Closing the Sale The Power of Negotiating to Win

Start Strong

“What it takes to win a championship is to have your preparation meet the opportunities, whether it’s out on the racetrack or behind the scenes,” according to NASCAR driver Kurt Busch.Joe Guertin, “When Did ‘Closing’ Become a Bad Word?” Agency Sales, March 2006, http://www.allbusiness.com/sales/1064380-1.html (accessed March 16, 2010). This is true in sports and in selling. Winning in selling—delivering value to customers and to your company—requires good solid preparation and hard work. Sure, there are some sales that fall into your lap. Those are the ones that make it feel like selling is easy. But most sales don’t happen that way. In fact, in many industries closing the sale may take weeks, months, or even years.

Despite the term “close,” which implies the end, closing the sale starts with the first step in the selling process—qualifying. Sometimes salespeople want to fill their sales funnel (or pipeline) with lots of leads so they don’t take the time or ask the right questions when they are qualifying. While it’s true that you want to “go out and get as many nos as you can,” you’ll get a lot more yeses when you pitch to the right prospects.Joe Guertin, “When Did ‘Closing’ Become a Bad Word?” Agency Sales, March 2006, http://www.allbusiness.com/sales/1064380-1.html (accessed March 16, 2010). In fact, the selling process is analogous to building a house; if the foundation is poured right, everything else will easily come together. The same is true in selling—prospecting is the foundation of the entire process.Tim Connor, “The Myth of Closing Sales,” Roderick Martin, http://roderickmartin.com/the-myth-of-closing-sales (accessed November 17, 2009).

Not only does closing start at the first point in the selling process, but it also is far from the end of the selling process. In fact, closing is a lot like graduation—it is actually the beginning, not the end. Just like graduation is not the end of your education but rather the beginning or commencement of the rest of your life, the closing in sales is the beginning of the relationship with the customer, not the end of the selling process.

Closing Time

The close sounds like it might be a definitive part of the selling process. It’s actually not a single statement, question, or event. Rather, the close is an ongoing series of events that occurs throughout the selling process, according to Mary Delaney, vice president of sales for CareerBuilder.com.“Closing the Deal,” Selling Power Sales Management eNewsletter, May 17, 2004, http://www.sellingpower.com/content/newsletter/issue.php?pc=368 (accessed March 16, 2010).Qualifying is the key; it’s virtually impossible to close a sale with the wrong prospect. But the preparation doesn’t stop there. The preapproach, approach, presentation, and overcoming objections all play a role in the closing the sale. According to author Ray Silverstein, the close is made in the first thirty seconds of the sales presentation. He says that’s when a customer has an emotional response to you and your product or service story. Silverstein points to research that was conducted by William Brooks and Thomas Travisano that concludes that people want to buy from people they like and trust.Ray Silverstein, “How to Close a Sale in the First 30 Seconds,” Entrepreneur, http://www.entrepreneur.com/management/leadership/leadershipcolumnistraysilverstein/article178590.html (accessed November 17, 2009). If this sounds familiar, it should be. The concept of building a relationship based on first impressions was covered in detail in Chapter 3 “The Power of Building Relationships: Putting Adaptive Selling to Work”. And understanding the difference between needs, which are rational, and wants, which are emotional, makes a difference in how your prospect perceives you and the message you are delivering.

To demonstrate that the close takes place at virtually every point in the selling process, Daniel Sheridan from Extensis Group LLC, a sales training consultancy, says it best: “If you’re waiting for a proposal to close, it’s too late.” He goes on to say that the most important meeting is the first one because that’s when trust and rapport are established.Simona Covel, “Finding the Right People to Make the Sale,” Wall Street Journal, May 29, 2008, http://online.wsj.com/article/SB121199448885726503.html (accessed November 17, 2009).

The close builds on everything that has already taken place throughout the selling process—rapport, trust, information sharing. It’s also important to know what the close is not. The close is not a high-pressure exchange between seller and buyer. It’s not a time when the salesperson resorts to trickery, manipulation, or other unsavory tactics just to get a sale.Geoffrey James, “Close More Sales: Train Your Sales Team,” Selling Power 23, no. 8, http://www.sellingpower.com/content/article.php?a=6389 (accessed March 16, 2010). While sales are the ultimate financial goal of the selling process, relationships, trust, and understanding a customer’s business and providing cost-effective solutions are driving factors behind making the sale.Ram Charan, “What Your Customer Isn’t Saying about Your Sales Pitch,” Wall Street Journal, May 29, 2008, http://online.wsj.com/article/SB121182439378120865.html (accessed November 17, 2009). The same principles that guide the rest of the selling process also guide the close.

