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RFQ vs. RFP: What Is the Difference?

When a company engages in business with other corporations on a business to business (B2B) basis, they will have to navigate tricky clientele attainment processes. With thousands of businesses to choose from, it can be difficult to find the best price for goods and services without putting in hours of research. Companies engage in large-scale B2B operations through the distribution of Requests for Proposals (RFPs) and Request for Quotes (RFQs).

These documents allow companies to send out requests to potential contractors and vendors for certain goods and services. In turn, these vendors will send quotes and project proposals to the company for approval and, hopefully, hiring. Usually, the procurement department of a company will distribute these documents.

Though they are similar documents, different situations can lead to choosing RFQ vs. RFP use by a company. A key factor in successful corporate sales is knowing when to appropriately use one over the other. Luckily, there are a few key differences between an RFQ and an RFP that can help corporate professionals navigate these documents.

 

Request for Quote

A Request for Quote, or RFQ, is a document that companies use to gather information about goods from the potential vendor. Before the procurement of these goods, this document explains that the company wishes to purchase a certain type and amount of goods from a vendor. The RFQ will detail the specifications and quantities of those goods.

The company will send the RFQ to specific companies they are interested in working with. In response, potential vendors will send quotes and price estimates to the company who put the RFQ out. From these responses, the company can choose which vendor can provide the best products at the best prices. Usually, a company uses an RFQ if they need to make a large-scale purchase.

For example, imagine that an office is in the market to purchase a large quantity of paper for an upcoming conference. They need to purchase 2,500 reams and are trying to find the best price for their project. The office will send an RFQ to various paper suppliers in their area to find the best quote for the amount they need.

RFQ may also stand for “Request for Qualifications.” Companies use this document to solicit vendor and contractor qualifications to narrow down choices for a project bid.

 

Request for Proposal

A Request for Proposal, or RFP, is a document that companies use to gather information about services from a potential supplier or contractor. These documents are more complicated than RFQs since they ask for more than just a price.

Since the document is a request for services, not products, the information contained in the RFP is more detailed than information in an RFQ. The RFP will detail the goals and nature of the project that the company needs completed. In addition, it will detail the number of pages and illustrations that the proposal should contain, what laws the project is subject to, and what qualifications the contractors should have. The company may request the proposal contain other information as well, depending on the project.

In return, the potential contractor will submit a proposal detailing:

  • What the contractor needs for project completion
  • The estimated costs of labor
  • The estimated costs of management and other fees
  • The total project cost

The company will use this proposal to decide whether to hire that contractor. Companies who lack the expertise to detail the scope of the project they want to complete use RFPs to solicit assistance from more knowledgeable contractors.

For example, imagine that a corporation is looking to open a new store location in a different state. They need to find a contractor to renovate their property to match the design of their other locations. They will send an RFP to various contractors in the area detailing the nature and goals of the project, the different building codes that the contractor will have

to adhere to, the company’s style guide, and the licensing requirements the company is seeking. Contractors will return proposals to this company and the company will select the best proposal for hire.

 

What About RFT and RFI?

Other documents that companies use to solicit information from potential suppliers are RFIs and RFTs. RFI stands for Request for Information. Companies use RFIs to gather information on what steps to take next in a contract negotiation. Usually, RFIs are the last stage in the RFQ or RFP process.

RFT stands for Request for Tender. Companies use RFTs to solicit offers from potential suppliers for specific goods and services detailed in the request document. These documents help companies make informed decisions based on pre-identified criteria before hiring or purchasing goods and services.

 

If your company is looking for effective corporate sales training, look no further than Shapiro Negotiations. Our comprehensive workshops for sales professionals will equip your team with the tools, habits, and knowledge necessary for corporate success. Contact Shapiro Negotiations today to learn more about the program and to schedule a free consultation.

What Are the 5 Negotiation Styles?

People have different communication styles. Individuals bring sets of experiences, skills, and tools that affect the way they interact with others, both at home and in the workplace. Individual communication styles also translate into how they negotiate. From these patterns of communication, five distinct negotiation styles have emerged: competing, collaborating, compromising, accommodating, and avoiding.

Negotiators often fall into one or more of these five styles whether they are trying to reach an agreement or resolve a conflict with multiple parties. Master negotiators know how to use their primary negotiation style to their advantage and when it’s beneficial to introduce the others. Read on to learn about the common characteristics of the five negotiation styles, their strengths, and their weaknesses.

