Although it’s one of the most important skills sellers can develop, sales negotiation can be stressful for most. Not to mention, sales negotiations are increasing in difficulty as the impending recession gives buyers cause for concern. This leads to greater buyer objections and more pushback from buyers at the negotiating table.
With a recession on its way, now is the time to recession-proof your sales tactics and equip yourself with the skills you need to feel confident navigating sales negotiations. According to the Rain Group, 48% of top-performing sellers don’t feel prepared for negotiations. One of the best ways to ensure you can confidently tackle negotiations is to avoid subscribing to commonly held sales negotiation myths. In reality, these myths can actually be more harmful than helpful to the outcome of your sales negotiations.
If you’re new to the sales field, or if you’re an experienced sales professional looking to expand your negotiation skills, reviewing 5 sales negotiation myths may help you overcome the hardships of the impending recession and win more deals. In this article, we’re debunking the top 5 myths about sales negotiation. Let’s begin!
Myth #1: Buyers Only Care About Price
With a 40% chance of a recession in 2022, it’s easy to assume that as buyers slash budgets, they only care about the final price of the product. While buyers are concerned about price, they care far more about value. In fact, companies that emphasize value in negotiations are two times more likely to capture maximum prices. The last thing a buyer wants is to invest their limited budget into a product with a poor ROI or one that lacks value — no matter how low the final price is.
Since buyers are operating on limited recession budgets, they want their dollars to stretch even further. Therefore, buyers are looking for high-value solutions to their most pressing pain points. Thus, it’s critical that during periods of sales negotiation, you can showcase the immense value of your product or service over your price.
For example, your prospect may struggle to automate their IT infrastructure to save employees’ time. However, due to the recession, they are hesitant about investing in your company’s automation solution with their limited budget. To ensure that you’re negotiating effectively, consider providing customer testimonials and relevant data to showcase your product’s performance and usefulness. When the prospect can see data evidence demonstrating that your product can eliminate a days-long process down to a few minutes, they can understand the precise value they gain from their investment.
Myth #2: Start Your Negotiations at Your Walk-Away Price
Some sellers begin negotiations by offering the lowest price possible, assuming that the buyer will see the price as a bargain. This is hardly ever the case. One thing is for sure: your buyer is more than likely planning to come back with a lower counter-offer after the initial offer. Nearly one-third of B2B buyers claim their purchase decisions are driven by price — which likely means they spent a large amount of time going back and forth with sales reps in negotiations. Typically, buyers will negotiate offers because they aren’t sure how low a salesperson is willing or able to go. This is especially true in a recession, when the buyer wants to spend as little money as possible. The problem is, if you initially offer your walk-away price, you’re almost guaranteeing that you won’t close the deal above that price — whereas when you offer above the walk-away threshold, you can still close the deal at the lowest price while still garnering profit.
For instance, say you set your initial offer at your walk-away price of $2,600 leaving you with no room to negotiate when the buyer counter offers at $2,250. You’re now forced to keep offering the $2,600 price. However, the buyer grows increasingly frustrated with your refusal to budge — resulting in the deal falling apart. Had you initially offered at $3,000 or higher, both you and the buyer would have $400 on the table to negotiate around. Then, you and the buyer may have more options and flexibility when negotiating the price.
Myth #3: Don’t Let Emotions Get in the Way
Often, it’s emphasized that reps should not get emotional during the sales negotiation process. This isn’t necessarily true — empathy and kindness can go a long way in a sales negotiation, as 88% of B2B buyers only buy when they see a salesperson as trustworthy. The phrase “don’t let emotions get in the way” mostly refers to your ability to remain calm and collected, no matter how much the buyer frustrates you. This boils down to your EQ, or emotional intelligence.
Emotional intelligence is the ability to be aware of and control your emotions, while also managing and responding appropriately to the emotions of others. When dealing with the highs and lows of sales negotiation, your emotional intelligence can be the difference between a happy buyer and a frustrated, angry prospect who’s ready to pull out of the deal.