If closing is not a specific event that happens during the selling process, you might be wondering how you effectively get the order. You learned about the trial close in Chapter 10 “The Presentation: The Power of Solving Problems”. The trial close can take place during any part of the selling process. The trial close gives you the opportunity to get specific feedback from the customer as it relates to her likelihood to make the purchase at any point during the process. While the trial close is most likely to come during the presentation, it could come even earlier in the process depending on the prospect and the product or service being purchased. A trial close asks for an opinion (“What is most important to you about this product or service?”), whereas a closing question asks for a decision (“Shall we complete the paperwork?”).D. Forbes Ley, “Trial Closing Questions Tell You When to Ask for a Decision,” The Bachman Company, http://www.bachmanco.com/pretz/PDF/Trial%20Closing%20Questions.pdf (accessed November 18, 2009). The trial close gives you the opportunity to learn what the prospect is thinking and will give you some insight as to when to make the close. In some cases, the trial close may result in a close, but if it doesn’t, the prospect’s response provides valuable insight. The trial close should be done early and often throughout the selling process. Getting the prospect’s opinion at various points throughout the process helps you determine your path and how and when you should make your close.D. Forbes Ley, “Trial Closing Questions Tell You When to Ask for a Decision,” The Bachman Company, http://www.bachmanco.com/pretz/PDF/Trial%20Closing%20Questions.pdf (accessed November 18, 2009).

ABC or ABO?

There is an old adage in selling that says, “Always Be Closing” (ABC). This means that a salesperson should never miss the opportunity to close a sale, no matter where it occurs in the selling process.Michelle Nichols, “The Two-by-Four Closing Question,” BusinessWeek, April 19, 2007, http://www.businessweek.com/smallbiz/content/apr2007/sb20070419_586407.htm (accessed November 17, 2009). But in today’s collaborative environment, it’s better to approach closing more like “Always Be Opening” (ABO).Joe Takash, “Connect with the Buyer,” http://www.joetakash.com/media-resource/wp-content/uploads/2009/03/independent-agent.pdf(accessed May 16, 2010). In other words, the best strategy is to always be helping your customer identify and solve his problems, just like you do when you are opening the selling process. Focus on asking the right questions and learning about how you can suggest solutions (in some cases, the solution might not even be your product or service). When you deliver value to your prospect, they will look to you for advice and counsel. “You become much more than a salesperson, you become their marketing expert, a resource, an ally,” according to Mario Russo, general sales manager at radio station WBEN-FM in Philadelphia. “That’s when you are successful in selling.”Mario Russo, Executive Panel in Marketing 2335—Public Relations and Publicity, Saint Joseph’s University, Philadelphia, PA, November 18, 2009.

It’s true that asking for the order is critical for success in selling. But if you close too soon, you might run the risk that the customer thinks that the process is over and mentally moves on to something else.Mark Hunter, “Close Too Quick and You Lose Profit,” Fast Company, November 4, 2009, http://www.fastcompany.com/blog/mark-hunter/sales-hunter/close-too-quick-and-you-lose-profit(accessed November 17, 2009). That’s why it is a good idea to ask exploratory questions: open-ended, nonthreatening questions that encourage your prospect to discuss her business needs. This helps supplement the information you gathered during the preapproach, enabling you to understand what the customer needs and how to meet those needs. For example, if you are selling accounting software, you might ask the following exploratory questions: “What are the top three activities that consume your people’s time daily?” “What is the ideal way you would like your people to spend their time?” “What are the types of activities that you think can be automated?”“Closing the Deal,” Selling Power, May 17, 2004, http://www.sellingpower.com/content/newsletter/issue.php?pc=368(accessed November 17, 2009). None of these is a hard-sell question. Rather, each question allows you to listen and gather information so that you can identify how you can help the prospect solve his problem.

While you always have your eye on the prize of closing a sale, the focus is to extend your relationship with your prospect beyond selling to servicing and being a business partner. That’s what ABO is all about. When you focus your selling efforts in this way, it makes it easier to sell additional products and services to existing customers because you are constantly learning about ways in which you and your company can add value.

