Lecture 3: Sales Negotiation

1.1 Sales Negotiation

1.2 Introduction

Objectives
After completing this lecture, participants will be able to:

· Determine the recommended structure and key aspects of a sales meeting;

· Grasp the nature of negotiating strategies, styles and tactics; and
· Develop a negotiating plan.
1.3 The Structure and Key Aspects of a Sales Meeting

The Structure and Key Aspects of a Sales Meeting

1.4 Answer the question

Correct Choice

X TRUE

FALSE
Feedback

This is true. Most of the time, a sales meeting doesn’t last long enough to cover all of its planned topics,
especially if it is the first time both parties are meeting. From a seller’s perspective, it is important to leave
enough time to let the potential buyer explain what their needs and problems are. Similarly, both parties need
to make sure that they have enough time to agree on the next steps after the sales meeting.

1.5 The stages of a sales meeting

The stages of a sales meeting

As briefly explained in lecture 2, sales meetings can be divided into 5 stages. Although these are not set in
stone, they do provide the structure for a meeting and can help the parties to ensure that all of the relevant
topics are covered within the available time. These stages are:
1. Introduction
 2. Sales pitch
3. Feedback
4. Conclusion
5. Follow-up actions

Let’s imagine that you are a seller participating in a trade fair. Here is an example outline for a 30-minute sales
meeting with a new potential customer:

1. Introduction (approx. 2 min.)

• Generally, start by shaking hands (firmly but not too hard) and introducing yourself and your
colleagues
• Make sure to exchange business cards!
• In most countries, so-called “small talk” can help you become more familiar with a potential customer.
It might be a good idea to open the meeting with an innocuous discussion about something topical or
interesting, such as the weather or sports. Building trust starts from the first second of a sales meeting!
• Studies have shown that both parties at a sales meeting form an opinion about each other in the first
15 seconds; they either almost immediately like or dislike each other. Changing such a first impression
later is very difficult. As such, the first 15 seconds are crucial. You don’t get a second chance to make a
first impression!
• Assumptions and stereotypes matter. For example:
• People who wear glasses are considered to be more intelligent by an average of 10 IQ-points.
• Being well-dressed and looking professional is important.
• Poor language or communication skills suggest that somebody is “not worldly.”

2. Sales pitch (approx. 4 min.)

• Start by briefly introducing your company.
• Use the Rule-of-Three Template to present the three most important points you would like to
make about your company’s product or service.
• Make sure that you remember your audience. Try to tell your potential customer how your
company can help solve their challenges and met their needs.

3. Feedback (approx. 12 min.)

• Here, mention the time constraints of the sales meeting (in this case, 30 minutes), and explain that you
would like to better understand the most critical needs and challenges faced by the potential customer.
Also, ask if there is anything else that the potential customer would like to know about your company.
• You can also move towards asking questions yourself. However, you should be careful to focus on
issues that help you better understand the needs and challenges faced by your potential customer. Ideally,
choose questions that will lead the potential customer to talk about your company’s offer.

4. Conclusion (approx. 8 min.)

Outline a response based on what you have learned so far. Focus on your key offering, based on the needs
and problems identified. Think about how you intend to make the potential customer interested in your
company (or even how to get them to make a purchasing decision, in case they have shown a clear interest).
Some hints to consider when it comes to a sales meeting’s conclusion include:
a. Focus on a single, most salient need or challenge that your company could help solve.
b. Focus on the possible benefits of working with your company.
c. Mention any valid references that your company has.
d. Watch for any changes in the level of interest and attention of the potential customer. Be
prepared to change your approach if needed!
e. Ask whether or not the potential customer is interested in the benefits that you have outlined;
confirm whether or not you have correctly linked their needs and your company’s benefits. Check
for any unmet need!

5. Follow-up actions (approx. 4 min.)

Before the meeting ends, try to agree on any follow-up actions that you and the potential customer
might want to take. If you both agree, for example, this might be a good time to set the content, time
and place for the next meeting. Alternatively, you could ask the potential customer’s permission to
send a detailed quote or technical details by e-mail.
a. Making sure that you have the exact, accurate information is crucial for the follow-up - what
exactly are the next steps? When should the potential customer expect to hear from you again?
b. Take notes immediately after the meeting has concluded. The importance of notes can be easy
to overlook - especially if you are very busy - but it is crucial! If you do not take notes, it will be very
easy for you to forget something crucial later on.

