A Guide to Developing Effective Negotiation Strategies

This article is an excerpt from the Shortform summary of "The Challenger Sale" by Matthew Dixon and Brent Adamson. Shortform has the world's best summaries of books you should be reading.

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What are the steps for negotiation? How can you use those steps as a challenger seller?

There are 4 steps for negotiation in the challenger selling system. Unlike other selling methods, the challenger selling approach lets reps push back on customers. At some point during this process, you’ll need to negotiate. The challenger selling system lays out steps for negotiation through DuPoints system of negotiation.

Why Do You Need to Know About Negotiation?

Before we dive into the 4 steps, first consider what you think you know about negotiation. How does it work? When do you use it? In Challenger Selling, you’ll learn to look at negotiation differently.

Misconception 1: Taking Control is Synonymous with Negotiation

Many sales reps and managers think they should take control only at the end of the sales conversation, at the negotiation stage. However, Challengers take control of the entire sales process from the beginning, and used the steps for negotiation as an additional part of the process. As a result, customers see the Challenger as a confident partner as opposed to an anxious rep hoping for a deal at the end.

Challengers realize that customers may be confused about how to execute a complex purchase, so they teach the customer how to buy the solution. Extrapolating from past sales, they explain the purchase process and coach the customer on who should be involved.

DuPont’s Controlled Negotiation Process 

While Challengers should take control of the entire conversation, DuPont’s template for controlling the negotiation stage is a good example of how you can help reps learn to be assertive. The steps for negotiation can help them use those tools.

The key to DuPont’s approach is having an advance plan or strategy that gives reps confidence to not back down in a challenging conversation. The company provides reps with a template for pre-negotiation planning. The form requires listing the supplier’s strengths and weaknesses relative to the customer. This reminds the rep of the value her company offers and the confidence to seek a fair price.

Reps also have to think in advance about the information they need to get from the customer, as well as about what information the customer will want to know. They articulate the things the supplier is looking for in the deal and things they can negotiate on. They develop hypotheses on the customer’s needs. This kind of planning equips reps to challenge and push back as well as to think several steps in the negotiation process ahead.

Steps For Negotiation

Besides the background preparation, there are other steps for negotiation a company can take to help reps take control of the conversation. DuPont has created a four-step framework focused on mitigating reps’ tendency to give in too soon:

1) Defer: The first step in the negotiation process is defer. When a customer demands a discount, defer the discussion by saying something like, “Before we discuss price, I’d like to make sure I fully understand your needs so we can make this deal as valuable as possible for you. Is that OK?” In this step, the rep promises to address price but gets permission to proceed. It’s important to get the customer’s consent to defer or he won’t listen. The rep also has created some tension.

2) Broaden: The second step in the negotiation process is Press. Press forward to uncover the customer’s needs (DuPont provides tactics to help). The goal is to expand the customer’s view of the things that are important to him. What else besides price matters—for instance, expedited shipping?

3) Explore: The third step of the negotiation process is Compare. Compare and evaluate the additional needs identified during the conversation. After broadening the list as much as possible, come back to price, starting with an open-ended question: “What are you looking to achieve with a 20% reduction?” Often the reason is something that can be addressed another way—for instance, it may be driven by the desire for a specific business outcome like production cost reductions rather than economic need.

Now you’re negotiating not just on price, but on all the ways the supplier creates value and helps the customer address challenges. You’re also positioned to offer concessions other than price.

4) Concede: Finally, the last step of the negotiation process is Concede. Determine what you’re willing to concede ahead of time and follow a strategy of trading other things first before defaulting to price.

How and when you concede matters: DuPont teaches reps to avoid starting with smaller concessions and proceeding to larger ones or putting a take-it-or-leave-it offer on the table because they can leave a customer feeling cheated. Instead, concede your negotiable items in a measured way that makes the customer feel he’s winning. For instance, start with a meaningful concession, and offer progressively smaller concessions as negotiations continue. This manages tension constructively.

Caution

Remember that it’s important for reps to take control throughout the sales process, not just during the steps of the negotiation process. It has to happen throughout the conversation or it will feel contrived or off-putting at the end.

Teaching reps the importance of clear direction over quick closure and how to create value in the sales process can help them overcome passivity and be assertive.

The 4 steps for negotiation can help a sales rep make a sale while maintaining a positive customer connection. Use the 4 steps for negotiation when a sale gets tough, or when a customer is ready for the next steps.

4 Steps for Negotiation in the Challenger Selling Method

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Carrie Cabral

Carrie has been reading and writing for as long as she can remember, and has always been open to reading anything put in front of her. She wrote her first short story at the age of six, about a lost dog who meets animal friends on his journey home. Surprisingly, it was never picked up by any major publishers, but did spark her passion for books. Carrie worked in book publishing for several years before getting an MFA in Creative Writing. She especially loves literary fiction, historical fiction, and social, cultural, and historical nonfiction that gets into the weeds of daily life.

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