Everyone makes occasional negotiation mistakes. Recognizing any miscalculations and learning how to avoid them is the key to future success. With negotiations, ignorance is not bliss. You want to understand what you did wrong to avoid blunders.
To err is human; we are not machines that function robotically. Sometimes you might have an off day at the office. Mistakes happen, even at the negotiation table. However, recognizing the top sales negotiation mistakes and learning how to avoid them ensures future success. As the old proverb says, “fool me once, shame on you, fool me twice, shame on me.”
Every business negotiates on some level with customers, suppliers, and between departments, but not all negotiate successfully. Countless dollars are given away due to sales negotiation mistakes. The money lost chips away at your company’s bottom line and has the potential to turn your business upside down.
Negotiation is a skill that is learned and honed; it is not a mysterious gift. Top performers build profitable agreements and form strong business alliances due to negotiation training, experience, and knowledge. Paying attention to common mistakes and learning the steps needed to avoid them helps a negotiator manage the dynamics of any sales negotiation situation with confidence.
With a concrete understanding of the strategies needed, a negotiator avoids costly concessions and achieves desirable business results to create a mutually beneficial situation. By circumventing negotiation mistakes and using skills, you can build resilient relationships while improving profitability.
Sales professionals often find themselves caught in a catch 22. Suppose you sit down with a business cohort who regularly negotiates and ask them to share their negotiation tips. In that case, they will usually list everything they believe they do correctly when making a deal, and then they will throw in what they think others do wrong.
A confident attitude might seem to verge on arrogance, but the individual’s self-assurance is what makes them a skilled sales professional. However, the perspective can also blind them to their shortcomings and make it difficult to see the errors they make when negotiating. To avoid mistakes, you have to recognize them.
RED BEAR Negotiation researchers set out to examine the top sales negotiation mistakes by interviewing over 600 sales professionals.
We asked, “What negotiating mistakes do you see sales professionals make?”
Learning the Most Common Sales Negotiation Mistakes
In this article, we’ll outline 10 of the top sales negotiation mistakes so you can learn how to avoid them.
Mistake #1: Poor Concession Strategy
Concessions are a natural part of negotiations. Moving any negotiation forward requires making concessions. However, you’ll need a well-devised concession strategy. You do not want to stand firm and make demands without giving anything in return. Negotiators give concessions sparingly and use them to reach a favorable outcome. Remember, if you concede too much or too little, both parties will feel unsatisfied with the results.
You’ll want to avoid a poor concession strategy by undertaking the following steps:
Avoid Giving a Concession Away Unless There is No Other Choice
Never give away a concession unless you have no other choice. Remember, you do not owe the other party a favor. If you just give away concessions, you're hurting your business’s self-interest, and you will confuse the other party. If your offer is fair from the gate, then you do not need to concede.
Spur the Other Party to Concede First
Propel the other party to concede first. Do not be the first to forfeit. Instead, maintain the stronger position and spur the other party to concede first. However, if you have no other choice, you need to be prepared to concede to move the negotiations forward, but this should be a last resort.
Create Engagement and Emotional Investment Before Concession
If you have to concede, then make sure that you engage the other party, have them on your side, and then concede while inspiring an emotional investment in the situation.
Avoiding Conceding Too Quickly
Avoid being hasty when conceding. Or it will seem like you are not giving away anything of value to the other party. This can negatively impact the other party. If you take things slow and let the other party know you're reluctant to make the concession, they will feel like they have won, which you can use to your advantage.
Give a Concession/Get a Concession
Every time you give a concession, get a concession in return. If you are at a deadlock and want to make a concession, make sure you receive it in return. If you fail to let the other party know you want something in return, then you appear as if you are willing to give away something valuable for nothing. You will appear to lack confidence. This can negatively impact the negotiation process going forward.
Give Something of High Value to the Other Party and Low Value to You
When making a concession, give the other party something they consider of high value but make sure it is of low importance to you. We call these ‘elegant negotiables’ because they can move the negotiations in a good direction. Before you ever enter negotiations, make sure you have identified what you need to do to meet the other party’s needs and then prioritize them based on your cost. Keep the cost to you low.
Concession Planning Worksheet
The RED BEAR negotiation training program provides you with a Concession Planning Worksheet that will help you effectively prepare your concession strategy in advance. The tool assists you in developing the three benchmarks of your concession strategy.
- Your most favorable deal
- Worst-case deal (your low limit or when your walkway)
- Opening offer
You can then use the benchmarks on the Concession Planning Worksheet to prioritize what you will be asking for and what you are willing to give up reaching a fulfilling negotiation deal. You can then rank your concessions based on value and cost to you versus the cost to the other party.
Mistake #2: Not Uncovering Customer Needs
Negotiation preparation should involve developing questions to undercover needs over wants. You should also identify the full range of negotiables that you believe the other party is willing to trade.