1.6 Common mistakes to avoid in sales meetings

Common mistakes to avoid in sales meetings

A sales meeting will not always go according to plan, even with proper planning and a pre-determined
structure. Below is a list of common mistakes that any seller should make sure to avoid in a sales meeting:

• Sellers tend to talk too much about their company and product/service offering. Most salespeople are
passionate about their own sales speech, and so want to make sure that all of the facts and features are
explained in detail. This can often be a mistake, since the potential customer might not actually be hearing
anything that they are looking for, but only a string of irrelevant facts about the seller’s company and
products.
• Other related mistakes can include:
• Hurrying to mention too many topics and speaking too fast.
• Approaching the potential customer too strongly, often with only one aspect in mind: to
sell quickly. Such an attitude can cause a seller to run into deadlocks and lose opportunities.
• Lack of preparation often leads to situations where sellers under- or overestimate themselves,
not realizing their own advantages or disadvantages. This is not a good starting point to find common ground
with a potential customer.

• One of the most typical mistakes made by sellers is not closing a sales meeting properly.
Simply promising to keep in touch and send an e-mail at some later date without any clear, further agreement
is not enough!

1.7 Answer the question

Correct Choice

Presenting the

seller’s company

X Asking the potential buyer questions to better understand their needs and
challenges
Feedback

It is of crucial importance for sellers to have a good understanding of what they can and should offer to their
customers. Especially when it comes to the first sales meeting, it is important for sellers to avoid speaking too
much about themselves and their companies. The potential buyer should remain the focus!

1.8 Negotiating Strategies, Styles and Tactics

Negotiating Strategies, Styles and Tactics

1.9 Answer the question

Correct Choice

X TRUE

FALSE

Feedback

This is true. There are several possible strategies, styles, and tactics which can be used to good effect in a
negotiation. Having a good understanding of the negotiating frameworks and components which can be
deployed in sales can be of significant help to sellers in achieving their goals and targets if they plan their use
well and implement them in the correct situation.
1.10 Two examples of negotiating strategies

Two examples of negotiating strategies

Both parties to a sales meeting can choose to deploy different negotiation approaches, or strategies, to meet
their goals. A negotiating strategy refers to a broad approach taken by a party to arrive at a successful
outcome at the end of what may be a more-or-less lengthy negotiating process. The correct strategy to use
depends on a variety of factors, including the particular meeting’s situation. Two of the most widely used
negotiating strategies are:

Principled negotiation: Principled negotiation a concept that is based on the book Getting to Yes
<http://books.google.com/books?id=sjH3emOkC1MC&dq=getting+to+yes&pg=PP1&ots=3jJ4G5Du3d&si
g=hbhXpYdKAs3Y3SHeg6AxHgfuyUg&hl=en&prev=http://www.google.com/search%3Fq%3Dgetting%2Bto
%2Byes%26ie%3Dutf-8%26oe%3Dutf-8%26rls%3Dorg.mozilla:en-US:official%26client%3Dfirefox-
a&sa=X&oi=print&ct=title&cad=one-book-with-thumbnail> by Roger Fisher and Bill Ury. This approach to
negotiation focuses on the fact that both parties to a sales meeting generally want to find a mutually
acceptable outcome; a so-called “win-win” situation, in which both parties achieve their desired outcomes,
but neither sacrifices anything to do so. Such an ideal situation can be difficult to achieve in business
negotiations. However, the concept of principled negotiation represents a very different approach from the
stereotypical view of a tough negotiation in which one party will inevitably lose, while the other wins.
For more information about principled negotiation, click here: <http://negotiation.atwork-
network.com/2008/06/16/what-is-principled-negotiation>