 

Negotiation Style: Compete

A competitive negotiation style follows the model of “I win, you lose.” Competitive negotiators tend to do whatever it takes to reach their desired agreement – even when it comes at the expense of another person or entity. They are results-oriented and focused on achieving short-term goals quickly. Their desire for success motivates them, though the process of negotiation can blind them to potentially harmful impacts.

Competitive negotiators use all tools possible to boost their negotiation success, including:

  • Their position within a company structure
  • Their personality and humor
  • Aggression
  • Their economic prowess
  • Their company’s strength and size
  • Their brand’s visibility and influence

A competitive negotiation style is beneficial when you need to reach a short-term agreement quickly. If the terms of an agreement are critical and must be complied with, a competitive negotiator will be your secret weapon. If the second negotiator is also competitive, having another competitive negotiator on your team will be able to counter-balance their aggression.

Competitive negotiators work best in a highly competitive industry or for once-off sales, such as selling a home or a car. However, for negotiations with another highly competitive body, it is best to blend negotiation styles to avoid gridlock between two competitive negotiators.

These types of negotiators may focus more on winning than reaching a mutually beneficial agreement with the other party. Business relationships might break, and a company’s reputation may tarnish if a negotiation style is too competitive and crosses the line into bullying.

If you are a competitive negotiator, make sure to blend your style with a bit of accommodation or collaboration. Invite a partner to balance out your natural competitive streak. Business is as much about building strong relationships as it is about closing deals!

 

Negotiation Style: Collaborate

In contrast, a collaborative negotiation style follows the “I win, you win” model. Collaborative negotiators focus on making sure all parties have their needs met in an agreement. They value strengthening, establishing, and building relationships without compromising their company’s best interests.

Collaborative negotiators often evolve into this negotiation style from another. As time goes on and a negotiator gains confidence in reaching agreements, they become more comfortable advocating for their needs. They also become skilled in finding a mutually beneficial balance between their needs and the other party’s.

Individuals with a collaborative negotiation style are willing to invest time in finding innovative solutions and building business partnerships with other organizations. Other negotiation styles are often too impatient to invest this time, but collaborative negotiators are confident that they will benefit in the end.

A collaborative negotiation style is effective in most business negotiations. Collaborating with competitive negotiators is something to be wary of, however; since this negotiation style focuses on winning the most for their company, they might not be interested in developing a collaborative relationship. As a result, the more collaborative company can lose out – so be careful and always keep track of the agreement’s value.

 

Negotiation Style: Compromise

Many students of negotiation styles confuse the collaborative style with the compromising one. Unlike the “win-win” collaborative style, the compromising negotiation style follows a “I win/lose some, you win/lose some” model. When reaching the terms of the agreement, compromisers often relinquish some terms in favor of gaining others.

For example, if two governments are trying to reach a trade agreement, a compromiser might give the other government greater access to their country’s dairy market to gain protections for digital media trade. Simply put, a compromising negotiation style is a form of bargaining. Compromisers split the agreement’s value between the two parties versus finding a solution so that everyone benefits from an agreement’s full value. A competitive negotiator can easily take advantage of a compromising negotiator.

A compromising negotiation style is most useful in situations where the opposite party is trustworthy, and the agreement is under a tight deadline. However, compromising will cause your company to lose out on collaborative partnerships and innovative solutions.

 

Negotiation Style: Avoid

An avoiding negotiation style follows a “I lose, you lose” model. People who identify with the avoiding negotiation style highly dislike conflict and tend to talk in vague terms about the issue at hand rather than the issue itself. If an agreement is reached and an avoiding negotiator dislikes the outcome, they may try to take revenge on the opposite party before the party even knows that they were unhappy with the agreement.

Since avoiders dislike conflict and struggle with direct communication, they come off as passive-aggressive. This can cause rifts in interpersonal business relationships. Avoidance is a typical reaction when a negotiator is pitted against someone who is highly competitive. Avoiding negotiation styles work best in situations where the negotiation concerns a matter that is trivial to both parties. In conflict resolution, avoiding negotiators work best in situations where the investment of time to resolve the issue outweighs the outcome of the discussion.

 

Negotiation Style: Accommodate

An accommodating negotiating style follows the “I lose, you win” model – which does not seem to be in a negotiator’s best interest. Accommodating negotiators are the direct opposite of competitive negotiators. They focus on preserving relationships and building a friendly rapport by sacrificing some of their company’s interests in favor of the opposite party’s interests.