When you walk into the room to start negotiations, remember that the other party has their strategy that they have rehearsed. They have narrowed down their demands, and those demands only scratch the surface of their wants. They typically do not reveal their interests, motivations, or concerns.
Satisfying needs over wants is one of RED BEAR’s 6 Principles of Successful Negotiation.
As a negotiator, your task is to uncover the other party’s real needs, not just their stated wants. To achieve this, you’ll need to walk into the negotiation prepared by understanding the company and the people with which you are negotiating.
- Wants are what they ask for in the negotiation - these are things made up of measurable and specific requests. They are usually rigidly black and white such as ordering quantities, quicker delivery, or product prices.
- Needs are why they are asking for what they want. This usually reflects motivations such as the desire to look good to their superiors, personal job growth/protection, or the need to exert power.
Unfortunately, cutting through the wants versus the needs is not always easy. Typically, they will not tell you their needs, so it takes patience and understanding to get to the core of the situation and shine a light on the needs. Asking someone flat out why they want what they want does not work. A skilled negotiator has done their research, and they know the right questions to ask. They are experts at listening to the answers to their questions and can perceive unspoken cues that let them understand the person with whom they are negotiating.
A negotiator who understands the needs behind the wants has the capacity to find alternate negotiables. The goal of the alternative negotiables is to protect your business profits and solidify long-term relationships.
Once you know why the party wants what they want, you can effectively minimize your company’s losses and truly achieve a valuable deal. Uncovering needs also lets everyone at the table become more creative and reach a mutually beneficial agreement where everyone walks away satisfied.
Mistake #3: Not Planning and Executing a Sound Strategy
One thing stands true - lack of preparation leads to mediocre performance.
"By failing to prepare, you are preparing to fail."
- Benjamin Franklin.
If you sit down at the negotiation table and believe that you can take it as it comes and wing it, then you’re sadly mistaken. Without proper preparation, you will never achieve your full potential. If you are up against a negotiator who has taken the time to research and strategically plans, then you are going to walk away, leaving money on the table. The pitfall might end up being huge if you are not careful.
Before walking into a negotiation, you should identify everyone involved and understand their role. Prior to the meeting, everyone on the team should have planned a firm strategy, been on the same page, and been ready to execute the game plan without faltering.
The lack of preparation is a leading negotiation mistake that is avoidable by spending enough time preparing beforehand. Preparation helps to establish and understand power in the negotiation. Without proper preparation, it will be difficult to know when you have an advantage and when you don't.
Power is influence. Every negotiation is a power dynamic that takes place between both parties. Clearly, each side is trying to influence the other to gain their self-interests. RED BEAR views power in the following context: the ability to favorably influence the outcome by analyzing, assessing, and managing all the factors that affect power.
Failing not to use the full range and strength of your power is a severe mistake. Successful negotiators know that a negotiation is a balancing act. Underestimating your power puts you at a disadvantage. Power is always perception. The other party must view you as powerful to ensure a level playing field.
You can enhance your power by being clear and concise about your expectations and boundaries during the negotiation process. You need to have firm personal conviction. Information is not your primary source of power. When you sit down at the table and commence the negotiation process, you can use all power sources to leverage your position.
Take steps to influence the outcome of the negotiation process by:
- Judging the factors that either increase or diminish the other party's power.
- Analyzing the other party’s power.
- Manage all factors of the negotiation process that will help you achieve a desirable agreement.
To effectively use power during a negotiation, you’ll need to explore the six sources of power:
- Situational Power: Consider the situational elements that you use to your advantage during negotiations.
- Knowledge Power: Knowing the other party’s key drivers, personality and motivation help you to customize your tactics and create a more forceful case.
- Informational Power: Strengthen your position with internet research and consider reaching out to your network for potential insight.
- Organization Power: The power of the business behind you and its reputation.
- Personal Power: Your unique character traits include confidence, persistence, comfort with tension, and tenacity.
- Planning Power: Your ability to plan and organize.
Failing to leverage your power during negotiations means you are likely to have an unfavorable outcome.
Mistake #4: Not Managing Customer Expectations
One of the often-overlooked sales negotiation mistakes is failing to manage your customer’s expectations during negotiations. If you are too stringent in your demands, you might start to overpower the customer which immediately puts them on the defensive.
If you have a tough time saying ‘no’ to a customer’s unreasonable demands, then you are probably laying the groundwork for future negotiations and your overall business relationship.
Managing customer expectations from the start of your negotiations process and leveraging tension positively is extremely important. If you do not take these necessary steps, it will be difficult to build and secure a long-term relationship with the customers.
Today's customers are more challenging and more demanding. You might find it difficult to remain firm and still maintain a positive relationship. It’s hard to say no to a customer. With RED BEAR’s targeted negotiation strategies, you can effectively manage customer expectations.