Positional bargaining: Positional bargaining is a negotiating strategy that involves a party holding on to a fixed
idea, or position, that is at the centre of what they want and arguing for it and it alone. The classic example of
positional bargaining is the haggling that takes place between a seller and a buyer over the price of an item.
The buyer has a maximum amount that they will pay, while the seller will only sell something above a certain
minimum amount. Each side starts with an extreme position, which in this case is a monetary value, and
proceeds from there to negotiate and make concessions. In such a situation, the typical outcome will tend to
favour one party, while forcing the other party to make a certain amount of concessions. Unlike principled
negotiation, then, positional bargaining will tend to result in “win-lose” situations, or even in “lose-lose”
situations, where both parties walk away from the negotiation unsatisfied.
For more information about positional bargaining, click here: https://medium.com/swarm-nyc/the-art-of-
negotiation-positional-vs-interest-based-bargaining-c1931ce9ab4b#.49051nkr4 <https://medium.com/swarm-
nyc/the-art-of-negotiation-positional-vs-interest-based-bargaining-
c1931ce9ab4b>)<http://beyondintractability.org/essay/positional-bargaining>

graphic (Slide Layer)

1.11 Negotiating styles

Negotiating styles

Negotiating strategies can be accompanied by a number negotiating styles which can be helpful if used
correctly. These styles should be used in conjunction with an overall strategy, and can help influence the
outcome in constructive ways depending on the long or short-term objectives of a party. Below are five
examples of different negotiating styles:

Competitive
• The competitive style can be appropriate in a situation where one of the parties prefers obtaining their
chosen outcome rather than preserving the relationship with the other party over the longer term. Use this if
you think you confident that your position is correct and want to push it through to the other party.

Collaborative
• The collaborative style can be appropriate when the parties aim to ensure that they both walk away
from the negotiations feeling satisfied. Use this in conjunction with a principled negotiation strategy to try and
achieve a win-win situation.

Compromising
• The compromising style can be appropriate when the parties place equal importance on preserving
their long-term relationship and on the immediate negotiations. Use this if you have a few non-negotiable
terms that you wish to achieve, but are still ready to show some flexibility in the discussions.

Avoiding
• The avoiding style can be appropriate if time is short, and the parties simply want to reach an
agreement quickly. Use this if you need to finish the negotiations under difficult time constraints. Note,
however, that the avoiding style can lead to unsatisfactory, win-lose negotiation outcomes.

Accommodating
• The accommodating style can be appropriate if the parties more importance on preserving their long-
term relationship than on the immediate negotiations. Use this if you are trying to build a long-term
relationship with a customer. Note, however, that the accommodating style can mean that it will be difficult to
achieve some of your core negotiating aims in the short term.
1.12 Is it a good idea to negotiate?

Negotiating tactics

Unlike negotiating strategies, which deal with the broad approach taken by a party throughout a more-or-less
lengthy negotiating process, and negotiating styles, which refer to the way in which these strategies are
pursued, negotiating tactics are short-term tools which are used to achieve progress towards desirable goals
and objectives in a single meeting.

For example, a seller could try to use a negotiating tactic to close a deal, or a buyer could use a negotiating
tactic to bargain for a lower price. The table below shows examples of common negotiating tactics.
Is that your best offer? Halfway

Pushing for the best offer by implying that the Proposing a middle ground between the proposals of two
offer suggested is unsatisfactory. parties.

YIKES! You’ve got to be kidding! Empty pockets

Expressing shocked disbelief to encourage the Pretending that a certain proposal is unaffordable, that it is
other party to make a better offer. absolutely materially impossible to meet it, in order to
extract concessions

Expert opinion Sticking to your guns

Citing the opinion of an authority (such as a Holding firm on an issue and refusing to budge on it.
lawyer, economist, etc.) to gain leverage.

Russian front Leaking

Providing the other party with the choice Letting the other party find out “secret” information in
between two alternatives, one of which is more order to establish a relationship of trust and confidentiality.
intimidating than the other.

Small concessions No/higher authority

Sticking to only making minor concessions in the Arguing that it is necessary to contact a supervisor or
opening rounds of a negotiation. another higher authority before accepting an offer.

Full disclosure Non-negotiable/non-discussable

Promoting trust by informing the other party of Presenting certain points as bedrock principles of the deal
both the positive and negative aspects of a that cannot be negotiated or discussed.
proposal.