Consider this. You enter a sales negotiation with a buyer. After extending the initial offer, the buyer counters… then they counter again… and again… and again. Naturally, you feel frustrated at the buyer’s continued objections and attempts to lower the price. After all, you’ve invested hours of time into this deal, and you’re watching it potentially fall apart in the final stages because the buyer simply will not cooperate. If you lose your cool and show this frustration, your behavior and attitude may put off the buyer. This could result in the buyer ultimately choosing not to purchase, or starting your client relationship off on the wrong foot.
However, if you empathize with the buyer, indicating an understanding of their budget constraints while maintaining pricing standards, you’re able to build a trusting partnership. To start, inform the buyer that you want to ensure they’re getting the best price possible, but you also want to ensure that you aren’t losing money — as a business owner, the buyer understands you can’t sell them a product at a loss. Conversations like this build mutual trust and set a solid foundation for a mutually beneficial client relationship. A partnership based on empathy is more likely to end in a deal closure and a stronger client relationship down the road.
Myth #4: Do Most of the Talking in Sales Negotiations
While it may seem like a good idea for you to do most of the talking during a sales negotiation, the opposite is actually true. You have presented the terms of the deal — so let the buyer counter with their objections. Plenty of sales reps are ready to respond with their discounted offers to close the deal sooner. But talking too much, too soon, can actually be a disadvantage. When the buyer has more time to speak, they reveal their thoughts and objections to the deal. While talking, the buyer can indicate where they stand, providing you with crucial information regarding their objections and concerns. You can then use this information to alter your sales negotiation tactics to personalize the conversation and further prove the value of your product for the buyer’s specific use case.
Imagine you’re meeting with a buyer who has just reached out to you with a counter-offer. While it may be awkward to sit in silence for a small moment after they present their counter-offer, this awkwardness can work to your advantage. The buyer wants to fill this silence just as bad as you do — so they’ll start providing additional information regarding why they want a lower price. Perhaps they think your product doesn’t fully solve a specific pain point, or maybe they just can’t afford the pricing within their budget. You can listen and empathize with their objections, then personalize the conversation to those points the buyer just mentioned, working the sales negotiation to your advantage. If the buyer mentions that they feel your IT automation platform won’t save them enough time to justify a purchase, turn the conversation towards customer success stories and data points showing it will.
Myth #5: Never Walk Away
It’s tempting to approach every sales negotiation with the mindset that you won’t walk away, no matter how long it takes or what demands the buyer has. Although it’s hard to walk away from something you’ve dedicated hours of your time and resources to, sometimes it really is better to just walk away. When the buyer demands unrealistic amendments to their contract or the deal becomes unprofitable, it’s vital to walk away and spend your valuable time on a better-fit prospect.
For example, let’s say you’ve been in a sales negotiation with a buyer for over two weeks. Every time you’ve sent over an amended contract, compromising with a few of the buyer’s demands, they push back further. Perhaps they’re demanding additional services and features you don’t offer, or they’re continuing to negotiate the price down — either way, there seems to be no end in sight to this buyer’s counter-offers. Negotiating with this difficult buyer has eaten up far more of your time than planned. You could have spent your time in meetings with new prospects or closing deals with other potential clients, meaning you’ve actually lost money in negotiations. Considering the money you could have made in other meetings, it’s financially wise to walk away from the deal.
The last thing you want is to enter a sales negotiation as the underdog — especially during a recession. As economic stresses make sales negotiation even more difficult, it’s imperative that you walk into negotiations confident and prepared. If you buy into the wrong sales negotiation myths, you’re giving the buyer the upper hand and leaving money on the table.
Learn how an outsourced sales team could strengthen your negotiation skills and drive revenue on our blog, Sales Negotiations: 4 Skills Outsourced Sales Reps Bring to Get Deals Done.