Accommodators tend to try to win people over by giving in to their requests. They tend to share more information than they should. They are often well-liked by their colleagues because of their kindness – but kindness doesn’t work in every negotiation situation. Accommodating negotiation styles work best in situations where your company has caused harm to another and needs to repair a significant relationship. These negotiators are skilled at peacemaking between different bodies.

However, don’t send a pure accommodator alone to a negotiation with a competitive body. They can easily be taken advantage of. An accommodating style can easily turn into a collaborative style with proper training and teamwork.

 

Which negotiation style describes your negotiation practices the best? Do you tend to compete, collaborate, compromise, accommodate, or avoid? Or do you practice a mixture of negotiation styles, expertly bringing in competition or accommodation to fit the environment? To learn more about how to use your negotiation style to your advantage, visit Shapiro Negotiations today to schedule a negotiation training session.

What Is Organizational Selling?

Multiple forms of sales take place every day in the corporate world. From B2B to B2C, a wide range of structures exists to diversify the market and provide the best goods to consumers. One of the most complex forms of sales is known as organizational selling. With organization selling comes a set of standards and guidelines to which salespeople must adhere to establish trust and credibility with their clients.

 

 

The Definition of Organizational Selling

Organizational selling is defined as a business selling to another business. This seems simple enough, but organizational selling follows a different set of rules than selling a product to a single person. Just like their customers, organizations and businesses require certain products to keep their operations running smoothly. From shipping and packing supplies to raw materials like wood and steel, these organizations need to purchase goods from an outside source if they don’t produce them.

Driven by customer demand to produce goods, organizations purchase products in greater quantities than private consumers. As a result, organizational selling often deals with bulk purchases and their order costs tend to be much higher than what an individual would purchase. In addition, organizations must adhere to certain guidelines regarding the products they use. A certain type or quality of wood, a certain grade of steel, even packing boxes must adhere to organizational policies and consumer protection laws.

Sometimes, governmental standards under the Occupational Safety and Health Administration (OSHA) are also applicable. For example, if your company manufactures no-slip shoes and steel-toed boots, another organization that wants to supply its employees with these shoes would likely ask if your product is OSHA-approved.

When organizations look to purchase goods, they are looking for products that would provide the greatest value for their businesses and meet certain quality and safety guidelines. This makes their purchasing habits unique from individual consumers.

 

Why Is Organizational Selling Important?

Knowing how organizations and businesses purchase goods is the key to marketing those goods effectively. The purchasing habits of these businesses can easily translate to common sales practices such as pitching and cold calling. Organizations depend on certain products to survive. For example, if you own a lumber mill or a mining company, the raw materials you produce are necessities for certain companies to operate. Take advantage of this fact by identifying those companies and pitching your product to them.

Identifying how your products can benefit organizations can lead to the development of a list of potential clients to contact. In addition, the bulk purchases of these organizations will provide major revenue that often exceeds what a private customer can provide. Facilitating an organization’s buying experience by allowing bulk purchases will keep them coming back for future business.

Since organizations adhere to standards regarding certain materials and products, researching the guidelines that surround your product will lead to additional development and marketing opportunities. Does your steel need to be a certain grade to be marketable? Does your latest line of shoes need OSHA certification? Bringing your product up to standard will allow you to market those qualifications to potential customers, making them likely to buy.

The use of missionary salespeople can help you identify and sign potential organizational clients. Missionary salespeople enter a region that your company does not currently serve and market your products to potential clientele, including major organizations that rely upon the goods that you produce.

Salespeople can use the concept of value selling to market your products to major organizations. Value selling focuses on how a product can solve a customer’s problems. With organizations, the problem is simple: They need safe, high-quality products to manufacture their own products and to keep their companies running smoothly. Your company manufactures the safe, high-quality product they need – and you can sell it to them.

 

The marketing formula is simple. Organizational selling is ripe with potential sales success – all it takes is a little bit of research and making the right connections. To learn more about effectively marketing your product to organizations, contact Shapiro Negotiations today about our corporate sales training program.

What Is Reservation Price in Negotiation?

The art of negotiation requires that people know the definitions of some confusing terms. Reservation price, BATNA, surplus, demand, ZOPA – these words can easily overwhelm a new negotiator.

However, once you know the simple definitions of these not-so-simple words, you will be able to use them with ease and authority and apply their concepts to negotiate successfully.

 

Reservation Price Definition and Examples

Reservation price is the least favorable price at which a negotiation will be accepted. This price is always a numeric amount. Simply put, the reservation price is the lowest amount that a seller will accept for an agreement and the maximum amount a buyer will pay. This is also known as the “walk away” point.

