One of the most important concepts in negotiation has to do with feelings of satisfaction. In other words, regardless of whatever concessions you decide to give it’s important for the other party to FEEL like they’re getting a good deal.
That’s why one of the most effective ways of reducing the size of the concessions you give while increasing the other side’s level of satisfaction (especially when negotiating at month-end) is giving in slowly.
In fact, in his bestselling book Never Split the Difference, author Chris Voss cites research that says people getting concessions often feel better about the bargaining process than those who are given a single firm, “fair” offer. And amazingly, the bargaining process makes them feel better even when they end up paying MORE or receiving LESS than they otherwise would.
Here are three tips for giving in slowly:
1. Pick deliberate discounts
Instead of leading off by offering a large, conspicuous discount upfront, pick a smaller, more deliberate discount. A great way to do this is often to negotiate with hard dollar discounts rather than percentages.
For example, if your service costs $125 per user per month, you might be tempted to offer (or entertain your customer’s offer of) a 15% discount, which would be an $18.25 concession. Instead, shift your focus to dollars and offer a $5 or $10 per month discount which would only be 4% or 8% respectively.
In the same way, if your service costs $5 per user per month, moving in full-dollar increments to a $4 price point would be a whopping 20% discount. Instead, focus on offering smaller, more deliberate discounts like 25 or 50 cents per user per month which would only be a 5% or 10% discount respectively.
In either case, the customer will still leave with a strong sense of satisfaction and you’ll have preserved a large amount of revenue in the process.
One of the most critical concepts to master in the realm of negotiation is power. In short, power represents the authority to grant concessions or agree to things the other party is asking for. While for salespeople, finding buyers with the ability to use their power to grant concessions is often seen as a positive thing, we don’t often consider how much power we want in a negotiation. In fact, NOT having power can actually help you generate higher levels of customer satisfaction.
For example, instead of granting the concession the customer might be asking for (assuming you have the ability to grant it), let them know that YOU don’t have the authority to give them what they’re asking for and that you’ll have to seek approval through the appropriate systems and players. If your organization already has an approval process in place for this type of thing, don’t be afraid to fall back on it.
Taking anywhere from a couple of hours to a couple of days to work through the approval process will make your customer feel grateful and satisfied with the outcome (even if the process may not actually take quite that long).
3. Act “as if…”
Back at Salesforce, I noticed a strange trend in our deal negotiations. Many of my newer reps were actually giving away FEWER discounts than my experienced reps! I was confused as to why until I went home and noticed how my kids negotiated with me. One of the main reasons why children are KILLER negotiators is because they are unencumbered by the knowledge of what a “good deal” is. My new reps were the same way.
They had yet to be influenced by previous success or failure in the negotiating arena at our company. They didn’t know that *most of the time* customers like this get discounts like that.
The experienced rep beside them may have just given a 25% discount to a similar customer but the new reps acted as though 5% was the deal of the week! They believed in our value and weren’t unencumbered by the tribal knowledge of what a “good deal” was.
The moral of the story: in a negotiation it often pays to forget what you know and aim higher! For example, instead of moving to a large say 15% discount off the bat because that’s what you gave your last customer, put yourself in a beginner’s mindset. Start with a modest (e.g. 5%) 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 see points #1 and #2, defer authority and pick deliberate discounts.
Start every negotiation with belief in your value and a beginner’s mind and you’ll come out ahead.
Bonus Video: if you’d like to hear more about these concepts, check out this short video:
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