Are Lackluster Negotiation Skills Killing Your Bottom Line?

March 23, 2015 Russ Chadinha

Most sales organizations put salespeople through some form of training to set standards for how they approach the market. But if your reps aren’t well trained for negotiating as part of the sales process, this shortcoming is going to have a negative impact on your profitability.

In some ways, the preparation that leads up to the negotiation is as important to sales effectiveness as the conversation itself. Your salespeople may be trained to approach the sales conversation in a certain way, but the preparation sets the stage. That’s why it’s essential to go beyond product training and implement consistent negotiation training for reps, offering this program across the sales team. To provide ongoing support, make sure that your sales management team has the requisite coaching training in negotiation skills.

Preparation should start well before formal negotiations. When you take the time to understand the needs and concerns of your customers and prospects ahead of time, you’re able to be more proactive about overcoming potential objections. Make sure that your sales content and stance is aligned with customer concerns.

This preparation also includes setting appropriate expectations for the negotiation. It’s important for reps to go into sales conversations with realistic expectations.

Here are five signs that your team’s negotiation skills are having a negative impact on profitability:

1) Not hitting the sales plan, despite preparation: Your reps are doing their research and setting reasonable expectations, but still aren’t on target.

2) Hitting the sales plan in terms of revenue, but not profitability: This suggests that it’s too easy for customers and prospects to get concessions from your sales reps.

3) Low win rates: Too many deals are being lost in the sales conversation or don’t lead to a decision.

4) Win rates vary widely across your sales team.

5) High price concessions.

Make sure your reps always have a way out, so that they don’t feel compelled to say “yes” to a deal that’s going to result in an uphill battle within your organization. Reps need to have a way to bring unusual negotiation issues to the leadership of the company. Have a forum in place to review deals that fall outside of your typical business processes.

The key to improving negotiation is training salespeople to plan ahead for complications, as much as possible. If your company offers a pricing model that’s unique in your space, for example, it’s possible that the customer won’t be familiar with that pricing model. If this topic doesn’t come up until you’re negotiating the sale, it complicates the conversation and could slow or kill the opportunity.

The point is that your customer’s concerns about your pricing model should have been understood, addressed and overcome before beginning negotiations. Reps need step-by-step guidance for making these preparations, and a conceptual understanding of how this prep work plays out once they get to the actual negotiation.

Training on specific product lines is important for your sales effectiveness, but your reps need good negotiation processes and skills if they’re going to use that product knowledge to close profitable deals.

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