Quivering quill Shark

Asking for concessions at the last moment, just Intimidating the other party by showing that they are only
before signing the deal. a “small fish,” which could easily be eaten.
1.13 Is it a good idea to negotiate?

Is it a good idea to negotiate?

During an initial sales meeting, the seller meets the potential buyer with the objective of identifying and
confirming their needs and challenges. Usually, this is followed by an offer or a solution that fits these needs
and is mutually agreeable to both parties - a sale.

Negotiations start when the potential buyer shows interest in the seller’s proposed solution, but is only willing
to conclude the sale provided that the parties can agree on certain conditions.

Sales negotiations are successful when both parties have agreed on these conditions and make a deal.

Ideally, the seller shouldn’t want to negotiate. In fact, from the seller’s perspective, the best kind of outcome is
one in which the potential buyer accepts the seller’s conditions immediately, without entering into
negotiations. As such, while sellers should not refuse negotiations with potential buyers outright, it is not in
their interest to initiate such negotiations! Rather, they should wait for interested buyers to make an offer, and
reply accordingly.
1.14 The Zone of Possible Agreement

The Zone of Possible Agreement

In negotiation, the “Zone of Possible Agreement” (ZOPA), also called "bargaining range," describes the zone
between two parties in which an agreement can be concluded. Within this zone, an agreement is possible.
Outside this zone, however, no amount of negotiation will result in an agreement.
For a seller, understanding the ZOPA is critical for a successful negotiation. However, to determine whether
there is even a ZOPA with which to work in the first place, both parties must explore each other’s interests and
values during the initial sales meeting. This should be done early in the negotiating process, as it is crucial to
allow the parties to modify their negotiating techniques later on, should the need arise.
Often, a negotiation includes several aspects, such as price, delivery time, or shipment conditions, all of which
must be covered under the ZOPA. The parties to a sales meeting need to identify the attributes that are most
important for them in order to determine where it is wise for them to make concessions, and where it is not.

Example of the uses of ZOPA:

• Let us say that somebody is willing to lend money at a certain interest rate over a certain period of time,
and that somebody else would like to borrow money at a certain interest rate over a certain period of time.
The ZOPA of both parties is defined as the area between the maximum and minimum interest rate and
period of time on which they can agree.
1.15 The negotiating habits of different cultures

The negotiating habits of different cultures

National culture is one of the many factors which influence negotiating habits. In fact, although this is
sometimes overlooked, somebody’s culture often significantly influences that person’s negotiating patterns in
terms of communication, attitudes, styles, and relationship-building. Unfortunately, there is no quick method
to decode the way in which this works in practice: the only way to become familiar with different cultural
negotiating habits is through experience, or through in-depth research before a sales meeting.

Examples of areas where cultural differences may cause misunderstandings include:

The importance of personal trust
The importance of status and background
The role of the individual versus that of the group
The attitude towards age, race and gender
The attitude towards familiarity/formality in business
The importance of hospitality and entertainment
The attitude towards time and punctuality
Accepted physical distance and physical contact
The attitude towards explicit versus indirect messages
The ability to deal with/accept conflict and confrontation
Attitude towards silence in a discussion
The role of bargaining in business
• The importance of tradition/continuity versus innovation/change
• The attitude towards long-term commitment versus short-term gains
• The importance of written agreements
Case example: Argentina:

“Nick Mills worked hard to become the top sales representative of the IT-company for which he works. When
his company received an invitation from an Argentinian firm give them a marketing presentation as a first step
towards a potential long-term business relationship, Nick was chosen to go to Buenos Aires. He had originally
set up an appointment to make his presentation on the afternoon of his arrival in the city. However, after
touching down at the airport, he was met by a representative from the host firm who told him that the sales
meeting and presentation would be postponed for two days in order to give Nick a chance to rest and see the
sites along with his Argentinian hosts. However, Nick insisted he was fit and ready for the presentation, and
pressed to have it held that afternoon. Eventually, it was rescheduled for its original time slot. However, Nick
noticed that none of the executives present at the meeting seemed interested. When he had finished his
presentation, the company’s Vice President suggested that they all meet again in two days.

