Sales Staffs Face Particular Hurdles

Notes on Negotiation
Written by Marty Latz, Latz Negotiation Institute

“What is it about the sales environment that seems to put us at a disadvantage in our negotiations? Our sales folks almost always feel they have weak leverage, constantly ask for more authority, and end up giving discounts we don’t want. How can we reverse this while still closing more deals?”

These questions, posed by a mid-sized company owner, raise issues for every company with a sales force. Keep in mind that the negotiation process is virtually synonymous with the sales process and does not simply start when a customer requests a discount. It starts with the first contact with a potential customer. So what are these challenges and how can they be overcome?

1. Many sales folks are not disciplined process people

Picture the classic sales person: friendly, outgoing, instinctively good at rapport-building, articulate, persuasive, relationship-oriented to the point of avoiding harmful conflicts and able to rattle off the features of what they’re selling.

These are important. Yet notice the traits not typically associated with sales professionals – great questioners and listeners, naturally curious, process-oriented, and comfortable with conflict.

The challenge: Sales professionals – to become top sales negotiators – must augment their natural “classic” skills with these other skills. How? Learn and implement negotiation best practices through a systematic, disciplined strategic planning approach.

Developing strategic plans and putting them into practice helps ensure they bolster their natural strengths with proven strategies that include: writing down their goals; exploring their counterparts’ needs and interests through active listening and questioning; deciding on their first concession before making it; setting the agenda for their calls.

We largely know what works in negotiations. The challenge is to implement them and not just instinctively try to get the deal done.

2. Misaligned incentive structures

Many sales people derive the biggest portion of their compensation from commissions that kick in when they close a sale. This makes sense. It’s critical to incentivize them and align their interests with their company’s interests.

But here’s the challenge. With any significant commission, sales folks are motivated to get a deal at almost any cost. Since they usually get zero commission if they walk away – even if it makes strategic sense for the company as the deal might create bad precedent – the salesperson will push superhard and provide any discount within their authority to close the deal.

The solution? Reorient their incentives. Consider more incentives for deals with smaller discounts and/or higher margins and perhaps some financial protection when a salesperson appropriately recommends the company reject a deal. Especially incentivize the creation of strategic plans.

And two, actively manage the authority provided to your sales folks with the knowledge that they will likely give most of it away unless you reorient their compensation.

3. Sales folks often misbelieve they have weak leverage

Sales folks often feel they have weak leverage as they are constantly asked to concede and provide discounts. In fact, many sales professionals have strong leverage – and don’t need to concede much – if their competitors don’t match up well with them, if they have strong sales pipelines/many interested customers, and/or if they have limited products or services and can’t easily provide more.

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Marty Latz is the founder of Latz Negotiation Institute, a national negotiation training and consulting company, and ExpertNegotiator, a Web-based software company that helps managers and negotiators more effectively negotiate and implement best practices based on the experts’ proven research.  He is also the author of Gain the Edge! Negotiating to Get What You Want (St. Martin’s Press 2004). He can be reached at 480-951-3222 or Latz@ExpertNegotiator.com

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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