Last week, I wrote about the difference between sales and marketing. The point of the article was to take these two ideas that often get mixed together, and draw a clear line where one activity stops and the other starts.
These kinds of definitions are important for the same reason that a sales process is important: If you want to be effective, then it is helpful to have a clear idea of where you are in any given situation, to know where you should be going and to know how to best get there. Taking the time to get your bearings and doing so within well defined frameworks will make these endeavors more efficient and effective.
One other set of words that often gets mixed together is sales and negotiation. Let’s take a look at these two activities, shed some light on the differences between them, and look at when and how to consider each one. Let’s start with some definitions:
Definition of Sales: I think of sales as an endeavor of persuasive communication, executed one-on-one or in a relatively small group
Sales Key Concept: Generally speaking, salespeople are successful when they successfully seek to understand the compelling reasons for which a prospect will take action toward buying the product or service offered by the salesperson
Definition of Negotiation: I think of negotiation as a conversation between two or more parties about the details of working together. It takes place after a general agreement about all of the sides wanting to work together. Negotiations can derail that idea, but this is where the details of working together are fleshed out and agreed to (or not)
Negotiation Key Factor: A negotiation is likely to be successful for a given party in the negotiation if the interests of their side are well understood and the walk-away point (BATNA) is both clearly defined and adhered to
In the sales process as defined in my book Mastering Your Sales Process, Negotiation is half of step 6 out of 7 (“Objections and Negotiations” is the single step before the last step of “Securing the Deal”). This placement in the process is critical to a proper understanding of what negotiation really is, and when it is appropriate. It is also indicative of where most people fail with negotiation.
If we look back at the definition of negotiation, there is an implication that negotiation happens when two parties have already decided to work together in general principle. The negotiation is about working out the details. Deals can certainly fall apart in negotiations, and the details are important, often hugely significant. What is important to remember is that the negotiations can’t start until a basic agreement to work together has been established.
Let’s look at an example of how NOT recognizing the proper place of a negotiation within the context of a sales process can derail the negotiation and the sales process itself. See if this sounds familiar:
You walk into the office of a prospect to initiate a complex sales discussion. You have never met this prospect before, or anyone from their company. As you sit down and begin your work of getting to know the prospect, their needs and their ability to buy, the client interrupts you and says:
“Listen, let’s just save some time here – how much does it cost.”
Now price is a certainly component of negotiation, but it is based on value. In this example, there has been no opportunity to establish value. Value is a function of needs. There has been no chance to establish needs. So what can you do?
If you offer a price at this time, you are attempting to negotiate before both sides have a chance to decide that there is an interest in working together, and you are likely to lose. To be successful in sales, negotiation skills are important. However, of equal or perhaps even greater importance is knowing when to negotiate, or even if you should negotiate.
You will improve your likelihood of success if you can help the customer understand that you offer different solutions for different problems, and each solution has a different pricing model. Based on this, what makes sense, then, is to understand the needs of the client (part of selling) before getting into negotiations about price (part of negotiation).
For a simple example, imagine waling into an auto repair shop and saying “my car won’t start, how much will it cost to fix it?”. The ONLY possible answer is some variation on the theme that the price can’t be determined until there is more information about the nature of the problem and the solution required to fix it.
It is much easier to get to your destination if you know where you are, know where the destination is, and know the steps to get there.
So to be successful in your sales negotiations, map your sales process, know where negotiation fits, and don’t go there too early. If you have not established value by uncovering needs, and you have not set your own limits about what makes sense for you as a walk-away point, then you’ll be hard pressed to get to a good solution, and to a successful conclusion of your negotiation.
Authors note (AKA shameless plugs)
So, this 7-step sales process and associated topics…. Yup, I write about that a lot. I’ve been working with it since I developed it about 25 years ago – in my own diverse work experiences, with my teams when I had them, and with clients ever since.
If you would like to develop you own personalized and customized, highly effective and efficient B2B selling system, here are some further steps you can take:
The Salesman’s Guide to Dating is a free or very cheap (depending on Amazon) Kindle book that walks you through the sales process using the familiar analogy of dating. It’s a good, fun and quick way to get your mind around the whole process and how the pieces fit together.
Building Your Sales Process (BYSP) is a free and very thorough exploration of the same 7-step process that will walk you through the development of your own customized, personal B2B selling system. When you are done, you will know exactly what to do to get new business.
The Momentum Selling System® is an inexpensive but very robust online sales training course that is similar to BYSP, but goes deeper into the concepts behind each of the steps, and also helps you develop a plan not only for the 7-step process but also addresses mindset, repeat business and client base management.
If none of that sounds right, I do personal coaching and offer a free 30-minute intake session so that we can both learn if it makes sense to work together 1-on-1. If this sounds interesting, click over to the coaching page on this site and sign up for the free session.
Here’s to your success!