Ask for the Order

When you focus on delivering value to your prospects and customers, you have earned the right to close or ask for the sale. It might seem obvious, but sometimes salespeople get caught up in the selling process and lose track of the fact that it is a buying process for the prospect. Sometimes, simple questions like “Will delivery on Tuesday work for you?” or “Should we start your service the week of the twenty-first?” help you and the customer focus on moving from the sales presentation to the delivery of the product or service. The specific closing questions will most likely differ based on the product or service you are selling. For example, in pharmaceutical sales, industry sales expert Jane Williams adds, “Never end a successful close without adding the proper patient dosing.” She says, “It is very important that your physician prescribe your product properly.”“Closing Arguments,” Selling Power Pharmaceuticals eNewsletter, September 11, 2007, http://www.sellingpower.com/content/newsletter/issue.php?pc=648 (accessed March 16, 2010).

Sometimes salespeople don’t feel comfortable asking for the order. Earn the right to ask for the order. Be confident: believe in yourself and your product or service.Laura Lorber, “Three Tips for Closing a Sale,” Wall Street Journal, http://online.wsj.com/article/SB121198785761226199.html#printMode(accessed November 17, 2009). The trust you establish from the beginning will translate into how you can close the sale. Closing the sale is all about presenting solutions for the biggest problems that your prospect faces. “If you can’t help them with their biggest challenge, they won’t have time for you,” says Mary Delaney from CareerBuilder.“Closing the Deal,” Selling Power Sales Management eNewsletter, May 17, 2004, http://www.sellingpower.com/content/newsletter/issue.php?pc=368 (accessed March 16, 2010). Author Barry Farber includes the element of confidence in the closing equation by saying, “The important factor that contributes to your success at closing (or knowing when to move on) is the leverage you have going in and the confidence you have to back it up.”Barry Farber, “Wrap It Up,” Entrepreneur, April 2008, http://www.entrepreneur.com/magazine/entrepreneur/2008/april/191580.html (accessed November 17, 2009).

Not every contact results in a sale. Typically, 80 percent of prospects say no to a sales offer, and that percentage may be as high as 90 percent during these challenging economic times.“Sales Closing—Closing Throughout the Sales Cycle Process Using Different Types of Closes,” Money Instructor, http://www.moneyinstructor.com/art/saleclose.asp (accessed November 17, 2009). This underscores the fact that it usually takes several closes to actually close the sale. In some cases, it will take at least three tries. In other cases, it can take as many as five or more attempts. It’s best to view closing as an ongoing part of the process, not a single event in which a prospect can say no. Confidence and the right mental attitude can make all the difference in being able to take all the nos on the way to yeses.Joe Takash, “Connect with the Buyer,” http://www.joetakash.com/media-resource/wp-content/uploads/2009/03/independent-agent.pdf (accessed May 16, 2010).

When to Close

It’s rare that a prospect will say, “I’m ready to close this deal.” That step in the process usually belongs to the salesperson to actively close the sale. The best way to know when to close is to listen and watch. There are verbal and nonverbal cues that prospects provide that help you understand when she is ready for you to close. Here are some of the signals that the prospect is ready to buy:

• When the prospect displays positive body language and interaction. The prospect is engaged, interested, asks questions, reviews literature, and provides insights about his business.
• When the prospect asks questions. It is a good time to close after answering a question. Questions like “How long will delivery take?” or “How would that integrate into our current system?” are good cues that the prospect is close to buying.“Tips for Closing a Sale,” AllBusiness, http://www.AllBusiness.com/sales/selling-techniques-closing-sales/450-1.html (accessed November 17, 2009).
• After you handle an objection. This can be the perfect time to close, as you have just provided some insight that will help the customer make her decision.

Types of Closes

There is not a single surefire way to close every sale. You should be prepared with several different types of closes and use them as appropriate for each situation. Some situations may require a combination of closes.

What Works?

Closing is part of the selling process. A process is a systematic approach, which, by its very nature, can be measured. You won’t be able to be successful closing every sale. After all, even professional baseball players only hit the ball three times out of every ten pitches to be considered above average. While hitting the ball 100 percent of the time would be considered unrealistic, every professional hitter takes batting practice to help increase his batting average. His batting coach gives him tips as to how to stand, swing, and ultimately increase his percentage of hitting the ball. The same can be done in closing. Record the information about your closings—what works and what doesn’t.Raymund Flandez, “Sales Outsourcing First Teaches Workers to Ask A Lot of Questions,” Wall Street Journal, September 12, 2008, http://online.wsj.com/article/SB121199452139126417.html (accessed November 17, 2009).

