As Sales professionals, we notoriously overestimate our ability to 'wing it'. While being good on our feet may allow us to leave a sales pitch or negotiation still standing, it will not allow us to maximize the value of the deal.
In studies of over 25,000 negotiators, the MarketWatch Centre for Negotiation found that negotiators typically leave up to 42% of the combined potential value of the deal on the table. This is the result of negotiating from the 'gut' and allowing emotions, instead of strategy, to drive demands.
Here are a few suggestions to improve your 'luck' optimizing the value of your next customer interaction:
1 - Preparation vs. Perspiration
60% of the outcome of a negotiation is determined not at the emotionally-charged negotiation table, but rather by the amount of advance preparation. Mapping out your needs and moves is not very time-consuming but, done well, understanding your customer's needs requires a significant time investment.
Fortunately, the ROI on this time is high. Information is power, so shift the power balance toward yourself through a robust discovery process from your customer's perspective. Use the 7Cs to get inside their head:
The better you understand what your customer needs, as an individual or on behalf of their company, the more high value trades you will be able to make with them to get what you need from the deal.
2 - Dress Rehearsal vs. Improv
Internal roleplaying of anticipated selling and negotiating scenarios, or more appropriately, 'realplaying' of them (participants briefed with customer context, buyer needs, buyer personality, etc.) with peers and managers is important muscle-building for sales professionals. The feeling of 'I have been here/done this before' can help minimize revealing body language when confronted with an objection or negotiation tactic, as well as get the right response to the tip of your tongue.
While realplaying with colleagues can feel embarrassing, mangling an opening statement, offer or tactic in front of a customer can be even more so (as well as more costly). Be sure to practice a variety of skills and situations including an interrupted opening statement, a customer objection, a customer tactic (e.g. good cop/bad cop, time pressure, silence, etc.) and closing.
3 - What Is vs. What Could Be
The negotiation room is a stressful place, and stress can block your best thinking. Preparing in advance, when you are in a positive frame of mind, enables 31% better thought processing. This fosters big picture solution-building vs. offer/counter-offer, argument/rebuttal. This can unlock mutually beneficial alternatives that neither side might be able to see when face to face with emotions, tactics and time pressure in play. Generate as long a list of high value trades/proposals in advance as possible so that you never run out of options and risk deadlock. The end of the list is the end of value creation!
As former FBI Hostage Negotiator, Chris Voss, shares in his presentations to business professionals 'You only fall to the highest level of preparation'. Understanding your customer deeply can help you demonstrate empathy that allows for greater value creation... so plan to get lucky!