by Ian Newall
Sell first, negotiate later.
Selling and negotiating, what’s the difference? Is there a difference, and, if there is, what do we learn by making the distinction?
Firstly, what is selling? Persuading someone that your product or service is the one that is best able to meet their needs. In other words, building value for your solution.
Think about it from the customer’s point of view. The customer is using a product or service. As time passes, things change. New legislation or regulations will come into force, markets may expand or shrink, companies may undergo mergers or acquisitions, new technology or changes in personnel. Eventually the solution will no longer meet the new demands placed on it. New needs will emerge. The customer will begin to seek a new solution.
The customer may want to check out a number of providers who can potentially meet its needs. The customer will give the business to the supplier who, in the customer’s mind, best meets the customer’s needs. In an ideal world the customer ends up valuing most highly those things that the you do best.
Negotiation, on the other hand, takes place when you engage in dialogue with your customer with the objective of reaching an agreement about the terms under which you will deliver the product or service. This means that both sides must want to do a deal and that both have the mandate to vary the terms. This latter point is crucial. If you can’t vary the terms, you can’t negotiate. At some point in the negotiation the two sides should be able to bargain with each other — trade one issue against another. In an ideal world, this satisfies both parties’ most important interests. Typical issues could include price, timescale, scope of the contract, service levels and payment terms.
Which brings us to why it is important to sell first and negotiate later. If it’s a low-cost decision, if there’s a trusting relationship with the seller, or there’s no competition, the customer may buy immediately. In other words, the customer trusts that the seller will provide a solution that best meets their organisation’s needs.
It is just possible that the same may apply when the customer is making a major decision. The seller has built enough value for the solution that the customer enters into a contract without negotiating. However, in most cases, the customer will have concerns about the implementation of the solution or may be constrained by company policy and will, therefore, want to negotiate.
During negotiation you should be able to trade issues against each other. For example, if the customer wants implementation in a shorter time scale, as seller you would like to get a higher price – after all, it will cost you more to implement sooner. The more value that you have built for your solution, the more likely that customer will be prepared to pay for the shorter time scale. In other words, in order to negotiate effectively, you need to have built value for all aspects of your solution.
On the other hand, one of the worst things that you can do is give things away when you should be building value. Inexperienced sellers frequently make the mistake of, for example, giving discounts when they should be selling so that, when they come to negotiate, there is nothing left to negotiate with, except margin.
That’s why Huthwaite advice is: “Sell first and negotiate later…if you have too!”
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