Why did Nick get this reaction?

Answer: The Argentinian counterparts’ initial offer to delay the presentation for two days was their way of
scheduling some “informal” time to get to know Nick. As a virtual “stranger” none of the executives felt the
desire to engage with him during his presentation immediately upon arrival to the country.

1.16 Answer the question

Correct Choice

X Stand firm. They are merely trying to test your resolve and gain some last-
minute concessions.

Ask for time to speak to your superiors.

Agree. The Chinese would not push you in this way unless they have a
 good reason; they might be afraid to “lose face.”

Feedback

Though “losing face” is indeed an aspect of Chinese culture which can play a role in business negotiations, it
does not really apply in this case. Most likely, the negotiating team is simply using the “quivering quill”
negotiating tactic in an effort to extract some last-minute concessions from you.

1.17 Answer the question

Correct Choice

Keep politely insisting you are unable to yield any ground on this point.
 The Russian team will eventually understand.

X Make a fuss and theatrically leave the negotiating room with your team.
This will make it very clear to the Russian team that further insistence on
concessions for this particular point would be unproductive

Make a slight concession. It should be enough to satisfy the Russian team,

which would then accept to move on.

Feedback

Generally speaking, Russian people have a tendency to appreciate direct and sometimes “harsh” forms of
negotiation - they are known as tough negotiators. Although this is not a tactic that should be used in all
circumstances, making a fuss and theatrically walking out of the room is a good way to indicate to the other
negotiating team that further pressure on a particular point will not yield good results.
1.18 Answer the question

Correct Choice

arrived late on purpose to show that he has the negotiating power in this
negotiation.

X simply arrived late, as punctuality tends to be taken lightly in Mexico.

has arrived late to let you enjoy your surroundings before discussing busin

Feedback:

The importance of punctuality is not particularly stressed in Mexico, as in much of Latin America. Often,
people from cultures which do not value punctuality particularly highly will arrive late through no more sinister
motive than the simple fact that they are late! In such cases, patience and forward-looking attitude are key to
successful negotiations.
1.19 Answer the question

Correct Choice

There is no real difference. Negotiating strategy and tactics are just two ways of referring to the same
broad concept of negotiation.

Negotiating strategy is a concept that is related to specific cultures, whereas negotiating tactics are
not.

X A negotiating strategy refers to a broad approach taken by a party to arrive at a successful outcome
at the end of a negotiating process, whereas a negotiating tactic is a short-term tool which is used to
achieve progress towards desirable goals and objectives in a single meeting.
Feedback

A negotiating strategy is a longer-term, broader approach, whereas a negotiating tactic is an immediate,

smaller-scale approach.

1.20 Planning for Negotiation

Planning for Negotiation

1.21 Answer the question

Correct Choice

X TRUE

FALSE

Feedback

This is true. When a seller and a buyer enter into negotiations, the assumption is that they already know each
other. As such, they should have more information about each other before a negotiation session than before
a sales meeting. In some cases, it might even be possible for the parties to create a planning template to
guide them through the negotiation.
1.22 Planning a negotiation

Planning a negotiation

Conducting a successful business negotiation can take a lot of preparation. For a seller, the key is to
understand the core goals of their company, while also understanding the needs and challenges of the
potential buyer, as reflected earlier in this lecture.
However, another well-known concept of negotiation, and which is key in negotiation planning, is called
BATNA - the “Best Alternative to a Negotiated Agreement.” Coined by Roger Fisher and William Ury in their
1981 bestseller, Getting to Yes: Negotiating Without Giving In, BATNA refers to the most favourable option
that a party will still have if negotiations completely break down and no agreement is reached. A potential
BATNA could be, for example, making a similar deal with another buyer. Few negotiations ever take place in
which one side has no realistic alternative to reaching an agreement or a deal.
Example: Let us suppose that a couple needs to sell their house because of an attractive job offer in another
country. In fact, the couple already went ahead and purchased the house of their dreams in this other country.
They are now preparing to move.
However, let us now assume that the housing market in the couple’s previous city of residence suddenly
crashes. Any buyer worth their salt could now see that the couple would be desperate to sell their old home;
they cannot afford to continue paying mortgages, heating and insurance costs for two different houses for
very long. What’s more, a little research would reveal that the couple has not received any other offers on their
current house. Thus, a buyer arrives and makes the couple an offer that is substantially below the fair market
value. If they didn’t have any alternative - any BATNA - then the buyer would be able to purchase the couple’s
home for very cheap!

