In my post Sales Negotiation Training, I discussed the distinction between selling and negotiating and why it is so important to understand the distinction between them.Understanding this distinction can have a huge impact on the success you have in sales.You will be able to a sell higher volume of business and sell business that is more profitable too.Another piece of sales negotiation that you need to understand well in order to negotiate effectively is the negotiating alternatives that are available for you to establish a win/win agreement.There are five negotiating alternatives.
There are five negotiating alternatives.They are:
- Even exchange
- Split the difference
In the even exchange you exchange like value for like value.For example if you lower your investment, then you also lower the product or service value that would be about equal to the new investment you are proposing.This alternative affords the best chance of obtaining a win/win agreement because each party is getting and giving something of equal value.
The second negotiating alternative is an enhancement.The enhancement is when you give your prospect something of high value to them, but at lost cost to you.For example, you could provide and onsite analysis during the implementation of your product.This should be of low cost to you to provide, but of high value to your prospect.
Split the difference is the most common of negotiating alternative.Split the difference is basically meeting near the middle of what you proposed versus what your prospect wants.We’ve all seen it happen.You propose $100, the prospect says $50, you agree on $75.Although splitting the difference is the most common of the negotiating alternatives, it is third in the order of obtaining a win/win behind even exchange, and enhancement.
Concession is agreeing to your prospects counter proposal.Concession is one of the last negotiating alternatives you want to pursue, but there is a time when concession is the right choice.If you have had several items to negotiate and you have reached agreement on all the major items and have just a minor item left, concession could be the best move.Only use concession at the end of a negotiation on a negotiation item that is of small value.Conceding on large value items often leads to a win for the buying organization, but a lose for the selling organization.
The walk-a-way is more of a position than an alternative.The walk-a-way is the last resort when no agreement can be reached on the negotiated item.Using the walk-a-way alternative or position eliminates the possibility of a lose for the sales organization.Proper planning for a negotiation would include knowing your walk-a-way position.
Understanding the negotiating alternatives allows you to plan the negotiation.You can determine what you can use as even exchanges, enhancements, where to split the difference, etc.
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