MGT4212 Sales Negotiation Week 2

Planning a Sales Negotiation

• There are 8 key steps to an ideal negotiation process: preparation planning, relationship building, stating goals and objectives, starting the negotiation, understanding the compromise or disagreement, reaching an agreement or deadlock, confirming the sales agreement and its terms, and commitment and follow-up.

Preparation

• Always be prepared for a negotiation and base expectations on solid information.
• Research as much as possible before the negotiation to understand what information the counterpart will bring and prepare for possible outcomes.
• Set up an agenda of the topics to be discussed and prepare information and desired outcome in writing (goals, terms, and timing).
• Identify the Zone of Possible Agreement (ZOPA) and alternative positions (A and B).

Sales Goals and Objectives

• Set SMART goals: specific, measurable, achievable, realistic, and time-bound.
• Prioritize goals and objectives, understanding their importance and value.
• Keep strategy flexible, knowing and preparing options (BATNA) before the negotiation.

BATNA (Best Alternative to a Negotiated Agreement)

• BATNA is the alternative to a negotiated agreement if a deal is not reached.
• It is the option that will be chosen if no agreement is reached – your Plan B.
• Consider alternatives in the negotiation process to understand what to do if no agreement is reached.

Bargaining Mix

• The bargaining mix is the combined list of issues from each party.
• Be sure about the objectives and bargaining mix to gain confidence and an advantage in the negotiation process.

Preparation Questionnaire

• Use a preparation questionnaire to assess BATNA and prepare for the negotiation.

Collaborative Negotiations

• In collaborative negotiations, parties work together to achieve a mutually beneficial solution
• Focus is on building trust, sharing information, exploring options, and creating value
• Key aspects:
  • Analyze the customer/vendor in advance
  • Prepare by having a BATNA (Best Alternative To a Negotiated Agreement)
  • Probe in the negotiation to understand what is crucial to close the deal
  • Address requirements and objections to get a fair proposal/sales deal for both parties

Understanding the Other Party

• Two key aspects to understand in negotiation:
  • Positions: demands, offers, and other statements made by negotiators
  • Interests: underlying needs, objectives, fears, and ambitions

Active Listening

• Active listening helps understand positions and interests
• Techniques:
  • Repeating information to show understanding and encourage further communication
  • Restating or rephrasing information to ensure comprehension
  • Clarifying information to ensure clear understanding
• Tips:
  • Ask short, non-judgmental, and non-leading open-ended questions
  • Avoid distractions and exhibit careful listening body language

Written Communication

• Sales negotiations in writing should:
  • Use simple terms
  • Clearly describe and title information
  • Be aware of tone and manner, as it sounds different in writing
  • Consider text limitations for some formats
• Elements to include:
  • Offers and counteroffers to convey details and motives
  • Information about alternatives to confer an advantage

Email Communication

• Key aspects:
  • Use proper capitalization and punctuation
  • Avoid using emojis
  • Avoid sending long emails or large attachments
  • Respond quickly to important emails
  • Use effective email openings and subject lines
  • Right tone: immediacy is different from intimacy
  • Avoid using emails and texts to deliver bad news or resolve critical issues
• Example of an effective email:
  • Clear and concise on the request and preferences
  • Includes information about alternatives and BATNA
• Guidelines for effective negotiation emails:
  • See document: Guidelines for Effective Negotiation Emails

Non-Verbal Communication

• Nonverbal messages can be read based on the customer's:
  • Body angle
  • Facial expressions
  • Arm movements
  • Hand gestures
  • Placement of the legs
  • Body language patterns
• Interpreting body language:
  • Body angle and movements can indicate positive outlook, insecurity, or boredom
  • Facial expressions can indicate interest, expectation, concern, or disapproval