I used to be closely involved with a sales team at a medium-sized technology company. Nicolas, one of the salespeople there, often came away from meetings feeling a bit dazed, convinced that procurement’s only goal was to buy at the lowest possible price. But Bruno, one of his colleagues with the same types of customer, sells very successfully without always needing to lower the price. Is Nicolas just unlucky, or is there more to it?

What Nicolas isn’t seeing

Nicolas keeps falling into the same trap. He ends up negotiating on price because he hasn’t convinced the customer of his solution’s value, which leads to buyers trying to hammer the price down. Or he starts bargaining before other issues have been cleared up, such as delivery times or SLAs. And sometimes he simply gives up too quickly.

So what makes Bruno so successful?

Bruno, on the other hand, appreciates that negotiating actually means finding solutions. He understands his customers’ challenges and KPIs, and responds by offering them added value in his solutions. He keeps a ‘give and take’ list, which gives him self-assurance and helps him find a win-win situation together with the customer. Last but not least, he also always has a strategy and action plan. Customers see Bruno as a partner and adviser; he understands their situation and is there to help them.

Negotiating techniques

What’s crucial in negotiations?

  • That you, like Bruno, understand the procurement KPIs – there’s a lot more to it than simply buying at the lowest price
  • This knowledge gives the seller a certain amount of bargaining leverage
  • And that puts sales in a position to understand their discussion partners’ objectives and strategy, and predict their next move, so they can tailor their sales strategy accordingly

The moral of the story is to start negotiating as soon as the customer begins their buying journey, in the initial conversation. If you as the seller do everything right throughout the customer’s buying cycle, negotiating actually becomes very simple, even for complex matters. It turns the negotiation into a simple conversation that successfully concludes all previous discussions.

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It used to be the case that your quote was too expensive, and prospective buyers would almost always question it. If you asked why they thought it was too expensive, they would tell you it cost much more than your competition. This meant that good negotiators who could resolve issues automatically became the best sellers. Our client, Kris Verheye from Belgacom, says those times are now a thing of the past. Buyers aren’t price-buyers anymore, so you won’t get very far with sellers whose only skill is negotiating.

This new buyer, Buyer 2.0, is a very well-informed buyer. Our own experience and figures confirmed in Harvard Business Review tell us that B2B decision-makers have already made 60% of their purchasing decisions before they even meet potential suppliers. This means that the sales conversation is no longer about price, but rather about value and risk management.

At our latest Corporate Performance event, Kris Verheye said: “Buyers don’t always know how to get good value out of the things they have informed themselves about. That’s why the new buyer has to help, and make the difference as a good guide.”

So the conversation cannot be about the cloud to begin with, for example, but about the client’s challenge. What do they want to solve? What do they want to improve? Where do they want to be more competitive? The new seller doesn’t have to find an answer for the whole business strategy straight away, but they do have to understand the client’s market conditions well enough to be able to take advantage.

Once the intended aim of the purchase is clear, we shift to the financial aspects. What is the available budget? What is the expected TCO? How will we calculate the return? The new seller starts acting as CFO and, in this role, concludes the second phase of the purchasing process.

Only then is it time to discuss the solution and, for example, look at that cloud. The average buyer won’t necessarily want to know what it is exactly; they might know about that already. But they will want to know how their supplier can ensure the implementation will be as invisible as possible, and how they can minimise any risk resulting from the change. So the new seller becomes the risk manager.

Perhaps there’s no need to discuss a solution at all, because the seller also has to be able to decide if it’s best to pull out of being the potential supplier, for example if the business case isn’t clear enough, or the budget won’t satisfy the ambitions, or the client is underestimating the project management. If this is the case, the seller also needs to be a risk manager with an eye for a maximum success rate for quotes, and a high return from pre-sales costs.

Together with the price-buyer, the price-seller is also disappearing. Ironically enough, this increases the sales costs, which you can read more about in this article.