Small Business Customer, Negotiations: Don’t Leave Money on the Table
As a small business owner, chances are that you negotiate more often than you’re aware. For example, you negotiate terms with employees, vendors, suppliers, even the bank.
When negotiating with customers, confidence in your negotiating skills will help you strike effective deals. The time and energy it takes to improve your negotiation skills are well spent, because of the enormous payoff. Effective negotiation skills will help you reach outcomes that might otherwise slip through your fingers. You bring your A-game to the bargaining table, thereby maximizing the value of the agreements you reach. As the saying goes, you don’t leave money on the table. You confidently flex your negotiating muscle to close a sale with a customer.
Small Business Negotiations to Close a Sale
To conduct a good negotiation to close a sale, you need three things:
- A thorough understanding of the deal
- Effective persuasion
- People skills
Set Boundaries in Negotiations
First, let’s look at No. 1. When entering negotiations, it’s important to have clear goals in mind. So, show up to the negotiating table with a well-developed idea of what you want to achieve. Define the best outcome: price, length of the contract, list of services, etc. If all of the stars align just right, what will the deal look like?
Conversely, define the least acceptable outcome. At what point do you walk away from the deal? In between the best and worst outcomes are your alternatives. Therefore, walk into a deal with a firm Plan B, or even Plan C or D - whatever it takes to reach an acceptable outcome. The better prepared you are, the stronger your position in a negotiation. Know your boundaries from the outset.
Create Value for the Customer
Second, effective persuasion involves a number of factors. The most powerful form of persuasion is to create value for the customer. By putting yourself in your customers’ shoes, you can look at their position from their vantage point. What are they looking for in the deal? What pain points do they want to be addressed? Essentially, empathy goes a long way in reaching a deal and creating a long-lasting relationship.
Oftentimes, it helps to read between the lines. Try to pick up on what the other party is implying, not just saying. Watch for mannerisms, and read their emotions. Create an environment of trust at the bargaining table, which helps to build positive emotions and results in a mutually beneficial agreement. If necessary, calm any nervousness or anxiety and try channeling these into excitement.
Honestly Represent Your Product & Services
Third, incorporate people skills to achieve your negotiating goals. The first people skill to cultivate is honesty. Overselling a product or service might help close a deal, but overselling leaves the customer dissatisfied and opens the door to negative feedback. Alternatively, honest representation helps a customer understand what to expect. Honesty fosters trust, not just for the current negotiation. Trust contributes to long-term customer loyalty because a customer respects you and your brand.
A second people skill to cultivate is effective communication. Negotiations naturally require give-and-take, as the two sides work towards an agreement. Because of this, it’s important to clearly speak your thoughts and listen to the other person. Ask questions that help you understand what motivates the other party. Actively listen, without interruptions, and restate key points to make sure you understand what they’re trying to convey.
Reach Mutually Beneficial Solutions
Lastly, focus on win-win negotiations to reach solutions that benefit both parties. Instead of focusing on who gets the bigger “slice of the pie,” shift your approach. Don’t grow your own slice at the expense of another. Grow the whole pie! As a result, each party gains value and leaves the negotiation table satisfied. The negotiation results in a sense of rapport and trust, laying a solid foundation for the future. For more information about small business negotiations, read the Negotiation Preparation Strategies from Harvard Law School.
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