mouth]
What is it about kids that makes them killer negotiators? How are they able to relentlessly pursue their desired goal while still giving the illusion that they’re engaging in a give-and-take 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 for three reasons:
- They have a clear end-goal
- They are relentlessly persistent
- They are not encumbered by the knowledge of what a good deal is! (i.e. they’re unconsciously unreasonable)
Think about it. In business negotiations, we have rules and constraints like operating margins, payment terms, legal requirements, and we often 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?
The Curse of Familiarity
Back at Salesforce, one of the reps on my team, who had been with the organization for a number of years, was negotiating a licensing agreement. Having been through many similar deal and negotiation cycles, he knew that under most circumstances he had the ability to offer a 25% discount on a particular product line. 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 was more than generous and negotiated to that end with her clients. Over time, her average discount rate was consistently less.
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.
The Power of Giving In Slowly
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 want to feel as though they got a good deal. In his famous book, Never Split the Difference (one of my top sales reads), author and former FBI Hostage Negotiator, Chris Voss states:
“Researchers have found that people getting concessions often feel better about the bargaining process than those who are given a single firm, “fair” offer. In fact, they feel better even when they end up paying more or receiving less than they otherwise might.”
In sales as in life, people don’t appreciate things that come too easily. A mindful negotiation practice can significantly build up your client’s levels of satisfaction and create the win-win experience you’re looking to deliver.
So how can you create more satisfaction in your negotiations while not giving away unnecessary discounts and concessions?
For example, instead of moving to a large (e.g. 15%) discount off the bat, put yourself in a beginner’s mindset. Start with a modest (e.g. 4% or even 8%) discount and operate as though that discount is considered a very good deal (which indeed it might be). Then, if you do need to provide concessions give them slowly using a tactic I refer to as deliberate discounting.
Bonus: check out my free deliberate discounting training and download helpful templates below.
For example, instead of jumping from a five to a 10 percent discount, move to seven percent. A great way to do this is to negotiate with hard dollar discounts rather than percentages. For example, suppose your service costs $150 per month. Instead of offering an easy ten percent discount, which would be a $15 concession, shift your focus to dollars and offer a $10 per month discount (which would only be 6.7%). The customer will still leave with a strong sense of satisfaction and you’ll have saved yourself and your company a few points of profit margin.
Negotiating in good faith and helping your clients reach a mutually satisfying agreement is the hallmark of any top-notch sales rep. When in doubt, taking a lesson from the children and forgetting everything you know about what a reasonable outcome is, may be the killer strategy you’re looking for!
Looking for more helpful negotiation tactics? Check out my 4 Tips for Negotiating at Month-End.
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Great Premise David. I am very familiar with the unreasonable anchors my kids throw at me!
One thing that I’ve seen, both in SaaS and infrastructure sales, is an apparent buyer discount bias due to years of conditioning. For instance, we are regularly hit with expected discount percentages, because that’s what a customer has received for the same class of products previously.
It takes a ton of work in resetting those expectations and providing enough “value” data points to hold the discount level.
I guess the other option is to just give in and raise LIST prices!
Appreciate the comment Josh! Indeed, the line between negotiation and objection handling is very thin in the example you’ve given (as it is in many cases). If you’re looking for a good way of handling the objection of a customer with a potentially outdated viewpoint (of coutse, there are MANY), here’s a helpful video: https://youtu.be/t5YV4REikLw