What Does ‘Sales Negotiation Skills’ Really Mean?
When I am training sales teams, I usually find that everyone agrees on the need for sales negotiation skills. Despite the overall consensus that they are needed though, there can sometimes be some uncertainty around what we actually mean by ‘sales negotiation skills’.
If you work in sales, negotiation skills are a fundamental part of your role. The bottom line is that from the C-suite to the sales team and from the smallest transaction to million-pound contracts, someone must negotiate the sales that bring your business the revenue.
When I am training sales teams, I usually find that everyone agrees on the need for sales negotiation skills. Despite the overall consensus that they are needed though, there can sometimes be some uncertainty around what we actually mean by ‘sales negotiation skills’.
What Is Sales Negotiation?
So, let’s start by focusing on the goal.
‘The core purpose of any sales negotiation is to reach an agreement that satisfies everyone.’
Sometimes this definition causes a bit of confusion in the training room. Surely the goal is to ‘get the sale’ isn’t it. Well, yes, naturally you want to walk away with the deal, but that can only happen if the customer is prepared to buy.
A good salesperson provides solutions to the problems facing the customer. Sales negotiation skills are part of the process of identifying a customer’s needs so we can work towards providing those solutions. If we want the sale to happen, we usually need to negotiate to a point of agreement for all parties.
It’s not a situation where one party "wins" at the expense of the other because we are looking to negotiate a sustainable arrangement that leaves both parties satisfied. When we do that, we are setting the stage for a long-term relationship.
As former FBI hostage negotiator Chris Voss writes in his book ‘Never Split the Difference,’
'Your goal is not to get your way, but to reach an understanding.'Chris Voss
The understanding he is talking about is the cornerstone of effective sales negotiation skills.
What Sales Negotiation Is Not
Effective sales negotiation skills will help you avoid falling into some common traps. These may feel like an easy route to a sale at the time, but they are dangerous and counterproductive.
- Sales negotiation is not about winning at all costs: Aggressive tactics may seem to offer immediate gains, but they don’t forge long-term relationships. They usually leave customers feeling resentful, unhappy, and bullied into a decision. You are storing up resentment that leads to complaints, customer service issues and even reputation damage.
- Capitulation is bad negotiation: At the other end of the scale from the ultra-aggressive approach is the ‘have anything you want’ approach. Giving in to every demand just to close the deal may well work, but it also results in a one-sided agreement. This approach not only erodes profit margins but also sets unrealistic expectations for future negotiations. A sale with little or no benefit to the business, isn’t a sale… it’s a burden. Worse still is that it leads to impossible promises. Using unethical and unprofessional tactics like unrealistic performance promises or agreeing to unachievable delivery times may result in a sale, but they will very quickly lead to problems with unhappy customers.
- It isn’t about negotiating down: Negotiation is not about whittling away at the deal until you get the bare bones sale. It is about removing constraints and expanding the parameters wherever possible. A collaborative approach will often uncover opportunities that benefit both parties, such as bundled services or additional vertical opportunities. Always look to expand the discussion into new sales areas.
It is vital you avoid these traps because they are the opposite of negotiation. The better options will always be proactive, collaborative, and open to negotiation.
The importance of a win-win outcome
A win-win outcome is the gold standard in sales negotiation. There is more to this than both sides getting what they want though. A true win-win is an outcome where everyone not only reaches an agreement, but where they also gain and prosper from the arrangement.
Why is the win-win so important? Well, let’s look at what you gain from it, and I think its value will speak for itself.
- It creates trust and loyalty: A successful outcome for everyone means your customer will feel you are working with them and for their benefit. That generates trust and loyalty.
- It improves your reputation because you are seen as fair and competent: Sales professionals who prioritise mutual satisfaction avoid being seen as overly aggressive and selfishly sales focused. Both will tarnish your reputation.
- It sets up future and referral business: A win-win negotiation lays the groundwork for future opportunities, whether it’s upselling, cross-selling, or repeat business. It also encourages referrals, and trust me, if you underestimate the power of referrals, you will do so at your cost. When a customer talks about you as ‘the really understanding and helpful person who…’ in a referral, you are already well on the way to a new customer.
Markers of successful negotiation
There is a difference between just getting to the end of a negotiation and the level of success you achieved from the negotiation process. So, how can you tell if your negotiation efforts were successful? The best way to do this is to look back and review your performance in relation to some key indicators of success.
Here are some key areas to look for:
- You identified the sales points: The collaboration you created by using effective listening, empathy, defining the customer’s needs and so on, helped you to identify sale opportunities. If you have had a really successful negotiation, you should feel confident that you identified every point in the process where you could help the customer.
- Both parties felt satisfied: A good negotiation leaves both the seller and buyer feeling that they have gained something valuable.
- The relationship was started or strengthened: Successful negotiation builds rapport and trust.
- The sale is practical and sustainable: The sale happened and all parties felt confident in the final outcome.
- The customer felt understood: Empathy is a powerful tool in negotiation. By actively listening and addressing the buyer’s concerns, you demonstrate that their needs are a priority for you. You don’t necessarily need to agree with their ideas, but you do need to appreciate their mindset to fully understand what they need.
In short, a good negotiation makes everyone involved feel good about the outcome and invested in completing the process. That is the indication of success, that is the ultimate proof of your sales negotiation skills.
Practical tips for developing more effective sales negotiation skills
All negotiations are unique, so you and your personality will also be a factor in how you conduct yourself, but there are some basic principles you can apply
- Listen More Than You Speak: Understanding the buyer’s needs, concerns, and motivations is critical. So, at the risk of being a little blunt, shut up and let them tell you what they are.
- Focus on Value: Highlight the unique value your product or service brings to the table.
- Be Flexible: Consider creative solutions to address the buyer’s concerns or objections.
- Know Your Limits: Define your walk-away point before entering the negotiation. This prevents you from agreeing to unfavourable terms.
- Aim for Collaboration: Approach the negotiation as a partnership rather than a battle. Find common goals and work towards a solution that benefits both parties.
Pulling it all together
Sales negotiation skills are not about outsmarting or overpowering the other party— they are about reaching a shared understanding and creating something that meets the needs of both the buyer and seller.
By adopting a collaborative mindset, actively listening to the customer’s needs, and focusing on value, negotiations transform into powerful opportunities for mutual success.
Sales negotiation skills are about allowing the sales process to happen naturally and easily for everyone at the table.