For example, imagine that you are selling the house you purchased 15 years ago at $500,000. Your house is worth $1.5 million, but with the current state of the housing market and the demand for purchasing a house, you would be okay with selling your home for $1 million.

You meet with a prospective buyer, and they tell you that the highest they are willing to pay would be $1 million. This would be your reservation price. From this point, you can decide whether to sell your home to this buyer or wait for a higher offer.

Many people confuse reservation price with BATNA. BATNA stands for “best alternative to a negotiated agreement” and, unlike reservation price, it expresses a scenario rather than a number. BATNA answers the following question: “What will you do if you are unable to reach a negotiated agreement with your partner?” While the reservation price is dependent upon reaching a negotiation, the BATNA is a back-up plan in case negotiation fails.

Using the previous example, imagine that you are still selling your home worth $1.5 million. Your reservation price is $1 million, as it will be the lowest price you would accept from a buyer. However, a close relative is moving to your city from out of state and is looking for a place to live. She offers you $900,000 for your home, a little more than half of its current worth but nearly twice what you paid for it.

If you are unable to reach a negotiated agreement with an outside buyer, your BATNA would be selling your home to your relative. Your reservation price will remain the same and while you would not be able to sell your home at the desired price, you will still make money off the negotiation.

Often, reservation price and BATNA do not yield such a wide profit margin. Imagine you are selling a guitar online. You purchased the guitar five years ago for $500, and it is still in good condition. You decide to list the guitar for $350 and decide that your reservation price is $200.

A buyer contacts you after six months of waiting for a response. He offers you $150 for your guitar, which is lower than you’ll go. You negotiate for $200, but he refuses. You decide to wait for another offer to come along but inform the buyer that if no one gets back to you, he can have the guitar for $150. This buyer would be your BATNA.

 

Why Is Reservation Price Important?

Simply put, reservation price is important because it allows a negotiator to define their baseline. For consumers and sellers alike, reservation prices help us make rational, informed decisions during negotiations, ensuring that no shady deals or lowballing takes place. Reservation prices protect everyone during negotiations and enable appropriate discourse.

 

To learn more about the art of negotiation, contact Shapiro Negotiations to schedule an expert training session today.

 

Tips for Cold Calling Scripts

Solicitation Many people say cold calling is a dead practice. With the rise of social media, email, and internet marketing, it’s easy to dismiss good old-fashioned phone calls as unnecessary. The stress of collecting phone numbers, making multiple calls to unexpecting strangers, and facing anger and hang-ups just isn’t worth the low sales yield.

However, many sales employees are simply not communicating effectively with their customers because of poorly written sales scripts that lack organization and a personal human element. Making simple changes, such as studying the anatomy of a cold calling script and taking on a conversational tone will help strengthen your cold calling script and turn your sales pitches from boring and basic to engaging and persuasive!

 

Know the Anatomy of an Effective Cold Calling Script

The basic anatomy of a cold calling script is:

1. State your name and your company, as well as some variation of “I hope your day is going well!”

2. Connecting statement. This is where researching the prospect comes in handy. Use the information you’ve learned about their company or interests and connect it to your own experiences.

3. Reason for calling. Tell them why you’re calling, but not explicitly. Explain that you notice that they are lacking a service or product that your company can provide for them. Be specific and connect with the prospect.

4. Qualifying statement. Tell them why your company can provide the best service or product and make their operations easier. Tell them what your service or product does and ask them if they already use a similar one.

5. Personalized ask. It’s all up to you from here. If they already use a similar service or product, tell them why yours is better. If they don’t, explain the benefits of your service or product. This will lead into your ask – and hopefully lead to a sale!

Many times, a sales call fails because of poor organization and preparation. Adhering to this basic structure will allow you to communicate the purpose of the call and begin your sales pitch to the customer quickly and effectively.

The amount of time a cold calling script should take a salesperson to read through should be 30 seconds or less. The entire sales call should take only a few minutes to complete. With a cold call, you are likely interrupting the prospect’s daily routine and you want to be mindful of their time. With a concise script, you will be able to communicate your message quickly, confidently, and clearly – qualities your prospect will appreciate.

How can such a short sales pitch be compelling enough to lure in new customers? The answer lies in the amount of prior research a salesperson does and his or her ability to hold a conversation.

 

Identify the Audience and Research, Research, Research

Once you’ve identified your prospective customer, take a few minutes to research them. Visit their LinkedIn profile and company website. Visit their associated social media profiles. Make notes of areas where your service or product can benefit them.

