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Transparent Negotiating: A simple tip to make deals more predictable

· negotiations,transparency sale,discounting

Do you know why Banana Republic has a big discount that expires at the end of the day? Or Eddie Bauer? Or (insert retailer name here)?

Me neither.

I have a guess. I bet you all do.

But what I’m sure of is - if I don’t buy it today, I can just wait until next week when they offer 40% off again. They always do.

Sound familiar? Your “end of quarter” discount? Does the price change on January 1st?

The buyer doesn’t know why you’re doing it, either. She has a guess.

And, she’s pretty sure she can still get the discount if she buys later. I mean, you'll probably offer that discount again next month or quarter, right?

We’ve conditioned the buyer. We’re not transparent.

- Paying at a discount feels like paying the regular price - we still want a discount off the discount.

- Paying the regular price feels like an absolute rip-off...because you’ve inadvertently screamed from the mountaintop that your regular-price isn’t really your regular price.

Negotiation doesn’t have to be this hard. You shouldn’t need a different personality to pull it off. Just be transparent.

There’s a lot to be learned from some of the amazing negotiation books out there. However, you're probably not negotiating the release of hostages, right? My advice? Start with a simple framework based on your four levers. These are the things you, as an organization, are likely to pay the client for in the form of a discount:

1) Volume (how much the client commits to buy): Buy more, pay less per.

2) Timing of cash (how fast the client commits to pay): Pay up-front probably costs less than paying monthly.

3) Length of commitment (how long the client commits to the products/services): Commit longer, pay less.

4) Timing of the deal (when the client signs the agreement): Well...does the client understand this one?

Regarding the ‘timing of the deal' lever, explain to the buyer:

“There’s value in our ability to forecast our business. If we can align around your timing, we’ll pay you in the form of a discount to hold to it.”

You’d be shocked by how that transparency, business explanation, and mutual alignment drives buyer behavior.

The client wants to pay less, right? Instead of being in the charity business of just giving away discounts, make the statement highlighted above. Then ask, "is it realistic to align around getting this done before the holidays? If so, we'll pay you in the form of a discount to do so, as there's tremendous value to our organization (and, actually me personally) to have this locked up before then - for our forecast, and our family sanity."

Give and get. Assuming you’ve aligned around a December signature, when the holidays come around and they ask:

“Will you hold the price into January? We’re not going to be able to get this done in time.” 

You can respond with, “I don’t know. What I do know is that we aligned around your timing, and that discount reflects our agreement that we’d pay you in the form of a discount for finalizing this month. Let’s talk about next month next month.”

The minute you say "yes", your deal just slipped to January, and your business discussion has lost its credibility. The minute you say "no", you've eroded trust, the client likely will need to acquire new approvals...which means your December deal probably just pushed out to February. An answer of, "I don't know" followed by "I won't know until (next time period)" shockingly drives buying behavior keyed on certainty.

Well, it's not actually a shock. One of the key decision drivers for the buying brain is certainty. The more certainty we create around a certain option, the more likely the buyer is to seek to secure it.

The other three levers can (and should) be delivered cards-face-up for the client, too, and all together. They’ll be negotiating their own deals - and eventually their own renewals. It’s a workshop I teach, it’s a chapter in the book, but it’s so much easier than you think.

Negotiate transparently for the win.
 

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