Chapter 27 - Negotiating the Agreement
The author considers negotiation to be the basis of human interaction: our species has survived "because we've learned to compromise" and make do with less than we wanted.
Selling is easy when you can provide a product that meets the customer's expectations for a price they are willing to pay. But that seldom happens: customers want more than a seller is willing to give at a given price point, and the seller wants more than the customer is willing to give for what he offers. Both sides must compromise a bit, to give more and take less than they originally intended, for a deal to result.
Particularly for selling services, negotiation is important to setting expectations because there will be an ongoing relationship between the seller and the buyer - the firm does not disappear after making the sale, but must return periodically (or be on-site on a constant basis) to deliver the service. Ultimately, the service must be done to the customer's satisfaction, and any details that were glossed over in contract negotiations will be glaringly evident in the service that is provided.
The author suggests that product salesmen often take negotiations less seriously because they have no contact with customers who are stuck with their products (EN: perhaps true in some instances, but most firms are seeking regular business rather than a one-time sale, and those who run pump-and-dump routines generally don't stay in business long anymore, so this generalization is not warranted. Also, there is ample potential for pump-and-dump in services, particularly when the services are a once-and-done service that takes a short time to provide.)
The author speaks to a personal experience where his fee for training was a percentage of the increase in sales - his intent was to charge based on increase in gross sales, and the client sent him a much smaller check based on the difference in net sales. In this instance, the contract was not specific, which led to a lot of wrangling and discontent through the five-year term of their contract, which both parties were glad to see the end of. This experience left the author highly sensitive to the issue - and dedicated to being clear in advance to avoid getting into an antagonistic and unprofitable relationship.
This also underscores the importance of striving for win-win in service contracts. Even if both parties understand the terms fully, a customer will quickly recognize that he is not getting sufficient value for the price he is paying once the service begins.
A few tips:
- Beware of assumptions. It's not unusual for clients to have many assumptions of what you will do for them, aside of the things they openly discuss when negotiating the contract. Get them out in the open to avoid being taken by surprise later.
- Emergency preparedness. Ask "what might go wrong" and encourage prospects to do the same, to ensure there are contingencies in the contract so that you will have a clear plan when they do.
- Get assistance. A salesman need not be a lone gun, and it's often helpful to engage a service person during a sales call (ideally, the person who will perform the service, or oversee the team that does)
- Be flexible. Where the client doesn't wish to take your as-is service, be prepared to make adjustments - do a little more or less (and charge correspondingly more or less) to suit them.
As a final note, take the perspective that you are always negotiating, in every interaction with a prospect or a customer. If you are not discussing the arrangements of the deal, you are laying the groundwork to do so.