You don’t have to wait until the close to be able to track your progress. Sales veteran and author Barry Farber suggests managing accounts and the sales process with a simple visual tool. Post your prospects in the different stages of the sales cycle on a corkboard. While there are several software programs that perform this function, there’s nothing more powerful than seeing it play out on the wall in front of you every day.Barry Farber, “Wrap It Up,” Entrepreneur, April 2008, http://www.entrepreneur.com/magazine/entrepreneur/2008/april/191580.html (accessed November 17, 2009).

Closing Complex Sales

A complex sale is a term that usually refers to high-value purchases (usually $100,000 and higher). Products and services such as enterprise systems, health care providers, commercial real estate, manufacturing equipment, logistics services, and other major business-to-business (B2B) purchases are considered complex sales. These types of sales have a long selling cycle because there is a lot at stake for such a major purchase and there are multiple people involved in the decision-making process. In fact, it may take as long as six months to three years to close the sale.Steve Kayser, “Shooting the Donkey in the Complex Sales Process…Hollywood Style,” http://scottymiller.wordpress.com/category/tips-on-navigating-the-complex-sale (accessed January 7, 2010). The product or service commitment is usually a long-term commitment with a contract as long as three, five, or even ten years or longer.

While the selling skills discussed throughout this book apply to complex sales, there are some differences. According to Jeff Thull, author of Mastering the Complex Sale, there are four phases to a complex sale.

1. Discover. As with any other sale, research about the prospect and his needs is critical to success. During the discover phase, you set the stage for the ongoing relationship or engagement. This stage includes your detailed research about the company and its current provider including several meetings and phone calls with the prospect. It is at this stage that the prospect determines whether the engagement has potential.
2. Diagnose. In a complex sale, the decision is likely to be centered on what should be changed, such as the location of a warehouse, and includes a collaborative effort between the salesperson and the customer to determine if the change is feasible and desirable. This stage also includes extensive financial analysis to determine the impact of the decision on the company. The role of the salesperson is to be a true business partner and help the prospect understand the trade-offs and benefits of making a major change in the operation.
3. Design. Complex sales usually involve products and services that are customized for each customer. For example, an ad campaign, software, retail fixtures, or other major purchases are adapted, adjusted, or designed exclusively for that customer. At this stage, the sales rep works closely with key people in the customer’s organization to design the best solution to fit the customer’s needs.
4. Deliver. If the first three phases are implemented correctly, this final stage should logically follow. At this point, the key people at the customer’s organization have been involved in the design and financial justification of the product or service so the presentation of the formal proposal should lead to acceptance. Then the efforts are focused on the delivery of the product or service and implementation. For products such as software and other major purchases, there may even be training, troubleshooting, and other transition issues that are handled by the salesperson.“Winning Strategies to Succeed in Complex Sales,” Prime Resource Group, March 2010, http://www.masteringthecomplexsale.com/sales-training-book-press-release.htm(accessed January 7, 2010).

During each of these phases, it’s important to identify all the decision makers and their positions in the process. As with every stage in the selling process, this is about asking the right questions. “How will your organization go about making this decision?” and “Who else do I need to talk to?” are good questions to ask during the discover phase so that you can get input and feedback from all involved at the beginning of the process. Once you identify all the people involved in the decision-making process, you’ll want to identify the decision makers. Again, the right questions will help you focus your efforts appropriately. Knowing to whom the expense will be charged helps you identify the ultimate authority. The person who controls the budget is most likely different from the person who will be evaluating the technical aspects of the product or service. For example, while the chief information officer may make the budget decision, the systems implementation manager may be evaluating the technical aspects of the software. Finally, you want to identify the “power broker,” the person who will ultimately make the final decision. This is usually the person, a subject-matter expert, who is the right hand of the person who controls the budget.“Ten Keys to Winning Complex High Dollar Sales,” Best-Coaching-Training.org, May 9, 2009, http://www.best-coaching-training.org/2009/05/29/ten-keys-to-winning-complex-high-dollar-sales (accessed January 7, 2010). In other words, you want to identify with whom you will be negotiating and ultimately closing the sale.

The Art of Negotiation

Simply put, “negotiating is the act of discussing an issue between two or more parties with competing interests with the aim of coming to an agreement.”“Negotiation,” Entrepreneur, http://www.entrepreneur.com/encyclopedia/term/82556.html (accessed November 20, 2009).While that might sound like an impossible task, it is not as difficult as you might think. Even people with differing positions or points of view share a common interest, which becomes the basis for finding common ground. It’s these common interests—security, economic health, personal recognition, control—that motivate people. If you take the time to understand your prospect’s interests in a negotiation, you can successfully collaborate and find a solution that supports the interests of all parties.Stephanie Mojica, “The Art of Sale Negotiation Skills,” Associated Content, December 26, 2008, http://www.associatedcontent.com/article/1313361/the_art_of_sale_negotiation_skills.html?cat=35(accessed November 19, 2009).

