Improve sales negotiation skills and avoid end-of-quarter problems by avoiding two big issues that plague sales organizations:
These issues result in an estimated $98 million per year in lost revenue for the average company. However, these issues can be addressed by:
This approach reduces discounting, improves the quality of deals, and improves human relationships while increasing closing percentages, decreasing time-to-close, and improving forecast accuracy.
Market pressures from Wall Street and investors, irrational competitive behavior, and internal quarterly pressures to “make our numbers” all contribute to the problem of waiting until the end of the quarter for promotions. To deal with the pressure, many salespeople wait for those quarter-end (or month-end) promos to make it easier to close deals. Even worse, sales organizations have trained buyers to feed off this behavior. However, waiting until the end of the quarter can result in decreased deal size and win rate, as well as lost revenue for the company.
This can be done by offering three paths forward at three different investment and effectiveness levels instead of simply offering one price. By doing so, the conversation shifts from the price of one offer to the value of three different solutions. This approach reduces the probability of zero-sum concessions in favor of value-creating tradeoffs, broadens the conversation beyond the price, and acts as a sensitivity analysis for the needs of the buyers when asked to rank each solution from most to least desirable. After the “ranking,” sales organizations can co-create a fourth solution that has maximum value for the buyers and the company.
This approach involves modeling “what happens when a renewal goes well” by looking at past successful renewals to understand what happened when and by whom. At intervals of 12-9 months, 9-6 months, 6-3 months, and less than 3 months, sales organizations can determine what actions took place and who was involved both internally and externally. By doing so, sales organizations can identify best practices and coach against them for all stages. The goal is to make negotiation best practice common practice and install rigor and cadence for scale.
Waiting until 30-45 days out to plan for renewals is an issue that plagues sales organizations. This issue can be addressed by determining the impact of no agreement for both sides to get crystal clear on tangible value. By analyzing the customer’s alternative to buying from the company, sales organizations can determine the risks posed to them of missing their business goals by not choosing their solution. The analysis can also be used to determine the customer’s business needs at the moment, their most likely alternative, and all the strengths and weaknesses of that alternative given their needs. This analysis informs the value of the company, which is defined as how it meets customer needs at higher confidence and lower risk than an alternative. By understanding value, sales organizations can reduce pressure for concessions and lead rather than react.
Additionally, sales organizations can change the conversation from “here is our offer” to “here are three value-creating going forward options” to further address the issue of waiting until 30-45 days out to plan for renewals. Multiple Solution Options, which run from tactical to strategic impact on the customer organization with corresponding commercial terms for each, can be used to shift the conversation from price to value. This approach reduces discounting, improves the quality of deals, and improves human relationships while increasing closing percentages, decreasing time-to-close, and improving forecast accuracy.
To determine the value of the company and shift the conversation from price to value, it is important to understand the customer’s business needs and most likely alternatives, as well as their strengths and weaknesses. By doing so, sales organizations can determine how they meet customer needs at higher confidence and lower risk than an alternative. This requires doing the analysis through the lens of understanding the needs of senior, mid-level, and operational stakeholders because it is likely that they are different.
Taking the time to determine the criteria customers should be using to compare the company to alternatives and in fact, knowing it better than they do, allows sales organizations to lead versus react. This analysis also provides sales organizations with the confidence to hold tight on concessions. It is this value analysis that informs the stance to take on discussing commercial terms with the client. Of course, this should be done as early as possible, but even if sales organizations are pushing for a month-end close, they should never talk commercial terms without being backed up by this insight.
By implementing these strategies, sales organizations can benefit in several ways. Changing the conversation from price to value can improve deal quality and reduce discounting. Planning for renewals 12 months out can decrease the time-to-close and improve forecast accuracy, while determining the impact of no agreement for both sides can increase closing percentages. Additionally, implementing these strategies can improve human relationships between the company and its clients.
Waiting until the end of the quarter for promotions and waiting until 30-45 days out to plan for renewals are two issues that plague sales organizations. However, these issues can be addressed by planning for renewals 12 months out, determining the impact of no agreement for both sides and changing the conversation from price to value. By doing so, sales organizations can reduce discounting, improve the quality of deals, and improve human relationships while increasing closing percentages, decreasing time-to-close, and improving forecast accuracy. To determine the value of the company and shift the conversation from price to value, it is important to understand the customer’s business needs and most likely alternatives, as well as their strengths and weaknesses. By implementing these strategies, sales organizations can benefit in several ways, including improving deal quality and reducing discounting.
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