Challenger is currently conducting a wide-scale study on the current state of negotiations in B2B selling – ‘Commercial Negotiation’ – as we’re referring to it. While new data is coming in every day, one recent finding caught our eye:
Only 43% of ‘negotiations’ happen during a live interaction between seller and customer.
Our take? Negotiations don’t happen in a vacuum.
At its core, Commercial Negotiation is about agreeing on an exchange of value with a customer – the proposed solution for a commensurate price and conditions. But most of the time and effort is spent in preparation for live interactions. There’s much more going on than what is immediately observable at the proverbial negotiating table, which may just look or sound like a lot of haggling about price, or getting to perfectly worded terms and conditions.
To be sure, almost every type of sale will involve some kind of bargaining to close the deal. And there are many well-known tactics and frameworks out there to use in all kinds of different situations. But few account for the full scope of factors that can mean the difference between success and significant loss of value in B2B sales scenarios.
A seller who has reached late-stage negotiations by following the Challenger approach has, at a high level, guided the buyer along a purchase journey that has educated them on the true scope of their business problem, gotten them to buy into a strong business case for change, and helped them understand the connection between your solution and its unique ability to solve said business problem like nothing (or no one) else. But it’s the late-stage back-and-forth that can mean all the difference when it comes to preserving, or even increasing, the value of the deal.
Challenger recommends sellers keep these four things in mind as they execute their Plan for the Close…
Confirm the Value – For a Challenger seller, the Close represents a shift in emphasis around the value being delivered. Up until this point, the focus has been on quantifying the cost of doing nothing. Now it’s time to quantify the economic value that the solution will deliver. Absent clarity around value, closing discussions become price discussions.
Plan Your Concession Strategy – Earlier this week we ran a poll of nearly 300 sellers that revealed something encouraging: Only a quarter (27% to be exact) offered discounts in more than half of their deals in 2020. Still, agreeing to a price reduction is a temptation for many, and one that is sure to erode value and margins. Before simply agreeing to any price reductions, high performing sellers work to identify alternative, cost-effective concessions that deliver incremental value to the customer. And if they absolutely must concede on price, they’re comfortable asking for something in return. Speaking of constructive tension…
Use Constructive Tension – Challenger research shows that there are three communications techniques, or gambits, that high performing sellers rely on more than their average performing peers:
The difference between average and high performance is often rooted in a seller’s ability to create, and maintain, an environment of Constructive Tension end-to-end.
Prepare for Delivery – Preparing the ground for effective delivery of the solution before the deal is closed is an underleveraged but powerful tactic. Establishing (in partnership) a firm rollout plan, identifying the primary users who will derive the most value from the solution, and building an early communications plan for said users will help both parties maintain confidence, enthusiasm, and momentum around the impending agreement.
Challenger can help.
Want to build some of these techniques into your Plan to Close?
Resources available to Challenger Activation clients.
For a deeper dive, Challenger Activation clients can access our brand-new TEMPO Playbook, full of tactical guidance from Challenger Advisors, and downloadable tools and templates for execution throughout the sales process.
And remember…while successful late-stage negotiations seem to get all the glory, the heavy lifting that makes it all possible happens well before what is traditional thought of as the ‘negotiation’ itself.
Sharpen your early-stage strategy with Uncovering Customer Need, the first in a series of four brand new eLearning courses on Negotiations, now available exclusively in the Challenger Activation Portal. Each of these ~20-minute self-led lessons is designed to help sellers develop and execute strategies in the early-stages of the sales process that will set them up for success during late-stage negotiations.
*Activation Clients please note: In order to access the Playbook, you’ll first need to log into your Challenger Portal account at portal.challengerinc.com From there you can go directly to the TEMPO Playbook as well as access the Uncovering Customer Need elearning course.
Good luck closing out 2020.
We at Challenger sincerely wish you all a happy, healthy, and successful close, and hope these resources help you and your teams generate some big wins.