Negotiation is woven into our daily lives, whether we’re deciding on a meeting spot with friends, negotiating a deal with a customer, navigating a disagreement, or compromising with work colleagues. Successful sales negotiation outcomes are driven not by “natural talent” for negotiation, but by a combination of critical thinking and behavioral skills; therefore, developing both is critical for everyone.
We negotiate far more often than we realize, sometimes with ease, other times facing unexpected challenges. Whether discussing the price of a product or trying to resolve a customer issue, we often discover that emotions and expectations influence the outcome just as much as strategy does. While much advice exists on how to become a ‘winning sales negotiator,’ the real experience is rarely as simple as it appears in step-by-step guides. Unlike many resources that focus solely on tactics, in this article we use scenarios and the factors that shape every sales negotiation, offering practical insights for navigating the unpredictable nature of the process. In doing so, it addresses not only the complexities of negotiation but also the unique traits each sales negotiator brings to the table.
Defining sales negotiation may seem academic at first, but doing so uncovers several important points that can guide our approach. Negotiation is a process involving two parties who have differences that need to be resolved. They work toward agreement by exploring options and exchanging offers.
Understanding negotiation as a process, rather than a single event, is crucial. For example, recognizing its staged nature allows participants to prepare for each step, anticipate potential obstacles, and adjust their strategies as the discussion unfolds. The choices negotiators make along the way influence both how agreement is reached and the outcome itself. This perspective highlights that negotiation is dynamic and shaped by the actions and decisions of everyone involved, rather than being a mechanical procedure with predetermined outcomes.
Introduction to Sales Negotiation
SOME NEGOTIATING CONCEPTS
Positions—Positions represent “what” the negotiators say they want; they are the specific demands, proposals, or solutions suggested during negotiation. Positions are based upon interests, which are the underlying motivations or needs that drive each party’s stance—such as a desire for better pricing, improved terms, recognition, or maintaining a good relationship. While interests are usually not disclosed, at least not in competitive negotiations, they are the real reasons behind the position’s negotiators take and give up throughout the process. For example, in a sales negotiation, the customer’s position might be to request a big discount, while the salesperson’s interest could be achieving a deal or recognition for winning the customer’s business. Behind every position lie many interests, making it essential to distinguish the two for a deeper understanding of the negotiation process.
Interests—Interests explain “why” negotiators adopt particular positions and represent the underlying needs or motivations that must be met. While positions are what parties say they want, interests are the deeper reasons behind these demands. For example, money and price are not interests in themselves—money might represent purchasing power, financial security, status, or even the ability to support a family. In a salary negotiation, an employee’s position may be to request a higher salary, but their underlying interest could be ensuring financial security for their family. The employer’s interest, on the other hand, might be to retain top talent to enhance company performance, even if their position is to limit salary increases.
Understanding interests is the key to achieving “win-win” outcomes in a sales negotiation. Often, interests are not discussed openly and may remain hidden throughout the sales process, as parties fear they could be taken advantage of. To disclose interests without exposing oneself to risk, negotiators can begin by sharing general motivations—for instance, by expressing a commitment to long-term partnership rather than specifying exact needs. Additionally, asking open-ended questions such as, “What are your main concerns in this agreement?” encourages both sides to reveal interests in a way that builds trust and helps find mutually beneficial solutions.
Best Alternative to a Negotiated Agreement (BATNA)—BATNA represents the best result that a negotiator can achieve elsewhere if an agreement cannot be reached with the other party. For example, if you are negotiating the price of a product and another customer is willing to buy from you at a higher price but may take longer to close, your BATNA is to concentrate on that customer if your current negotiation does not result in a deal. In other contexts, such as legal disputes, your BATNA might be to proceed to court if settlement negotiations fail.
Bottom Line—The bottom line, or reservation price, is the specific point at which the negotiator will walk away from the sales negotiation. For instance, if you are selling software and the lowest price your company is willing to accept is $5,000, that amount represents your bottom line or reservation price. For buyers, the bottom line is the highest price they are willing to pay for goods or services; for sellers, it is the lowest price they are willing to accept.
While both BATNA and bottom line relate to decision points in negotiation, they serve different purposes: the bottom line is the least favorable outcome you are willing to accept within the negotiation, whereas the BATNA is the alternative action you will take outside the negotiation if an agreement cannot be reached. Understanding both concepts is crucial for effective sales negotiation strategy, ensuring you do not settle for less than your minimum requirements and that you know your best alternative if talks break down.
Zone of Agreement—The zone of agreement represents the range between the bottom lines of the parties. The bottom line refers to the minimum terms each party is willing to accept in a negotiation. If there is no overlap in these bottom lines, no agreement is possible. For instance, if one party is only willing to sell a product for at least $5,000 and the buyer is only willing to pay up to $4,000, the zone of agreement falls between $5,000 and $4,000.
TYPES OF SALES NEGOTIATION
People often don’t realize it, but negotiation is a part of our everyday lives, shaping decisions both large and small. For instance, whenever a group decides which restaurant to visit, a form of negotiation is taking place—even if the stakes are low. While these everyday decisions may seem minor, negotiation also plays a role in larger purchases.
Consider the act of buying groceries:Unlike at the grocery store, where prices are fixed and negotiation is not expected, you simply select your items, add them to your basket, and pay the amount on the price tag. No bargaining takes place. In contrast, purchasing a high-ticket item such as a sales course, house or IT or enterprise software is a classic example of sales negotiation. Here, price, warranties, delivery, and installation are all potentially negotiable, involving back-and-forth discussion and compromise between buyer and seller.
The workplace offers further examples. Getting a job and determining one’s salary and employment conditions almost always involves negotiation. These scenarios differ not only in formality but also in consequence; buying a car or negotiating a job offer can carry much greater weight than deciding what to have for dinner.
At the highest level, negotiations can involve multimillion-dollar business or property deals, where the stakes—and the need for careful preparation—are at their greatest. The higher the value or impact of the negotiation, the more effort and strategy should be invested.
Recognizing when we are negotiating—and preparing accordingly—can help us achieve better outcomes in both everyday and significant situations.
The Four Prescriptions of Principled Sales Negotiation
Principled negotiation offers a constructive approach to reaching sound agreements, suitable for nearly any conflict scenario. Its effectiveness is anchored in a few essential guidelines.
- Separate the People from the Situation: Personal attachment to positions can lead salespeople to perceive pushback as a personal affront, making progress difficult. By distinguishing the individuals from the issue itself, you can address the core issue while maintaining positive relationships and clearer perspectives.
There are three basic sorts of people problems, each with its own challenges and solutions:
- Different Perceptions Among the Parties: For example, a customer may interpret the delivery deadline differently—the salesperson sees it as a hard cut-off, while the buyer views it as flexible. This misalignment can lead to unnecessary tension or conflict. Clarifying and aligning perceptions early helps avoid misunderstandings and fosters mutual agreement.
- Emotions Such as Fear and Anger: These feelings can cloud judgment and hinder problem-solving. For instance, a buyer might fear being taken advantage of, while a seller might feel anger over perceived unfair offers. If left unacknowledged, these emotions can escalate and derail sales negotiations. Recognizing and addressing emotional responses allows the conversation to return to substantive issues.
- Communication Problems: Poor communication is a common barrier in negotiation. For example, one party might use ambiguous terminology or fail to listen actively, resulting in missed signals or frustration. Ensuring clear, direct exchanges and verifying understanding can significantly reduce these issues and improve negotiation outcomes.
By pairing these principles with practical examples and elaboration, negotiators are better equipped to identify and address challenges, leading to more productive and harmonious agreements.
- Acknowledge emotions and try to understand their source. Remember, all feelings are valid even if you don’t fully agree or understand them.
- Allow the other side to express their emotions. For instance, if a buyer expresses frustration, respond with, “I can see this has been difficult for you.”
- Try not to react emotionally to another’s emotional outbursts. Take a moment to pause before responding.
- Symbolic gestures, such as apologies (“I’m sorry for the confusion earlier”) or expressions of sympathy (“I understand your concern”), can help defuse strong emotions.
- Do not assume your worst fears will become the other party’s actions. Maintain perspective and keep the focus on problem-solving.
- Try to understand the other party’s viewpoint by putting yourself in their place. For example, ask yourself, “How would I feel if I were in their position?”
- Avoid blaming or attacking the other party for the problem. Instead of saying, “You caused this delay,” say, “I’m concerned about meeting our deadlines.”
