To open this week’s blog, I would like to start with a definition of commercial negotiation. While it will sound simple in nature, it is a relevant starting point to move forward from. Commercial negotiation is a situation where the buyer wants to want to buy, the seller wants to sell and the basis for the transaction requires an agreement. As I mentioned in my first blog, the negotiation process starts once the selling is complete and is principally focused on creating the best possible terms.
While we can not be black and white about the definition, it is a relevant concept as situations where one party is trying to negotiate, and the other party is still selling can either lead to no deal or a situation where more value could have been created if both parties are focused on commercial terms versus selling.
Here is how this could play through in a real-world scenario. Imagine you are in transportation sales and you are meeting with a potential customer for the second, perhaps third time. Through the course of conversation, you have outlined your company’s main points of difference which may include on-time delivery and safety performance amongst others. In fact, you may have talked about the concept of joint value creation where both company’s can create value through the completion of an agreement. As the meeting progresses, the potential customer asks to review the rate proposal you submitted via email the previous day. The feedback you receive is not positive. In fact, you are left with the impression that you have really upset this customer and perhaps feel the business slipping away. In my experience, the most common response from the selling party in these types of situations is to remind the buyer of the various non-financial characteristics that separate his / her company versus their competitors. While a gentle reminder of these points can be highly appropriate, continued reminders can frustrate the buying party and may lead to a deal not being completed. When the buyer is asking for a proposal, it is generally a good sign they are interested in buying your product or service.
One of the more effective approaches that can work well in these situations is to take an opportunity to ask probing questions about where the potential differences may be. Once you have the clarification required to your questions, find a way to ask the question “If this proposal is not acceptable to you, what are you proposing?”
It is easy for a buyer to give you general feedback that your proposal is not acceptable and send you away to re-submit. However, your ability to have the buyer provide a specific response to your proposal will then give you something to work with versus trying to work with broad, generalized statements that could lead you down the wrong path. One of the strategy’s buyers can use to have you move more times than they do is by simply saying a proposal is not acceptable and that you need to provide another proposal and then another proposal and so on. When you find yourself in this situation, you should find a way out as it may be diluting the value of the deal for your company.
Back to the topic of this blog on the difference between selling and negotiation, a strong sales professional that is able to both clearly articulate the features of your product / service and, when the door opens to negotiate, step through the door with a focus on negotiating the best possible commercial deal versus staying overly focused on service features will not only increase their chances of achieving their sales targets but also create the best possible commercial deals for your company.
As I mentioned in my first blog, I am looking forward to the journey of exploring the multiple aspects of commercial negotiations. If there is a specific area that you would like me to speak to, please send an email to me at firstname.lastname@example.org and I will work to provide the answer in upcoming blogs.
Warren Sarafinchan is providing advisory services and professional development in the areas of Business Strategy, Negotiations, Supply Chain Management, Sales Management as well as Leadership
Coaching. Warren has extensive experience working with leading organizations across North America designing and implementing solutions to complex business challenges and opportunities. Warren’s facilitative approach
has allowed teams he has worked with to accomplish ‘impossible dreams’.
In addition to Warren’s experience leading Supply Chain functions, he has implemented multiple ERP solutions, lead a Sales organization through a period of significant challenge and change as well as heading
Information Technology functions. This broad ranging experience allows Warren to bring total business solutions to his clients. Warren works from the initial problem solving / visioning through to successful implementation.
Most recently, Warren was the Vice President of Supply Chain and Sales at SunRype Products Limited. Prior to SunRype, Warren worked in senior leadership roles for Mars Canada, Maple Leaf Foods and Labatt
Breweries of Canada. Under his leadership, the teams Warren worked with have developed and implemented strategies that have delivered significant financial improvements, increased customer collaboration and overall improvement in team engagement. Additionally,
Warren has developed a professional development program focussed on negotiation that is proven to enable organizations to create significant value with both customers and suppliers. All posts by Warren Sarafinchan