This information will help you craft a compelling qualifying statement and reason for calling. This research will set you apart from other sales calls in the customer’s mind, adding a personal human touch to your pitch that will compel them to learn more.

 

Have a Simple Opening

State your name and your company but try not to linger too long on your introduction. If someone detects that you are a cold caller, they may hang up immediately. A simple “Hi [prospect name], this is [your name] from [your company]” will convey a friendliness and a familiarity that will keep the prospect on the phone longer.

Try not to ask the prospect how their day or week is going. Both the caller and the prospect know that “How are you today?” is simply filler and doesn’t convey genuine interest. It is more professional to use a statement such as “I hope your day is going well” or “I hope you’ve had a good morning.”

 

 

Be a Human, Not a Robot

The purpose of a cold calling script is for referral, not to read word-for-word. Having a well-organized script will allow you to communicate in a credible, authoritative way, but if it’s obvious to the customer that you’re reading from a script, you lose that credibility.

Always adopt a conversational tone when using a cold calling script. Read the script like an actor, not a robot. You want to connect with your prospective customer – talk with them, not at them!

 

A Cold Calling Script Example

You can tweak the following cold calling script example to fit your sales pitch. It applies the basic script anatomy, takes on a conversational tone, applies simple research, and has a simple opening.

Jessica, a sales representative for Rooster Distribution, is trying to find new customers for her company’s line of phone accessories, including chargers, headphones, and charging blocks. She identified her city’s local aquarium as a prospect, since it is a tourist hotspot and many travelers may need to purchase emergency phone accessories. The following is the script Jessica plans on using to call Rob, the manager of the aquarium’s gift shop:

 

Hi Rob, this is Jessica from Rooster Distribution. I hope you’re having a good morning!

I’m a big fan of the Bishop Aquarium – I saw that you’re opening a dolphin exhibit next month! I can’t wait to check it out.

The last time I visited the aquarium, my phone was dying, and I noticed that your gift shop doesn’t have any chargers in stock. I know that a ton of tourists come around as well, and I imagine that they might need these products too… you know how hectic traveling can be and how important your phone can be!

Losing a charger or needing one in a pinch is super common and something I deal with all the time. Rooster Distribution supplies local businesses around Bishop with phone products like chargers, headphones, and charging blocks every day. Has your gift shop considered stocking products like these?

[continue from here and transition into ask].

 

Of course, even with the best cold calling script in the world, you will receive hang-ups and rejection. This is simply a part of the sales world. It’s important to keep pushing forward to success – and with a well-organized, conversational script, your chances of success will increase.

To learn more about cold calling scripts and other effective ways to boost your sales call success, schedule a corporate sales training session with Shapiro Negotiations today.

 

3 Keys to Effective Negotiation Skills Training

Negotiation is a critical business skill for all sectors of an organization, from sales representatives to high-level leadership. However, for an optimal learning experience, a negotiation course or program requires more than PowerPoint lectures and worksheets.

For a negotiations skills training course to be as effective as possible, students must obtain hands-on experience, learn tools that they can take with them and use later, and learn how to apply these tools to multiple scenarios. Using innovative learning strategies to administer a negotiation course can turn a class of untrained negotiators into masters of the art.

 

Negotiation Skills Training Programs Must Be Interactive

Using hands-on activities and roleplay scenarios are effective learning tools for multiple subjects, and they are especially effective for negotiation skills training.

When designing the training program, make sure to insert interactive activities to break up the monotonous instruction. Allowing participants to get their hands dirty will allow them to develop their own influencing styles and negotiation skills in a safe environment. This will also help participants practice the tools they are learning in the course, making them more likely to retain those tools for future use.

To administer a simple but effective scenario exercise, follow these three steps:

1. Make sure to make the scenario realistic. Participants want it to be in “their world” and will take it more seriously if that is the case.

2. Don’t overcomplicate the scenario with too many details. While participants want it to be real, too much information can be overwhelming and can have unintended consequences. Keep in mind that the more information the scenario has the more “outs” and “justifications” the participant’s have if it doesn’t go their way.

3. Have clear objectives in mind when creating scenarios. What specific negotiation aspects do you want it to test? Participants ability to ask questions? Conviction with which they deliver a first offer? Preparation process? Figure out what you want to address with the scenario and then build it.

