The following article is by Jeff Thull, President and CEO of Prime Resource Group, and a thought-leader in the area of sales and marketing strategies for companies involved in complex sales.  

One of the enduring myths of sales negotiation is that there will be a back and forth struggle with your client in the final stage of the sale, or the “close.”  At its best, though, negotiation is open, honest and straight-forward communication based on mutual respect and trust.  When you recognize it in this form, it becomes clear that negotiation begins with the very first conversation and continues throughout the relationship.

We refer to it as the sales “diagnostic process.”  When you are using this process, there is no need for high-pressure, last minute bargaining; there are few, if any, objections, and there is no need for arm-wrestling at the end.  

This is difficult for many consultants and business professionals to grasp.  “What?  No objections?”  “No negotiating?”  “No closing?”  Please note that I’m not saying “no negotiating.”  I’m saying no eleventh-hour negotiating.  

In the diagnostic process, negotiation takes on a new definition: clear and precise communication and collaboration—a continual series of mutual agreements and understanding.  This collaborative approach eliminates the dependency on traditional closing and objection-handling skills.  

Let’s take a deeper look at this quality decision process.  The first element is the client’s recognition of some consequence due to the absence of the value your solution could provide.  Consider a feature of your solution that you believe has the most value and strongest competitive strength.  Ask yourself, “What would clients be experiencing without this feature?  What would they physically be able to see in their business that would show you and them that they are experiencing the absence of this value?”  

 

Think of yourself as a doctor.  You are looking for symptoms of the absence of business health in your “patient.”  Relative to negotiations, a symptom either exists or it doesn’t.  You and your client will reach agreement on that quickly, and if the symptoms exist, you move on to the next question, “What are the consequences of the symptoms?”  Or “How bad is it?”  

 

The next decision is to determine the financial impact of the problem.  It is important to bring your clients a process to guide them through measuring the financial impact of their problems, just as a doctor brings the capability of running tests to determine the extent of symptoms.  We refer to this as the “cost of the problem.”  Without a cost of the problem, there isn’t a problem.  In other words, if you can’t help your clients measure the financial impact of the problem your solution will address, they will be unable to measure the value of your solution, unlikely to buy your solution at all and very unlikely to want to pay the price you will ask.  

When the cost of the problem is agreed on, the next issue for the client is, “Is this bad enough to take action?”  When the client compares this problem and its costs to other problems or opportunities the client has to invest in, how does this one stack up on the priority scale?  

When these decisions are mutually agreed upon, we have “negotiated” away a high percentage of the objections we would traditionally hear and those that might lead to a “no sale.”  A large number of objections occur because the client receives a presentation or proposal before these decisions are made, a “pre-mature proposal.”  

Think about it—how many times have you given clients proposals before they decided they really had a problem?  They were only “interested” in your solution.  How many times have you given proposals to clients who said they had the kind of problem you solve, but they did not know how much that problem was costing them?  Finally, how often have you given a proposal to someone who had the problem, but had not decided that it was a top priority to address?  

When these decisions are made, the client has decided to take action.  And it’s now time to co-design a solution.  

There are four main sets of decisions to be made regarding the design of the solution.  “What results does the client expect after the effort and expense of addressing this problem?”  “What does the client want the situation to be after a solution is in place?”  “What is the best alternative or approach to achieve these expectations?”  “By how much will the solution reduce the financial impact of the problem?” and “How much money should the client invest to fulfill these expectations?”  Finally: “What do I need to measure and compare to ensure the solution will work?”  

These decisions are made in a particular order so that each one provides a foundation of information that supports the next and enables you and the client to make each decision with confidence.  Each decision creates a clarity that precludes random objections from popping up at the last minute.  

The key to successful negotiations is for all parties to be well informed and understand their respective mutual interests.  Then, you are working towards an equitable exchange of value and a continuing relationship.  When you reach agreement on each critical point of the exchange, as each emerges during the decision process, you have brought great clarity to the relationship.  The foundation of the diagnostic approach is that it is easier to reach clarity and agreement on many small points, than on a summary of all those points.  

If you pattern your sales approach after a quality decision process, rather than a sales process, you will be able to stay away from pre-mature proposals, and most likely you will not be a victim of those eleventh-hour negotiations.

 

The content from this newsletter is courtesy of Management Consulting News, a publication of MindShare Consulting LLC.   The editor is Michael McLaughlin, a principal with Deloitte Consulting LLP in San Francisco, and co-author of Guerrilla Marketing for Consultants.