Selling and negotiation: why knowing the difference can make all the difference
We may earn money or products from the companies mentioned in this post.
When should selling stop and negotiation begin? Anna Roesch from The Gap Partnership spells out the importance of understanding the fine line between the two.
Nearly every salesperson in the world will have pondered how best to answer the classic interview question – “Sell me this pen!”, so colourfully acted out by Leonardo DiCaprio in “The Wolf of Wall Street”. A quick internet search will reveal hundreds of smart suggestions for the perfect response, including from the real-life version of DiCaprio’s character in the film, Jordan Belfort.
Surprisingly though, there is little thought given to one of the easiest ways to sell the infamous pen: offer it at a much lower price than that at which it is usually sold. But would that sale be worth it? The issue is that the question lacks an important qualifier. Consider the difference in meaning if we add five words, so it changes from “Sell me this pen”, to “Sell me this pen at the highest possible price”. All of a sudden, it forces us to think in an entirely different way. The challenge becomes not just about selling, but also about negotiating.
Negotiation is a crucial skill for every salesperson, but it is a different skill of selling. I am frequently amazed at how people with years of commercial experience so often confuse the two. A conversation that I regularly have with potential clients starts with their request for negotiation training for their field salespeople. What can quickly transpire is that they are really asking for sales training. Cue twenty minutes of explanation from me about why that isn’t possible, as we specialize exclusively in negotiation – which of course we can absolutely offer once they are trained in sales.
Here is another common misconception. A friend of mine, who worked as a buyer and didn’t like his job much, told me once: “I’m going to quit and go sell some nice products so that I don’t have to negotiate anymore!”. I remember thinking – oh my dear, with this attitude your clients will eat you alive. The truth is many salespeople are scared of negotiating. Negotiation is uncomfortable, and they feel it puts them at risk of not making the sale. Since closing the deal is one of their biggest fears, they very often credit the other party with more power than it actually has, and prefer to secure an “okay” deal rather than risk losing it by trying to maximize it.
The funny thing is that on the other side of the table buyers also quite often go into “selling
mode” during negotiations. They sell their company, their brand, the future potential for business – all in the hope of getting a lower price. Because guess what, they also credit the other party with more power and are also afraid of not achieving their objectives.
So what is selling and what is negotiating? Both are part of the commercial process, and one comes after the other. First, the need has to be recognized or created. That’s the selling part. Once the other party is in-principle okay to work with you, you need to agree on the conditions under which the deal will be done. And that’s the negotiation part.
But how can you identify the moment at which selling stops, and negotiation begins? Imagine the process from the moment both parties start talking to the final deal as a road. The roadblock where you switch from selling to negotiating will not always be at the same point. If you have a product that is significantly superior to the competition, unique and your customers can’t – absolutely can’t – live without it, you barely need to negotiate and you can just impose your terms.
This is unfortunately not the case for most businesses. Take for example the job of an account manager in a consumer goods company. Negotiation is a much bigger part of it than selling. In principle, most retailers want to have their products on shelves, so the trick is to agree on conditions. But before thinking about negotiating, don’t forget that selling is a crucial first step. The better the selling is done, the easier the negotiation. That’s why those account managers first go to the buyers to present their business plans and category initiatives and only then send out price increases.
But beware a situation in which the only tools you have in your commercial skills toolbox are selling techniques. When people go back to selling during a negotiation, it demonstrates to the other party that they are not confident in their own position and subconsciously feels it needs an additional boost. Remember, if you’ve done everything right, the selling part is done by this point – the buyer is interested. Time to switch to negotiation techniques and behaviours.
Another problem with selling during a negotiation is that selling generally involves much more talking. When you talk, you give the other party information, and if you are not careful with what you say, they are going to use it against you. Another mistake many people make because they are too focused on making the deal rather than maximizing profit, is giving away too much too early.
Remember that selling and negotiation are two very different things. Watch out for the moment when you can switch from one to the other. If you are too consumed by your own fear of not closing a deal, you will miss buying signals from the other party. Listen actively, and once you spot those signals, start negotiating. Which means the time for trying to persuade the other party, for presenting arguments in your favour, for explaining the features of your product with enthusiasm, is over. You have done it already and the other party heard you. Now it’s time to get the best deal possible.
Negotiators say considerably fewer words than people who are selling. Negotiation is about listening to understand the other party’s needs and pressures. Once you get inside their head, you can properly analyse the balance of power and think about how to shift it in your favour. Then you can focus on making a plan of proposals that will allow you to use the power you have and leave the other party satisfied while maximizing value for yourself.
So what about that pen, the one immortalized in a Hollywood film and many a real-life job interview? Well, if it’s about maximizing the price and not just getting it off your hands, your negotiation skills will be just as critical to success as your selling technique.
Beware of the over-vigorous sell
A salesperson came to my parents’ house to demonstrate the features of a supposedly very efficient but also very expensive vacuum cleaner. He cleaned the entire house and talked endlessly about all the magical properties of the product. My father challenged the high price and the sales guy started explaining the same things even more vehemently. At which point, even my father, by no means a professional negotiator, became suspicious: why is he overdoing it? He clearly knows the price he is asking is way too high! My dad got the vacuum cleaner half price. He probably could have got it for a third of the original ask.
Beware of talking too much
Before being a negotiation consultant, I was an ingredients buyer for a major food company. One account manager was so keen on keeping the business he had with us that he could not stop talking about their company and products. I was already ready to buy from him as his conditions were better than the competition, but instead of asking me questions,
getting inside my head and realizing the power he had, he kept talking. In the waterfall of information that he drowned me in, he mentioned that they had just done some major upgrades in their factory. After some questions, I realized they made considerable gains in efficiency that lowered their production costs. The negotiation went very differently than it would have, had he been able to actually shut up and negotiate instead of selling.
Don’t give things away for free
A delegate on one of my workshops runs a small coaching and training business of her own. At the end of the program, she confided that she realized how much money she had been leaving on the table. For example, she would offer extra services for free to her clients, like customization of programs, additional people on the training, etc. She thought it would show the client how great her service level was. Which it probably did, but the problem is the client still wanted a discount afterwards and she had nothing to trade it against. Generosity in negotiation has only one effect: it engenders greed in the counterparty. If you give things for free, they will want more. And if you’re not able to give them more, they will perceive you as rigid and uncollaborative and be unwilling to move in your direction. So beware of giving too much away during the selling part of the process. My client now charges for some of those services and trades others in negotiation to give satisfaction to her customer.