 

Negotiation Skills Training Programs Must Supply Useful Tools

If students can use what they learn during the course in future situations, that is the sign of a successful training program. For this to occur, negotiation skills training programs can supply participants with tangible tools, such as training manuals or worksheets for future referral. Design the training program so that participants can easily answer the following question: “What will you do differently in your job as a result of this training?”

The goal of a negotiation skills training course is to ensure participants’ success in conflict. The program should be practical, and solutions should not be hard to find. Designing training materials that explicitly state the best practices for negotiations will be simple guides for participants to refer to in future situations.

 

Negotiation Skills Training Programs Must Be Customizable to Multiple Situations

Negotiation skills training programs must be relevant to the participants’ organizations or companies. Without this relevance, the facilitator will lose credibility. In addition, the participants will have to make their own connections to the material while learning new skills, which decreases their ability to retain information.

Implementing scenario exercises that are relevant to the participants’ industry is a correct approach to negotiation course design. If multiple industries are involved, design multiple scenarios. Using multiple examples throughout instruction will also allow connections to develop between practice and theory.

Negotiation skills training programs are tricky to administer effectively but following these easy steps will turn a program from mediocre to excellent. To learn more about negotiation skills training and to schedule an expert session for your organization, visit Shapiro Negotiations today.

Why Sales Analysis Is Important

Sales Analysis When creating a brand, understanding your consumers’ needs is imperative for a successful campaign. Prior to distributing goods to the public, however, businesses need to spend some time researching how their product or service can answer their consumers’ needs. A sales analysis positions a business to become a prominent force within the market because it helps them know if their marketing tactics are effective.

 

What Is a Sales Analysis?

Sales and marketing analytics are essential to unlocking commercially relevant insights, increasing revenue and profitability, and improving brand perception. A sales analysis report identifies the actual sales of a company over time. The report shows if sales are increasing or declining. With an analysis, actual sales may be compared to projected sales.

There are several benefits to conducting a sales analysis:

 

Opportunity to Expand Your Reach

A sales analysis is an opportunity to offer something unique, a niche, to the consumer who is not currently being met by other companies. Consumer surveys can also be conducted to learn about new goods or services that could have high demand in the marketplace. Understanding the demand is essential to remaining competitive. Also, unmet needs of the consumer are evaluated to see how products and services can be improved to increase customer satisfaction and profit.

An industry analysis allows business to estimate how much profit can be generated. Some questions to consider are:

  • Size of the market
  • How much the consumer spends
  • How frequently the consumer spends

 

Repeat Sales

New versus repeat sales of customer groups can be determined with a sales analysis. Managers can use this information to discover if they’re retaining business. Demand forecasting, a predictive analytic, can be used to estimate the quantity of products or services a consumer will purchase.

 

New Consumers and Branding

Gathering information about non-customers is an opportunity to gain their loyalty as well. A sales analysis will be able to identify what non-customers think of your product. The report can define the effectiveness of an advertisement, new products, and targeting. Your brand is important – it’s how your client base identifies you. Social media, sales conventions, and review sites are sources that are used to gather data regarding your brand, and you want consumers across these platforms to easily spot you. By identifying who is not buying from you, and why, your market can potentially be expanded to include new consumers.

 

Business Beware

While there’s no such thing as too much information, not understanding how to sue that information can be an issue. To avoid this:

  • Assess the financial cost: simply, how much money will your decision cost (or earn) the company
  • Assess the culture cost: a solution to a tough decision should have minimal impacts on your overall culture
  • Access the productivity cost: consider the impact of future productivity within the company

Sales analysis is one tool in your marketing kit; use it wisely and watch your client base grow.

 

When to Use Principled Negotiation

We understand that conducting contract negotiations can be overwhelming at times. Emotions can run high, and one party may feel as though their ideas are not being heard. Learning to approach talks in a more positive way, using principled negotiation, will help to avoid conflict. When you are at the negotiating table and you see there are options for you both to get what you want, it’s an idea time to use principled negotiation.

 

The Definition of Principled Negotiation

Principled negotiation is an approach that resolves disagreements between parties. It is also referred to as a “win-win” outcome. It focuses on bettering the interests of everyone and finding solutions that are mutually beneficial. Principled negotiation can help people achieve objectives and satisfy expectations by removing the “all-or-nothing” attitude. Consider these guidelines to ensure your negotiations go as smoothly as possible.

 

Separate Emotions from the Problem

Sometimes, emotions can cloud negotiations. If you feel as though you are at a disadvantage, you may react defensively. During any mediation, it’s important to maintain composure and not be influenced by fear or anger. Principled negotiation draws on principles instead of opinions. Seeing each other as partners will help keep the lines of communication open between parties.