However, in this case, the couple did have a BATNA. Living very close to the local university, they decided to
rent out their house to students until the housing market improved.
1.27 Know your own presentation style

Know your own presentation style

If you want to be a successful seller, it is important that you know and understand your own negotiation and
presentation style before entering into a sales meeting. Only then will you be in a position to adjust your
behaviour in accordance with the needs of the sales situation.

Communication styles are usually characterized by 4 types of attitudes:

• Passive: This style is characterized by waiting, withdrawing, as well as a certain difficulty when it
comes to acting and taking responsibility. Being too passive risks giving the other party too much space in
negotiations.
• Aggressive: This style is characterized by the desire to win, no matter what. People with an aggressive
communication style have the tendency to attack first, often due to a fear of being duped. This style may
be considered as rude by some people, and can sometimes be counterproductive.
• Manipulative: This style is characterized by the desire to use others in order to gain benefits. People
with a manipulative communication style tend to use the weaknesses of other people to their own
advantage. While it can be very effective, a poorly-executed manipulative style can backfire spectacularly.
It is thus very risky.
• Assertive: This style is characterized by the deployment of tools to help a negotiator gain self-esteem -
to “become assertive.” An assertive communication style allows someone to express concerns, hopefully
without offending or shocking their critics. However, as a “middle of the road” style, while it doesn’t have
any major weaknesses, this communication style doesn’t have any major strengths either.
1.28 The key aspects of a sales meeting

Using a negotiation planning template

Below is an example of a negotiation planning template. The purpose of such a template is to help parties
attending a negotiation to prepare themselves in a thorough and structured manner.
A few of the template’s fields may require additional explanation:
1. Goals and objectives: What are your objectives, and what are the other party’s objectives?
2. BATNA: What is your BATNA, and what is the other party’s?
3. Strengths and weaknesses: These should include both known and suspected/potential strengths and
weaknesses. These should also include an evaluation of the other party’s position vs. your own position.
Is the other party more or less powerful than you, whether in terms of size, existing customers, products
and/or services?
4. Negotiable issues: These should include limits for all negotiable items, products and services: What
are the potential outcome scenarios, organized from best, to satisfactory and worst?
5. What is your primary negotiating strategy and why? Will you use a principled negotiating strategy, or
will you use positional bargaining?
6. What are your negotiating tactics?
- What are the possible concessions that you can make without sacrificing your objectives?
- How can you create additional value for the other party? What are the best options for you?

Comprehension question
Exercise:
Choose a product or service. If you work at a company, try to think of a product or service that your company
offers to its customers. If not, try to think of a product or service that you know from your local environment.
Imagine that you are going to meet a potential buyer for this product or service. You have already met before.
You know that this buyer, who works at a large multinational, is interested in the product or service. However,
so far, he has been reluctant to commit, claiming issues with the price that you would like to charge. Based on
this basic scenario, try to fill in the negotiation planning template. To do this, download the template here (add
link here), and upload it to the "Negotiation Planning Template Exercise" on the main course page.
1.29 Summary

Key Points
Remember:
· It is important to follow a planned structure in a sales meeting. It helps the parties to ensure that all of
the important topics are covered within the available time. A seller should focus on asking questions that
help them understand the needs and challenges of the buyer and outline an offering accordingly.
· There are several strategies, styles and tactics that can be used in a negotiation. If they are well-
planned and used in the right situation, they can significantly help sellers achieve their goals and targets.
Sellers should also be ready to adjust their negotiation style depending on the situation and on the culture
of their potential buyers.
· A negotiation planning template can help prepare for a negotiation session. It is a good tool to define
goals and objectives for the meeting, as well as to analyse the strengths and weaknesses of both parties.

1.30 Thank you for completing the lecture