Mistake #5: Managing Information Poorly
As we have covered in previous posts, managing information is like a three-legged stool. The first leg is information you want to protect. This is information that could potentially harm your case or put you at a disadvantage. The second leg is information you want to share. This information, unlike the first leg, is likely to improve your case, or shift advantage in your direction. And, finally, the third leg is information you need to uncover from your counterpart that will help you gain a deeper understanding of their position or needs. When carefully balancing all three types of information, you will be able to shift power and advantage in your direction.
It's likely that you'll enter into negotiations with assumptions. You'll want to test those assumptions, in order to uncover key information. This information gathering helps to understand your counterpart's position. Failing to gain a better understanding during negotiations can leave you in the dark and unable to maximize value.
It's important to understand that your counterpart will be trying to pry information from you as well. Skilled negotiators understand this reality and work to keep unflattering information close to the chest. Practice how to address questions that put you in a ethical dilema, lying should never be an option. However, mastering how to spina a disadvantage can help you sidestep a tricky situation.
Remember, this is a negotiation and there is quite a bit of money on the line. Don't fool yourself by underestimating your counterpart's techniques. Don't let your guard down and give more trust than you get in return.
Mistake #6: Over-committing
People naturally want to please, but over-committing during the negotiation process can quickly become a problem. You should never make promises to the customer that your company cannot keep. Breaking promises will quickly sour future business with the customer and might end up costing you the potential to do business together.
Another problem is failing to get clear enough commitments from customers during the negotiation process. You should never get up from the table, leaving loose ends and settling for maybe or halfhearted commitments. Such lackluster agreements create a need for re-negotiation, which is time-consuming and costly.
During the negotiation process, you want to effectively coordinate your company’s resources to reach the solution you seek during the sales and implementation process. When you get up from the negotiation table, you need to feel satisfied with the agreement and have achieved success by avoiding overcommitting.
Don't be surprised if you have to push back from time to time. It's common to see pushing back as being too assertive, aggressive, or combative. You might think that challenging behavior will cause things to turn south fast. However, there is a trick to pushing back, and that is to remain confident and assertive. You need to believe that the value of your position is genuine.
Be clear about your wants, needs, and expectations. Don’t leave either party guessing. When you push back and remain transparent, the other party will realize they are dealing with a skilled negotiator.
If you don’t push back, the other party will think that you are easy to manipulate. Making demand statements and pushing back takes the negotiations to the next level.
Tricks to making demands include:
Use ‘I’ versus ‘‘you’ statements.
When negotiating, use ‘I’ statements versus ‘‘you’ statements. Typically, when people hear ‘you,’ they become defensive. When they enter a defensive position, discussions can grind to a halt.
Remain clear
Do not ask for what you want vaguely. Demand statements are clear and concise. The other party should immediately understand. If you ‘dress up’ or soften the demand, then it becomes weak.
Stay concise
Make your statements clear, assertive, and specific to generate tension. Tension is an excellent catalyst for achieving a creative solution and pushing the negotiations forward.
If you elaborate too much during the conversation, you weaken the communication. Keep things concise.
Remain constructive
Any demand statement should clearly communicate your expectations but always treat the other party with respect.
Repeat demand statements
In some situations, it's necessary to repeat your demand statements.
Take the silent route.
Saying too much after you make a demand weakens the statement. Instead, make a clear and concise demand and then fall silent.
Pushing back by making demands is a necessary skill of any successful negotiator. The failure to push back is a top sales negotiation mistake.
Mistake #7: Failing to Create and Reinforce Value
When negotiations hinge on price alone, this is a key sign that value has not been established or reinforced sufficiently. We refer to this as the "commodity trap." Today's salesperson has to sell on value, not price. This starts with a keen understanding of how a product or service impacts the customer's business.
Establishing value is a process, and it begins with planning. This requires careful consideration of the your customer's circumstances and how your product or service best meets their needs or solves their problem. With that understanding, develop a strong positioning statement to establish and reinforce value. Be sure to work elements of the relationship to avoid falling into discussion of price alone.
Be cautious early on in negotiations, your customer may want to move directly to discussing price. Have a game plan for how to redirect your conversation to value. Be prepared to redirect from multiple angles. If you get stuck, don't hesitate to ask why price is so important. This could provide you a clear indication of what's important to your counterpart.
Mistake #8: Too Focused on Price
During negotiations, you should never discuss price too early. It is imperative that the price is firmly anchored in the mind of the other party. They will often try to discuss price early and move away from the value, resulting in giving in too quickly. You can easily lose sight of things when focusing on price. Price should always be linked to the scope. When the dynamics change, so does the price.
Another thing to consider is if you focus on price too much, then you can damage your relationship with the other party when negotiating. Nickel and diming can negatively impact the entire process. You cannot lose sight of the big picture by focusing only on price or you could jeopardize everything.
