How to Negotiate the Best Deal

Last Updated May 12, 2008 12:16 PM EDT

Successful sales pros value their customers so highly that they're sometimes unwilling to risk a hard-won relationship by negotiating an agreement that's favorable for their own firm. The reasoning seems to make perfect sense: if the customer gets a good deal, then the vendor gets screwed, and vice versa. But it doesn't have to be that way.

I recently had a conversation with Randall Murphy, the president of Acclivus R3, a performance consulting and professional development company that specializes in sales negotiations. He believes that there three levels:

  • Bottom level = Competitive. The sales pro and the customer view the negotiation as a win-lose proposition. Concessions by one side are viewed as a victory for the opposite site and the emphasis is on having your side win at all costs. Such negotiations generally damage customer relationships, because one side ends up feeling as if they definitely got screwed. (Or as Randall puts it: "taken advantage of.")
  • Middle level = Cooperative. Many sales pros wrongly think that this is the best approach, but it's actually not all that better than the bottom level. Both sides are trying to be fair to one another, and see the need for a long term relationship. The negotiation is all about compromise and on not losing too much. Such negotiations seldom damage relationships, but they don't improve them either. Worst case, both sides end up feeling that they might have gotten screwed.
  • Top Level = Collaborative. The sales pro and the customer see their goals as aligned and work together to forge an arrangement that moves both agendas forward. The emphasis is on finding a way for both sides to win, big time. Such negotiations are the building blocks of strong customer relationships.
To negotiate a better deal, it's not enough for you to understand the levels; you must get the customer to see the value of a higher-level negotiation as well. Your challenge is to move the negotiation as far as possible towards the top of the pyramid, even if the customer starts the negotiation process way at the bottom. If a negotiation starts out as competitive, you must try to elevate it (at least) to the cooperative level and (at best) to the collaborative level.

I'll tell you exactly how to do this in a future post.