It is negotiating that provides profit for organizations. The collaboration between parties is what provides companies the opportunity to exchange goods and services for money.

It might be helpful to think about a negotiation like an iceberg. Although you can see the tip of the iceberg, it can be deceiving because it does not tell the entire story. The same is true when you are negotiating; your prospect may say something that appears to be obvious but really wants to achieve other things that are hidden below the surface. Using the process of negotiation to learn more about your prospect’s motivations and interests, you can understand what is below the tip of the iceberg. It’s usually the part of the iceberg that you can’t see that is more substantial and has more impact that the portion that is visible. When you come prepared, listen, and probe during the negotiation process, you can learn a lot about what lies below the tip of the iceberg and use this information to collaborate and eventually reach a common ground on the issues. For example, assume you are selling advertising space for a men’s magazine to the hottest new beer company. Your contact at the beer company wants to get the word out about this new brand but has a very small budget, so he doesn’t want to pay the full published rate for the ads. You don’t want to sell at less than the published rate because that will lower the value of your ad space. The tip of the iceberg shows that this is a price negotiation. However, if you ask the right questions and listen more, you will learn that his ultimate objective is to get people to taste the beer because that is the best way to get new customers. If he can get a major sampling opportunity, then he can use it to go to other media partners to get other sampling campaigns. Now you have gotten below the surface of the iceberg and understand his motivations. With this additional information that wasn’t readily visible on the surface, you can offer him an advertising package that includes ads in the magazine in addition to sampling opportunities at three upcoming national events that the magazine sponsors. Now the negotiation is focused on all parties winning by getting something they want, rather than simply negotiating on price. Getting below the surface provides valuable information and insights for negotiating.

Negotiate to Win-Win-Win

A successful negotiation can be measured by its ability to deliver a mutually beneficial solution to all parties. Some people believe that negotiation is an act that yields a “win” for one side and therefore a “lose” for the other side. The win-lose approach usually ends up in a lose-lose deal that doesn’t work for anyone.Robert J. McGarvey, “Covering the Bases,” Entrepreneur, June 1997, http://www.entrepreneur.com/magazine/entrepreneur/1997/june/14260.html (accessed November 20, 2009). This philosophy of negotiating is selfish and short term. In addition, this approach implies that negotiation includes some kind of confrontation or manipulation to “trick” one side into doing something that it doesn’t want to do. This is an unethical approach to negotiating which doesn’t have a place in the business world.Daniel Roach, “5 Simple Rules for Unbeatable Sales Negotiation,” Associated Content, September 29, 2008, http://www.associatedcontent.com/article/1047808/5_simple_rules_for_unbeatable_sales.html?cat=3 (accessed November 19, 2009).

In selling, negotiating and closing go hand-in-hand. Just as closing is not a one-time event, negotiating is a process that has both short-term and long-term impacts.“Negotiating to Win-Win,” Selling Power Sales Management eNewsletter, January 6, 2003, http://www.sellingpower.com/content/newsletter/issue.php?pc=248 (accessed March 16, 2010). The best negotiations are collaborative in nature and focus on delivering mutual satisfaction. According to Leigh Steinberg, lawyer and sports agent, “The goal is not to destroy the other side. The goal is to find the most profitable way to complete a deal that works for both sides.”Alan M. Webber, “How to Get Them to Show You the Money,” Fast Company, October 31, 1998, http://www.fastcompany.com/magazine/19/showmoney.html (accessed November 19, 2009).Effective negotiating is based on respect and is seeded with open communication. Collaborative negotiating is dependent on the following three elements:Herb Cohen, You Can Negotiate Anything(New York: McGraw-Hill, 1980), 163.

1. Building trust.Herb Cohen, You Can Negotiate Anything (New York: McGraw-Hill, 1980), 163.You’ve already learned in Chapter 3 “The Power of Building Relationships: Putting Adaptive Selling to Work” that establishing and building trust is key to relationship building. Negotiating is the ultimate extension of a relationship because you and your customer are agreeing to concede on some points to make the relationship go even farther. If your prospect signs a contract with your company for products or services, you are now even more dependent on each other to make the relationship work. It is the true win-win-win relationship. But if your prospect doesn’t trust you, or you don’t trust her, it will be difficult to enter into a negotiation that will work for both of you and both of your companies. Building trust is the precursor to all business transactions, especially negotiating and closing.

The best way to build trust during the negotiation process is to gain trust before the formal negotiation. And then, during the formal negotiation, focus on the ends rather than the means.Herb Cohen, You Can Negotiate Anything (New York: McGraw-Hill, 1980), 163. In other words, instead of focusing on going head to head on each issue to be negotiated, concentrate on keeping the end goal in mind. Take the time to listen and understand exactly what is motivating your prospect so you can deliver what is important to her. “Negotiation is needs based,” according to the online Selling Power Sales Management Newsletter. Understanding what is important to you and to your prospect drives your negotiation.“Negotiating to Win-Win,” Selling Power Sales Management eNewsletter, January 6, 2003, http://www.sellingpower.com/content/newsletter/issue.php?pc=248 (accessed March 16, 2010).

2. Gaining commitment.Herb Cohen, You Can Negotiate Anything (New York: McGraw-Hill, 1980), 163. Part of the process of closing is gaining commitment on every specific element of the sale. To do that effectively, strive to gain commitment long before you begin the formal negotiation. That means using every touch point you have at the company to help you. While you might think it is impossible to enlist others in your prospect’s company to help you sell, consider the creativity of Art Fry, the creator of 3M Post-it notes. Fry stumbled upon the semisticky adhesive years before the product was introduced after creating the first version of the product as a way to mark hymns in his hymnal at church, he started giving his new invention to secretaries and coworkers at 3M. Soon secretaries were taking the pilgrimage between buildings on the 3M corporate campus just to get more of the sticky note pads. It was the demand from the people who used the product that ultimately generated interest in marketing the product to consumers. Fry successfully gained commitment from others in the company as a way to “sell” his new invention as a marketable product.Greg Beato, “Twenty-Five Years of Post-it Notes,” March 24, 2005, http://archives.secretsofthecity.com/magazine/reporting/features/twenty-five-years-post-it-notes-0(accessed November 20, 2009).

3. Managing opposition.Herb Cohen, You Can Negotiate Anything (New York: McGraw-Hill, 1980), 183. It’s true that although a negotiation is a collaborative effort, it is inherently a situation that addresses opposing views. The best way to manage this is to be prepared and know what’s important to you and your prospect.

The Three Elements of Negotiation

Every negotiation, whether it is in business, politics, or your personal life, includes three critical elements. Understanding the role of these elements can help make you a better negotiator.

1. Information. When you do your homework, research, and ask questions about what is important to your prospect, you may be able to avoid negotiating on price all together. If you have information, and share information at the appropriate time, you can make a negotiation a huge win for everyone.Herb Cohen, You Can Negotiate Anything (New York: McGraw-Hill, 1980), 19.
2. Power. According to Herb Cohen, known as the world’s best negotiator, power is based on perception. If you perceive you have the power to influence your situation, you do (conversely, if you don’t believe you have the power, you don’t).Herb Cohen, You Can Negotiate Anything (New York: McGraw-Hill, 1980), 20.
3. Time. Time is the great negotiator. Ninety percent of all negotiating occurs during the last 10 percent of the set time frame. Deadlines force decisions to be made and negotiations to come to fruition. Use time to your advantage by never revealing your deadline. Don’t negotiate when you’re in a hurry; chances are you won’t get the result you want.RCM Staff Report, “27 Principles of Negotiating with a Meeting Facility,” MeetingsNet, February 1, 2003, http://meetingsnet.com/ar/meetings_principles_negotiating (accessed November 19, 2009).

Everything Is Negotiable

Many salespeople are afraid of negotiating. They are worried that they won’t be up to the challenge to persuade someone to do what they want or to pay their price. Confidence and preparation go a long way to achieving a satisfactory result on both sides. Negotiating and closing are ways of gaining agreement. The old saying goes, “Everything is negotiable,” and it’s true. Your prospect believes the same thing so be prepared to negotiate about virtually every aspect of the sale. For less complex sales, the close might come as a result of a simple question at the end of the presentation. However, for more complex sales, there are various elements of the sale that must be agreed upon to close the sale. Elements such as price, length of contract, service, terms, and options are common points to be negotiated as part of the close.

Many salespeople are concerned about negotiating price. They think that lowering the price will make the sale. In fact, price is rarely the motivating factor behind any purchase. That’s not to say that price isn’t important, but customers buy value, not price. If price were always the determining factor in purchases, premium brand such as Porsche, Apple, and Neiman Marcus would not exist. If you’ve ever shopped at Nordstrom, Banana Republic, or Abercrombie & Fitch, you decided that those retailers offered more value than Old Navy, eBay, or Wal-Mart for the item you bought. Price is a part of the value equation but not all of it. According to author Kelley Robertson, “Everything you say and do from the first contact with a prospect affects the value of your product or service in their mind.”Kelley Robertson, “Let’s Make a Deal: Negotiating Techniques,” The EyesOnSales Blog, January 18, 2008, http://www.eyesonsales.com/content/article/lets_make_a_deal_negotiating_techniques (accessed November 19, 2009). That means establishing value with your presentation, demonstration, testimonials, follow-up, and everything that comes before the actual negotiation. How is your product or service different? What advantage does it offer? What is the most important problem it will solve for your prospect?Kelley Robertson, “Let’s Make a Deal: Negotiating Techniques,” The EyesOnSales Blog, January 18, 2008, http://www.eyesonsales.com/content/article/lets_make_a_deal_negotiating_techniques (accessed November 19, 2009).

If your prospect wants to negotiate on price, use your creative problem solving skills to get to the end that will work for all parties. Use concessions, something that you are willing to compromise, to create value during the negotiation. For example, use length of the contract, payment terms, service, delivery date, training, or other elements to demonstrate to your prospect that you are willing to work with him and give him something that has value to him.

The following is another example:

The bottom line is that it’s best not to make a concession without getting a concession. In these examples, the salesperson always used another part of the deal to give something and get something in return. This win-win-win approach helps reach common ground and close the sale faster.RCM Staff Report, “27 Principles of Negotiating with a Meeting Facility,” MeetingsNet, February 1, 2003, http://meetingsnet.com/ar/meetings_principles_negotiating (accessed November 19, 2009).

Steps of the Negotiation Process

While negotiation has some elements of being an art, there are three specific steps that can be followed to help ensure success with each negotiation.

Know What You’re Worth

Before you even begin thinking about looking for an internship or job, your first step should be to determine your value based on the marketplace. As with every step of the selling process, doing your homework is key. If you don’t do your research to find out competitive compensation packages for the position and city in which you are seeking an internship or job, you might be disappointed with the job offers you receive.

There are several Web sites—Salary.com, JobStar.com, and SalaryExpert.com are just a few—that include compensation ranges for hundreds of different positions in areas across the country. Visit the sites listed in Table 12.1 “Web Sites for Researching Compensation” to gather compensation information before you go on any interviews.

It’s a good idea to use these tools as a guide as there are many assumptions that are made when these numbers are prepared. However, this information can be extremely helpful to understand the range of compensation being paid for a specific role in a specific city.“Evaluating the Salary Information You’ve Found,” The Riley Guide, http://www.rileyguide.com/saleval.html (accessed November 21, 2009). You will be able to negotiate more effectively if you walk into every job interview knowing how much you are worth.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 201.

Timing Is Everything

Although you may want to discuss compensation on your first interview, it’s a good idea to postpone discussing the topic as long as possible.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 202. Just as in the selling process, you want to put focus on establishing your value and learning about what’s important to your prospective employer before you begin discussing compensation. A word of caution: you should be prepared to give your desired salary range on an interview as many employers want to understand your salary expectations as soon as possible. If you can avoid the topic, do so until you receive a job offer. Here’s an example of how you can deflect the conversation.

If you are forced to give a salary range, be sure you can live with the lowest number you give. Once you say a number, it will be extremely difficult to negotiate above that salary.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 202.

Receiving the Offer

Most job offers are extended over the phone, although some may be extended in a letter and still others may be presented in person. Since companies usually interview multiple candidates for each position, chances are you won’t receive a job offer on an interview. However, you should be prepared to respond to a job offer if one is presented during an interview.

When you receive an offer, it will most likely come over the phone. When you get a phone call about an offer, write down every element of the offer (it’s OK to ask the person to hold while you get a pencil and paper). Thank the person who made the offer and tell her how pleased you are to receive the offer. Even if you think you want to accept the offer, don’t accept it right away.