Negotiations are like a house of cards. It takes skill, knowledge, tenacity, confidence, and a steady hand to effectively build the flimsy structure. The slightest mistake could send it tumbling down.
Instead of focusing on price, try to go beyond just price when negotiating. This is actually awfully hard because it feels like you should focus on price during negotiations because isn’t that your ultimate goal, to gain the best price in most transactions? You need to consider the price and make the best deal for all parties involved to create a solid relationship for the future.
Think about what is essential to the other party when negotiating. Often you can achieve the price you are seeking if you meet the different needs of the other party. You can provide importance while gaining what you want. Taking such an outlook helps you build a solid ongoing relationship.
When everyone rises from the negotiation table, sometimes building healthy business relations is more important than achieving profitability.
Mistake #9: Getting Emotional and Taking it Personally
Negotiation is stressful. It's not uncommon to react to stress by getting impatient or losing composure. But, it pays to stay calm. In fact, controlling how one reacts to overly competitive or aggressive tactics can sometimes disarm a hostile competitor. Maintain emotional power and keep a cool head.
It also pays to keep an open mind. Be receptive to what your counterpart has to offer. Rather than saying no and closing down discussions, fire back with an open question to keep the dialog going. Be on the look out for a key piece of information that could create an opening around a dead-end.
When the air grows so thick with tension that you feel like you can cut it with a knife, then you probably start to grow uneasy. Humans naturally want to avoid tense situations. It can make most people feel vulnerable. However, the best negotiators thrive in a state of tension and can use it to their advantage.
Tension spurs creativity. When the negotiations hit a standstill, tension can provide the nudge needed to go onward and reach a resolution. Tension is a powerful tool in any negotiator's toolbox when used correctly and should never be avoided.
Negotiations are made up of three dimensions:
- The collaborative dimension
- The competitive dimension
- The creative dimension
The creative dimension is used to move beyond impasses and reach a hugely beneficial solution. Tension is used to nudge the negotiations to the creative dimension.
Managing tension properly lets both parties utilize their fundamental needs to reach a creative resolution. The key is identifying the positive and healthy tension so you don’t let the opportunity pass you by.
When discussing tension, it should be noted that we are not talking about unhealthy, negative tension which results from arrogance or bad faith negotiations. Healthy tension is positive and inspires both parties to discover innovative solutions.
Engaging in the five types of negotiation behaviors is the best way to build healthy tension during the process.
The five negotiation behaviors include:
- Make Demands: This is when you communicate your needs and wants. You need to believe in the value of your position while making everything clear and concise. This lets the other party know they are dealing with someone who knows what they are doing and that you are not easily manipulated.
- Ask Open Questions: This will uncover information and reveal the customer’s needs so you can add value. Asking open questions helps diffuse any unhealthy tension and reduces potential frustrations. It is a wonderful way to break the ice about the other party’s needs as opposed to their wants.
- Test and Summarize: This behavior brings the customers’ needs to light and further builds the relationship. You’ll evaluate and summarize the other party’s position and then ask them if you understand everything correctly. This will show a willingness to truly put yourself in the other party’s shoes and see things from their standpoint. You'll need to listen closely to everything being said to bring the negotiations to fruition and positively form a relationship.
- Propose Conditionally: After making your demands, ask questions, and summarize the other party’s point of view. At this stage, you have reached a healthy tension that will help you move forward to propose conditionally. This is the creative part of the negotiation process. You’ll be able to offer new and inventive ideas to push the experience ahead, so each party is satisfied.
- Make Trades: This is a self-interest behavior and helps formulate the creative process. Make trades that are value-based exchanges to break away from a possible gridlock. You should be prepared to make concessions so the negotiation process moves onward. Remember, you need to get something equal or greater in return at this stage. This is the behavior and time that breaks the impasses and lest you achieve a favorable negotiation outcome. Obviously, the goal is in sight at this stage.
Mistake #10: Negotiating with the Wrong People
If you fail to conduct an effective strategy and research prior to negotiations, then you could end up negotiating with the wrong people in your customer’s organization. You might be wasting time on someone who lacks authority even to make deals.
This list of 10 sales negotiation mistakes brings us full circle back to mistake #1 - lack of preparation. Before negotiations, you need to analyze the other company to discover the key players before even beginning negotiating with anyone. If you are sitting down with a group of people from the other company, make sure that you know who the lead negotiator in the group is so you can focus your skills and efforts on them.
Conclusion
RED BEAR understands the challenges faced by sales professionals to negotiate profitable agreements effectively. The top 10 sales negotiation mistakes quickly become costly to the company. Learning how to avoid blunders helps you become a high-performing sales negotiator. Always set high targets because those who ask for more typically get more during negotiations. Knowing the full range and strength of your power helps you avoid negotiation mistakes.