strategic sales negotiation: 2nd most common problem

Price pressure is the second most common business negotiation problem we face today.  In fact, it is so pervasive that it has become a kind of self-fulfilling prophecy.  The more you hear the word price from people who want you to focus on it (to the exclusion of just about everything else going on at the bargaining table), the more you consciously and unconsciously start to think about one and one thing only:  price.

I think we can agree that the chance of you hearing the following statement is approximately zero:  "Well, (insert your name here), I've been looking at your proposal, and your prices are just too low relative to the competition's.  Can you raise them?"

Or maybe:  "I've been looking at the contract and your terms have you taking on way too much risk.  Can we shift some of that risk back to me?"

Or even:  "I really want to talk about the services you provide.  You're not charging me for those and I think you should."

Not only are you unlikely to hear any of those comments from you customers, you're almost certainly going to hear the exact opposite:

• "Lower your price."
• "Your contract is just too difficult."
• "Everyone else includes that service free."

So why then are we knocked back on our heels each and every time this happens?  I believe one reason is that we have blindly accepted the notion that we can never know what's going to happen in negotiation, so we don't even think about how to prevent these scenarios from happening in the first place.  Another reason is that we simply haven't collected enough data, and that's because we don't know:

• what data to collect
• how to use it when we have it

Price pressure occurs anytime you're asked to give something away for free.  Typically it begins when a buyer focuses on one aspect of a deal, then ends up parsing that one thing into smaller components and asking for concessions for each compoment.  It might be a price reduction or a request to give away something for free - a service, a specific contract term, legal terms or a condition in which the buyer is asking you to take on all the risk in a deal.  For the seller, this is a zero sum game. The buyer has not only lost track of the big picture of the deal, but in doing so stopped considering the potential value of other components of the deal.

Let me share with you some statistics from our SAMA (Strategic Account Management Association) research with global account managers that demonstrate just how pervasive the practice is:

• 92% say they are seeing more professional buyers
• 91% say buyers are increasingly focused on price and giveaways
• 81% say their competitors are acting irrationally

These statistics clearly support the notion that price negotiation is much tougher right now, and it's not likely to get easier anytime soon.