 

What Is Most Important?

Instead of focusing on winning your position, start by discussing common interests you share and specific details of agreement during negotiations. From there, identify the interests of each party. You may discover that the underlying motivations of both parties are similar and will allow you to stay focused on the solutions instead of the problems.

 

Use Objective Criteria

If there is a strong conflict between the parties, using objective criteria may be useful. Objective criteria can include scientific evidence, legal rulings, industry standards, and cost estimates. For example, if purchasing property is under negotiation, presenting the market value of comparable properties in the area will validate the price. The goal is to establish a fair outcome.

 

Make Options Available

Think beyond having only one avenue for settling conflicts. Instead, generate diverse options to reach solutions. During brainstorming sessions, propose ideas that will offer mutual gain and refrain from judging. Consider ideas that are more important and more widely used. Begin with the most promising ideas and don’t get hung up on small discrepancies. Keeping an open mind to all ideas presented is key and prevents hindering the negotiations.

 

Avoid Pressure

Again, a win-win situation is the ideal for principled negotiations. Deny the temptation to pressure the other party to accept your terms. Pressure from either side is considered a power tactic. The great thing about principled negotiation is that it works even if you’re the only one practicing it. If the other party does not use principled negotiating, its tools still have power at the negotiating table. Instead of responding to attacks, redirect to solve the problem. Do not take it as a defeat if you need to walk away from a mediation.

However, no one should walk about from the negotiations feeling as though they had to make a sacrifice. Principled negotiations won’t work for every situation. Scenarios that may not be a good fit for principled negotiation are:

  • When one party is set on winning at the other party’s expense.
  • When negotiating for inexpensive, widely available products that do not have a significant role in business.

Keep in mind: with proper principled negotiation tactics in place, both parties can get what they want – a win-win and a desirable outcome for all.

Overcoming Objections to Increase Your Sales

In a perfect world, prospects will accept your sales pitch without reservation and come to an agreement about price and other factors, becoming a revenue-generating customer. However, we know that negotiations rarely work out that way – otherwise there would be little need for sales training and the art of negotiation.

We know that one of the toughest parts of the sales negotiation process is overcoming objections to making a purchase or moving into the next step of the funnel. By effectively knowing how to address sales objections, you will be better equipped to engage your average prospect and turn them into a buyer. Here’s what you need to know about overcoming objections in sales.

 

The Most Common Sales Objections

The type of objection that you encounter may vary widely depending on the customer, product, or business model. However, some of the most widely accepted sales rebuttals include versions of the following:

 

1.“We don’t have the money for it.”

Budget is one of the biggest detractors from a successful sale. Many sales reps have the reflexive reaction to simply lower the price, but this isn’t necessarily the best scenario. Immediately lowering the price can bring about questions regarding your product or service’s value, diminishing your authority.

 

2. “I don’t have the authority to make that decision.”

In some cases, a sales objection might arise because the person you’re speaking to has to consult with a boss, a partner, or even a spouse before making a final decision. This can seem like an outright dismissal, but you can see it as an opportunity to follow up with other decision makers involved.

 

3. “I don’t really need it.”

In some cases, a client will say that he or she is happy with the status quo, but what this really means is that fear of making a change may be dictating their decision-making process. Sometimes, this objection arises simply from being ill-informed about the value of a product or service.

 

4. “Now is not a good time.”

Another version of this might include, “Get in touch with me again when I have the budget.” Overcoming this objection is about more than demonstrating value, it’s about creating urgency, and making a proposition so compelling that they might feel regret if they pass up the opportunity right now.

 

5. “I need more time to think about it.”

This can be a particularly tricky scenario to navigate because it combines several of the previous objections at once: It may concern budget, authority to decide, need, and the timeliness of the proposition. Chances are, the customer simply doesn’t see the value of the product or service you’re trying to sell.

 

Best Practices for Overcoming Objections

Now that we know what the most common sales objections are, how can we overcome them? We recommend a four-point process to get the sales negotiation process back on track:

 

1. Acknowledge the Objection

First, it’s important to understand where the objection is coming from. As we highlighted in the sections above, the most common sales rebuttals might mean something else. For some customers, it’s failing to understand the value of the product. For others, it’s complacency or fear of making the change. Still for others, it’s a simple lack of information. By acknowledging the objection, you’re better suited to counter and overcome it.

