article | August 17, 2017
Why Your Deals are Bleeding Margin
Standard one-size-fits-all sales methodologies no longer work. The competitors can license the same sales methodologies from the same vendors you can, so there is no competitive advantage to be had by adopting the latest sales methodology from the sales training industry. To increase deal sizes, improve win rates, and shorten sales cycles, you need to adopt a custom, proprietary sales process/methodology.
When it came time to close a deal, one of our clients was faced with a difficult dilemma. The solution had to be purchased within the next five days in order for Vick, the sales leader, and one of his reps to make quota.
The prospect had agreed to the solution details and was bought in. There was a compelling event within 45 days, but that was after quarter-end. To close the deal earlier, Vick prompted his rep to offer an incentive to close early. He dropped the price and, after a counter offer, ended up with a discount of 8% on the transaction. To make matters worse, the prospect felt rushed and ended up signing a purchase order that left him wondering if he selected the right supplier. A great sales campaign went from picture perfect to wobbly and less profitable.
If this sounds like something that happens to your sales team, read on to find out about the Give-Get Framework, a powerful negotiation tool.
Why Vick Lost His Deal Margin
Vick and his sales team followed their buyer-centric selling process. They provided value at every step, helping the prospect’s organization recognize their problem, identify requirements and evaluate options. The product demonstration was nearly flawless and the solution pricing proposal gave the prospect’s team the choices they needed. However, Vick’s team was unprepared to negotiate. A simple framework called “Give-Get” would have made a big difference.
Negotiation Training: Money Wasted
Many sales leaders spend good money to improve their sales teams’ negotiation skills. Consider this sample from the vast array of resources designed to teach negotiation strategy. In spite of the resources at hand for training, sales teams self-report that the training doesn’t make a sustainable difference in behavior.
Changing the Behavior of your Sales Teams – the Road to Better Margin
The most important part of a successful negotiation comes before the first meeting. It’s all about how you prepare.
Too often sales people have done no planning prior to walking into a negotiation meeting. Like Vick, they lay the final proposal on the table and wait to find out what is important to the buyer. They fail to take the time to consider what the buyer will ask for in advance and to prepare the best possible response.
Planning for negotiations does not have to be time-consuming or complicated. But it must be organized. The Give-Get Framework is a simple and effective way to prepare. It is a negotiation aid used before the explicit negotiation with the buyer takes place.
Preparing for negotiations requires recall and imagination. Consider comments by the prospect during the sales cycle. What have they said is important to them? Consider what has happened in comparable past situations. The buyer is likely to ask for similar concessions. Ask questions during the sales cycle to uncover what will be important during the final negotiations. What the Buyer wants to Get should be no mystery.
Get Ready to Get Ready
With a good idea of what will happen at the bargaining table, the sales team can plan ahead. For each ‘Get,’ consider what you are willing to ‘Give’ in exchange. The Give-Get Framework keeps the value of the deal intact and allows you to balance concessions. It isn’t perfect, but it can preserve the most precious part of the deal – the profit margin. Every dollar saved here goes to the bottom line.
Vick’s team was able to dramatically improve their negotiation results (and self-esteem) after adopting the Give-Get framework. The sales team practiced with role-play exercises:
Benefits like membership on the product roadmap committee, preferred delivery conditions, or free “advice” from another department could all be successfully exchanged.
The sales team practiced the other side of the negotiation process, too.
Examples include: an agreement to serve as an on-site reference, early payment, or the promise to deliver 4-6 “hot leads” from their personal network.
If you have experienced the ups and downs of negotiations, please comment below on your successes – or ideas that you wish you had tried. Your insights are always welcome.
You can start to protect your profit margins today by adding a negotiation planning step to your sales process and by arming your sales team with this powerful sales aid. Download a copy of the Give-Get Sales Aid to guide your effort.
Have expectations gone up and left you wondering if you have the right sales strategy to support your revenue growth goals? Here is an interactive tool that will help you understand if you have a chance at success. Take the Revenue Growth Diagnostic test and rate your Sales Strategy against SBI’s emerging best practices to find out if: