Negotiating effectively is the key to success in business

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Bikky Khosla | 07 Apr, 2009
Negotiations are part and parcel of a business. Whether one is buying or selling, negotiations play the most important role in day-to-day business proceedings. Despite the need for effective negotiations, businesses, particularly Small and Medium Enterprises (SMEs), in most cases falter in this department.

I have noticed that SMEs consider negotiations as merely lowering the price tag to suit the buyer. Actually there is more to it. Marketing departments of SMEs need to understand that lowering the price of products at the drop of a hat can put a question mark on the buyer's mind as to the quality of the products. He might ask himself: Why is he lowering the price? Is the quality of the product okay?

So instead of lowering the price it is best to add value to the product. Instead of discount, one should consider offering additional products, services, support, or development, while maintaining the price, or even increasing it. For instance, give certain added products or services which have been launched recently. This gives you an opportunity to let the customer test the new product too. It might pay off with future purchases. If possible, give an extension on the warranty or prepone your delivery date.

It is also very important to gather as much information one can on the buyer before one goes calling. His past buying history, his negotiating history, so on and so forth.... It's an unholy custom with most sales persons that they usually never list the issues involved before they go for a call. Neither are they aware of what they want to achieve and what they can offer if the customer says NO. Thus it's very important to ponder on the core issues and also to keep the attractive additions at arm's reach just in case they need to make the offer more attractive.

SMEs in general and their marketing teams in particular need to bear in mind that when they hear a NO from a customer and they are about to walk away from the negotiating table empty-handed, it also means that they have not done a good selling job. This calls for regrouping and approaching the customer again.

Having said that there are times when SME holders will feel that no deal is better than this deal. The customer should not get mixed signals that the seller is desperate to sell and thus give him an upper-hand to gain even greater concessions.

Lastly, I feel SMEs and their marketing teams should always remember that it hardly matters to the customer if they sign the deal today or three months later. They also have an option to approach another seller. But this customer matters to you and it matters more to your company. Also remember, being a seller it is you who has a target, and not the customer. One chance is all we get...the question is: are we being able to turn this chance into success?