 

2. Probe to Clarify

Asking simple questions about the customer’s reasoning is the next step in overcoming objections. Open-ended questions tend to work best, as they help you better understand what’s keeping a customer from a purchase. For example, if a customer says they simply need to think about it, ask yourself: what might be holding them back from making this purchase? From this brainstorm, you can help create a trustworthy relationship and establish value by introducing specific benefits of a product or service, such as a guarantee or return policy.

 

3. Respond to the Objection

Next, take steps to respond to any sales objection by clarifying your value proposition or showing how your product or service can deliver value to a customer. For example, if a sales objection arises  due to decision-making authority, don’t wait for a customer to “get back to you.” Instead, use this as an opportunity to identify the concern and keep the process moving along by setting up a joint meeting with the authority that’s holding the prospect back from a sale.

 

4. Refocus the Objection

The last step in overcoming objection is reframing it to arrive at the best solution. The approach to this will depend on the nature of the objection involved. For example, an objection rooted in complacency or perceived lack of need might simply require a targeted pitch of the benefits of your product or service. In many cases, demonstrating unique value, backed by specific examples of how a product or service will solve customer pain points, will effectively quell an objection.

 

Overcoming objections is a matter of asking the right questions, understanding the real reason for the sales rebuttal, and refocusing to drive value. It’s a process that requires plenty of practice, but these tips should help. Additional training can also be helpful in overcoming objections for further increased sales and revenue.

What Is Distributive Negotiation?

In some cases, such as when there is a fixed amount of value on the table, distributive negotiation is the preferred method to reaching a desired outcome. While integrative negotiation typically involves several complex factors, distributive negotiation involves a process where the outcome revolves around one factor, such as price.

For example, you might use integrative or interest-based bargaining when negotiating several aspects of a job – salary, benefits, time off, or even start date. By contrast, distributive negotiation involves one fixed point, and the assumption that both parties want to divvy up the pie in the best manner possible. Distributive negotiation examples typically involve purchases, such as a used car (for a consumer) or a large order from a vendor.

Distributive negotiation tends to be simpler than the integrative approach, simply because of the lack of external factors involved. However, both benefit from a thoughtful and exhaustively prepared approach. The more you prepare for any negotiation, the more likely you are to come out with a desirable outcome. Using a variety of strategies can help ensure that you’re coming away with a fair piece of the pie. Here’s how to do it:

 

1. Come Up With a Compelling BATNA

At the heart of any negotiation should be an effective BATNA, or best alternative to a negotiated agreement. In other words, what will you do if you cannot reach your first desired outcome? Generally, parties entering a distributive arrangement have a desired end goal, such as a price they’re willing to pay, or accept as payment.

The best way to improve your BATNA for distributive negotiation is to create various alternatives through research. For example, if you’re in the process of ordering a large amount of supplies from a vendor, it can be helpful to pursue several negotiations from different vendors at once. This better positions you to negotiate and achieve the best price possible by maximizing available benefits and even bouncing the possible alternative across vendors.

 

2. Find Your “Reservation Point”

Another key aspect of distributive negotiation is determining when you will walk away from the negotiation. For distributive negotiating, this is usually a fixed price point. For example, you might decide ahead of time, based on conversations with stakeholders and management, that you’re willing to buy supplies for $5,000, but will walk away if the other party refuses to come to that level.

It’s essential to determine your reservation point well before entering any negotiation, whether it’s a price you’re willing to pay, or what you’re willing to sell a product or service for. If you don’t determine this point before the negotiations begin, you could end up in a low-ball situation.

 

3. Think About the Other Party Involved

The key to understanding and effectively navigating any negotiation is accepting that you are only one of two parties involved. You don’t want to go beyond your reservation point, but neither does the other party involved in the negotiation. Knowing the other party’s BATNA and reservation point can help streamline the negotiation and smooth any major differences in opinion. In some cases, it can even narrow your options and determine when a negotiation simply isn’t worth pursuing.

Better understanding the other party requires proper research. Using the same example of vendor supplies, you might research the availability of other services in the area and how willing (or desperate) the other party might be to make a deal. When you have an idea of how much flexibility the other party has on price, you’re better suited to aim as high (if you’re the one selling) or as low (if you’re the one buying) as possible.

The distributive approach to negotiation involves acknowledging the differences that are inherent to both parties and understanding the basic definitions of BATNA and reservation point. When negotiating, keep those elements in mind and use them as strategies to achieve the best possible price. Remember, distributive bargaining involves taking home the largest slice of pie possible, a process that can require practice and additional training.