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The Proposal and Negotiations

“You’ve got to know when to hold ’em, know when to fold ’em, know when to walk away, and know when to run…”

You probably recognize these lyrics from the Kenny Rogers song, “The Gambler.” In sales, we are not gamblers, but we are proposal makers and negotiators, and the best salespeople are excellent at doing both. It is essential to become effective at proposal making and negotiating transactions because the more efficient you are, the more sales you will complete. Unfortunately, if a salesperson knows how to relate with a prospect and can reason out issues such as why the prospect should buy their product or service but lacks proposal making and negotiating skills, that individual will never reach their full potential. That is why all salespeople must make it a priority to master the skills of proposal making and negotiating.

So, if you find yourself struggling in these areas, here are a few strategies that will help you the next time you reach the critical point in your presentation of proposing and negotiating a deal.

To set the stage, at this point, you have already spent time relating with the prospect. You have explained key reasoning points, such as details about your company, why your solution is different, how you are aligned with their plans in the purchase of the product or service, and why they will have a good outcome. Additionally, you have resolved the money issues and have helped them select the appropriate product or service that best fits their needs and budget. You have also determined when they can take delivery of the product or start to use the service. So, the logical next step is for you to present your proposal. You want to make it with some urgency – in a manner that the prospect would be out of their mind if they did not take advantage of your proposal. The next step is to adjust your thinking from persuader to deal maker. Yes, you are now going to negotiate the transaction with this prospect.

In most sales situations, you will typically make the first proposal. The goal is to create a mutually beneficial arrangement between your company and the prospective customer. Therefore, during your proposal-making, you need to take the time to “drill down” on crucial deal points. What do I mean by this? You are going to dissect all aspects of specific deal points and any incentives included in the proposal. You will thoroughly explain an incentive and why you are offering it, and any conditions involved in completing the transaction by either party. In other words, what are the prospect’s obligations and the company’s responsibilities toward the agreement? One thing to keep in mind is that in most cases, it is a good idea to explain the deal points more than once, ensuring that the prospect understands all aspects of the proposal.

As strange as it might sound, another point is that it is usually best for you to position your offer like you’re the “Godfather” – you know, “I am going to make you an offer you can’t refuse.” Now, of course, you are not going to say that out loud, but that needs to be your mindset. Why? Because you need to have spent enough time before making the proposal, customizing your deal points to fit the needs of this prospect perfectly. That way, your offer is so compelling that there is only one answer that they should give. What is that answer? “Yes,” that is the answer you want.

Even with a great proposal, after you present your offer, most likely, the prospect is going to want to negotiate over various aspects of the proposal by making some counteroffer. Therefore, you will need to be aware of which deal points you can concede, and which ones you cannot. For example, a prospect may ask you for more time to take delivery or, they may ask for a discounted price or an additional service at a reduced cost or, no additional charge. An essential rule of negotiating is that if you give up a deal point, then you must ask the prospect to commit based on your concession on that deal point. For example, the prospect might ask, “Instead of taking delivery in two weeks, can I push that out to six weeks and still get the same price?” You could respond, “If we can agree to a six-week delivery, will you move forward?”

What if you cannot give in on a deal point, such as a discount? What can you do to negotiate the deal still? It is imperative that you explain why you are in that position to avoid an impasse if possible. For example, the prospect may ask, “Can I get another 20% off if I agree to take delivery in two weeks?” The salesperson might respond as follows, “I cannot give you that discount in addition to the incentives that I have already offered (he reviews incentives offered). If I gave an additional discount, it would impact the company’s ability to provide future service. You see, I know you will want service down the road, isn’t that true? However, what I can do is allow additional time for you to take delivery.” So, as you can see, the salesperson had to stand firm on the discount but gave legitimate reasons why he could not concede. You must always explain your reasons for your position. Remember, the person with the best line of reasoning for their position in a negotiation will typically succeed.

So, as a review of the proposal making and negotiating process, the goal is to finalize your deal. The way to reach your goal is to create a mutually beneficial arrangement. At the end of your presentation, you offer a custom-tailored, written proposal that best fits your prospect’s needs. You verbally explain each deal point in the proposal and review it more than once to make sure that they understand.

Remember, when offering any incentive explain to the prospect why you can provide the incentive to move forward. For example, your company has a pressing business need that must be met; otherwise, you could not offer them the incentive. And if the prospect helps your company meet their needs by purchasing now, then you will reward them with the incentives. Keep in mind, without this explanation, your incentives, and the overall proposal may appear contrived and lose its appeal to a savvy buyer. Almost all buyers are savvy, so you must handle this part of the proposal process with care. Lastly, ask the prospect to buy in an assumptive way. At this point, you are prepared for negotiations. If the prospect negotiates, you know what points you can concede and which ones you cannot. So, you either acquiesce and ask for a commitment or stand your ground, explain your position, and perhaps offer something additional to avoid an impasse.

So, there it is – a simple way to make better proposals and negotiate more business.

As I mentioned at the outset proposal making and negotiating is a crucial part of the sales process, and you must hone your skills to close more business. Keep in mind that this is not the be-all, end-all. First and foremost, you must persuade the prospect as to why they want to buy your product or service by using all other aspects of the sales process. Otherwise, it does not matter how good you are at making proposals and negotiating.

 

2019-10-28T18:20:09-04:00

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