- Think of each other as partners in negotiation rather than adversaries. Reinforce this by stating shared goals: “Let’s work together to find a solution that benefits us both.”
- Create proposals that are appealing to both sides. For example: “Would you be open to a later delivery date if we offer a discount?”
- Effective Communication Strategies
- Actively listen to the other party. Give your full attention and occasionally summarize their points to confirm understanding. For example: “So, you’re suggesting we adjust the payment schedule?”
- Direct your speech toward the other party and stay focused on your message.
- Use “I” statements to express your perspective, rather than blaming. For example, say, “I feel frustrated when meetings run late” instead of “You always make us start late.”
By organizing your approach to managing emotions, practicing empathy, and communicating clearly, you reinforce the idea of partnership and shared problem-solving—key tenets of principled negotiation.
- Focus on Interests, Not Positions
When an obstacle or problem is defined in terms of the parties’ underlying interests, it is often possible to find a solution that satisfies both parties’ interests. All people will share certain basic interests or needs, such as the need for security and economic well-being. To identify, understand, and deal with both parties’ underlying interests, you must:
- Ask why the other party holds their particular position and consider why they might not prefer alternative options. For example, if a customer insists on a specific deadline, ask what constraints or priorities are influencing that preference.
- Explain your interests clearly. For instance, if you’re discussing a delivery schedule, state your options and the reasons behind them, such as implementation or transportation needs.
- Discuss these interests together with an emphasis on the solution you both desire, rather than dwelling on past experiences. For example, instead of revisiting previous miscommunications, focus on what needs to change going forward to ensure successful collaboration.
- Remain anchored in your core interests, but stay open to considering different proposals and positions. For example, if your main concern is delivery but the customer is worried about implementation, look for solutions that balance both quality and efficiency.
- Invent Options for Mutual Gain
They say there are four key obstacles that can hinder creative problem-solving during negotiations:
- Premature judgment—Deciding on an option too early limits creativity and may rule out better alternatives.
- Searching for the single answer—Focusing too narrowly on finding one solution may prevent the exploration of multiple possibilities.
- Assuming a fixed pie—defining the problem in win-lose terms restricts opportunities for mutual benefit.
- Thinking that ‘solving their problem is their problem’—believing it is solely the other side’s responsibility to find solutions—reduces collaboration and shared problem-solving.
For instance, premature judgment can prevent teams from considering innovative solutions during negotiations, while assuming a fixed pie can lead parties to overlook options that might satisfy both sides. Recognizing these obstacles and actively working to overcome them is essential for inventing options that lead to mutual gain.
- Only Use Objective Criteria
When interests are directly opposed, the parties should use objective criteria to resolve the gaps that exist. Engaging in a contest of egos or wills is inefficient, risks damaging relationships, and rarely leads to wise agreements. Instead, strive for solutions grounded in objective standards that are independent of either party’s preferences.
Objective criteria should be both legitimate and practical—such as reviews, proof, compliance, standards, or precedent. To develop objective criteria collaboratively, begin by having each party propose possible solutions relevant to the issue at hand. Next, discuss the relevance and legitimacy of each proposal—consider factors like fairness, accessibility, and applicability. Continue the dialogue until both parties agree on which criteria to use as the foundation for the sales negotiation. To test for objectivity, ask whether both sides would be willing to abide by the selected standards even if the outcome were unfavorable.
By following these steps and anchoring discussions in objective criteria, negotiators can foster rational, principled agreements that stand the test of time and reputation.
Points to keep in mind when using objective criteria:
- Frame each issue as a joint search for objective criteria. Ask for the reasoning behind the other party’s suggestions.
- Reason as to which standards are most appropriate and how they should be applied; keep an open mind.
- Never yield to pressure, threats, or bribes—only to principles. When the other party stubbornly refuses to be reasonable, shift the discussion from a search for substantive criteria to a search for procedural criteria.
- Remember, sales negotiations do not have to be overly contentious or personal. The person you negotiate with today may be your close business partner tomorrow. Additionally, your reputation in your business community may be shaped by your reputation as a negotiator.
- Therefore, think big picture and be rational and reasonable in your negotiation, applying the principles of PEOPLE, INTERESTS, OPTIONS, and CRITERIA.
So there you have our take on sales negotiation tactics and approach. See here for more sales training videos.
