B2B Street Fighting Blog

use this best practice to differentiate when negotiating

Posted by K. (Karen) G. Fraser on Fri, Jul 13, 2018 @ 12:16 PM

differentiationIn these days when business buyers are more knowledgeable than ever, it is important for sellers to differentiate in every phase of the sales cycle. In the negotiation phase of the sales cycle, the customer is more keenly focused on you than you might think.  Through their buying cycle, the customer is comparing you, overtly and subtly, to their preferred alternative to you.  Remember that the customer’s preferred alternative to you is your main competitor.

Differentiating from your main competitor throughout the sales cycle is part of good selling.  This includes differentiating during the negotiation stage.  Strong differentiation during the negotiation stage can be done through use of the Multiple Solution Options (MSO) concept.  The MSO concept is based on providing more than one option or choice for the customer when you are in the negotiation stage.  It is doubtful that your competitors do this. 

When you give the buyer multiple – and reasonable – options that address the buyer’s business need(s), the probability increases for a successful conclusion to the negotiation.  For the buyer, the choice between options opens possibilities and demonstrates the seller’s flexibility and creativity. For the seller, offering multiple (recommend three) options, helps to keep the negotiation discussion open and focused on a positive outcome. When there are multiple buyer stakeholders, MSOs help the seller to address the often-differing priorities of different stakeholders.

But using the MSO concept does not stop at providing the buyer with options.  The MSOs need to be carefully crafted.  The components or trades in each offer should include something from each level of trade.

By way of reminder, we categorize trades by three (3) different levels:

Level 1 trades = the price of your solution, your product, your service or license.  These trades generally appeal to level 1 buyers, the first line manager team from Purchasing, Procurement or Finance. While every MSO will contain Level 1 trades, every MSO should also include trades from the other levels of trades.

Level 2 trades = terms and conditions.  These trades generally appeal to Legal, Finance, and Contract Managers. Sellers often ‘give away’ these trades without thinking about the value the trade represents to both sides.  Examples of level 2 trades include payment terms, early signing, finance options, currency fluctuation protection.  These trades are often high value to both sides.

Level 3 trades = creative trades.  These trades generally appeal to senior management and the leadership team.  Level 3 trades often have a longer-term impact.  Examples of level 3 trades include references, case studies, testimonials, joint marketing events, introductions, banner ads on each other’s websites.  Again, level 3 trades are sometimes offered without consideration to the real value of the trade.  

Trades at any level are to be considered from the point of view of value.  Some trades may be high value to you, while being low cost to the buyer.  For these trades, a seller might position a lower price or provide something more in exchange (i.e. perhaps extended training period or a few more consulting days). Likewise, some trades may be high value to the buyer and low cost for the seller to provide (i.e.  the buyer might value an opportunity to put a banner ad on your website for two weeks or may value highly an opportunity to be a speaker at one of your company events).

In summary, differentiation is needed at every stage in your sales process.  A strong form of differentiation in the negotiation stage is MSO.  And MSOs, carefully developed with trades at all three levels, will help to increase the higher probability of win - win that represents mutual value (for you and your buyer) and forms a firm foundation for strong ongoing business relationships.

Tags: negotiation skills for sales

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