One of the enduring myths of negotiation is that the final stage of the sale—the “close”—involves a back and forth struggle with the customer. But in reality, negotiation at its best consists of open, honest communication based on mutual respect and trust. It begins with the very first conversation and continues throughout the relationship. We refer to this as the “diagnostic process.” When you use this process there is no need for high-pressure, last minute bargaining. Few, if any, objections arise just before the deal becomes final and there is no need for “arm-wrestling” in the eleventh hour.
This is difficult for salespeople to grasp. “What? No objections?” “No negotiating?” Please note that I’m not saying “no negotiating.” I’m saying no negotiating in the 11th hour.
Negotiation takes on a new definition when you use the diagnostic process, which centers on clear and precise communication and collaboration—a continual series of mutual agreements and understanding. A collaborative approach eliminates the dependency on traditional closing and objection handling skills. By the time a customer receives your proposal, you and your customer have come to common conclusions and understanding of all the key elements involved in the transaction. You will have agreed on the nature and financial impact of the customer’s problems, your mutual expectations, the financial value of the solution, and the selection criteria for a high-quality solution. In short, the customer will have agreed to each element of a quality decision process. So there should be no 11th-hour surprises.
Let’s take a deeper look at this quality decision process. The first decision element revolves around the customer’s realization that he is experiencing some consequences due to the absence of the value your solution could provide. Consider a feature of your solution that you believe to be one with the most value and strongest competitive strength. Ask yourself, “How would the lack of my product or service affect my customer’s business? Think of yourself as a doctor. First diagnose the symptoms caused by the absence of your product or service. Then move on to the next question: “What are the consequences of the symptoms?” or “How bad is it?”
The next decision revolves around determining the financial impact of the problem. It is important to bring your customer a process that will guide him through measuring the financial impact of the problem, just as a doctor might run tests to determine the extent of a patient’s symptoms. We refer to this as the “cost of the problem.” If you don’t have a cost of the problem, there isn’t a problem. In other words, if you can’t help your customer measure the financial impact of the problem your solution will address, he won’t be unable to measure the value of your solution and so won’t be very likely to buy it.
Once the cost of the problem has been agreed upon, the customer must decide, “Is the situation bad enough to require that I take action? Is it a priority?” After these decisions are mutually agreed upon, we have “negotiated” away a high percentage of the objections we would traditionally hear and those that might lead to a “no sale.” A large number of objections occur because the customer receives a presentation or proposal before these decisions are made.
Think about it—how many times have you presented a customer with a proposal before he decided he had a problem? How many times have we given a proposal to someone who said he had the kind of problem we solve, but he did not know how much that problem was costing his business? Finally, how often have we given a proposal to someone who had a problem but had not yet decided that it was a top priority?
A customer decides to take action only after these decisions have been made. That’s when the two of you can collaborate to co-design a solution. There are four main sets of decisions to be made regarding the design of the solution:
- What does the customer expect the results to be if he goes through the effort and expense of addressing the problem?
- What is the best alternative or approach to meet those expectations?
- How much money does the customer have to invest in the solution and who much will the solution reduce the financial impact of the problem?
- How do I make sure that the solution will work?
Each decision provides a foundation of information that supports the next decision in the series, allowing you and the customer to make each decision with confidence. Each step creates a clarity that precludes random objections from popping up at the last minute.
The key to successful negotiations is that each party is well informed and understands his respective mutual interests. The goal is to work toward an equitable exchange of value that contributes to a mutually beneficial and a continuing relationship. The foundation of the diagnostic approach is that it is easier to reach clarity and agreement on many small points than a single summary of all those points.
If you pattern your sales approach after a quality decision process, rather than a sales process, I promise that you’ll no longer fall victim to those stressful, counter-productive 11th hour negotiations.
To download chapter one of Jeff Thull’s book Exceptional Selling: How the Best Connect and Win in High Stakes Sales, visit www.primeresource.com