It’s worth noting the time element of this negotiation. You should take as much time as you need to evaluate the offer, but you should be reasonable and state the time frame you need. Recall from earlier in this chapter that time is one of the elements that is always present in a negotiation. Sometimes a prospective employer or recruiter will try to create a deadline to force you to make a decision by a specific date. Use time to your advantage and negotiate for more time so that you don’t feel as if you are under pressure to make this important decision.

Evaluating the Offer

Congratulations on your offer! Although it’s a difficult economy, don’t feel pressured to take the first offer you get. Take the first offer you get for a job you really want. This is a special moment; it is the time when the power shifts from the prospective employer to you (remember that power is one of the elements that is always present in a negotiation). Your prospective employer has now indicated that you are their choice for the position. You have the opportunity to take the offer, counteroffer (your response to the job offer), or walk away. Whatever your choice, you have the power. As soon as you make your choice, the power shifts back to your prospective employer. That’s why it’s a good idea to take your time and completely evaluate your offer before you respond.

Now that you have all the elements of the offer, you can begin to evaluate it. Just as in a negotiation in selling, identify what is important to you. Consider making a list that includes both elements of compensation as well as other elements such as culture, opportunity, environment, commuting distance, and so on. Figure 12.6 “Compensation Elements to Consider in a Job Offer” and Figure 12.7 “Other Elements to Consider When Evaluating a Job Offer” can provide some ideas to help you create your list.Adapted from Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Prentice Hall, 2008), 204; and Paul W. Barada, “Job Offer Evaluation Checklist,” Monster.com, http://career-advice.monster.com/salary-benefits/Negotiation-Tips/Job-Offer-Evaluation-Checklist/article.aspx(accessed November 21, 2009).^,Adapted from Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Prentice Hall, 2008), 206; and Paul W. Barada, “Job Offer Evaluation Checklist,” Monster.com, http://career-advice.monster.com/salary-benefits/Negotiation-Tips/Job-Offer-Evaluation-Checklist/article.aspx (accessed November 21, 2009).

Only you can determine if a job offer is right for you. The following are some additional resources that you may want to review to help you evaluate a job offer:

• http://careerplanning.about.com/cs/joboffers/a/evaluate_offer.htm
• http://rileyguide.com/salguides.html
• http://www.ehow.com/how_2068763_evaluate-job-offer.html
• http://www.black-collegian.com/career/joboffer-199702.shtml
• http://www.salary.com/careers/layouthtmls/crel_display_nocat_Ser16_Par41.html
• http://career-advice.monster.com/salary-benefits/Negotiation-Tips/Job-Offer-Evaluation-Checklist/article.aspx

Negotiating the Offer

After you have had the time to evaluate the job offer, it’s time to identify any gaps that there might be between what you think is important and the offer. If you think the offer is perfect as is, then accept it as is. Keep in mind that many employers expect candidates to negotiate by presenting a counteroffer, a candidate’s response to a job offer. Since the economy is challenging, candidates don’t have as much bargaining power as when the economy is healthy. However, this is the time you have the most negotiating power with your prospective employer so it’s a good idea to take advantage of the opportunity.

This is the time when you should identify your prenegotiation goals. Remember that your prenegotiation goals are the minimum that you will accept. Your counteroffer will be above your prenegotiation goals to allow room for negotiation. You won’t be able to negotiate every element of the offer. Choose one or two key areas and focus your negotiation on those. Keep in mind the things that are important to you and to your prospective employer so that you can easily find common ground. For example, if speed and availability are important to your prospective employer, you may want to use that fact to negotiate a more flexible work arrangement. While it may be difficult to negotiate a higher base salary in this economy, you may be able to negotiate on another area such as getting additional vacation time.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 208.

When you have identified the areas you wish to negotiate along with your counteroffer for each, contact the recruiter or prospective employer to begin the negotiation. As with any negotiation, approach it with a confident, collaborative attitude. It’s important to note that you should not accept the offer until you negotiate the offer. Once you accept the offer, you have lost your power to negotiate.

Just as in a selling negotiation, you have to be ready to accept the offer as is or be ready to walk away. That’s a lot harder to do when you are negotiating on behalf of yourself since you are emotionally involved with the decision.

The Offer Letter

Once you agree on the final elements of the offer, you should ask for an offer letter, a formal letter from the company (on company letterhead) that outlines the terms of the offer. All companies should provide an offer letter as a matter of course for an internship (paid or unpaid) or a job offer. If you received the original offer in the form of a letter, you already have the offer letter; however, you should request an updated letter to reflect the final offer on which you agreed. If you find any discrepancies in your offer letter, contact the person at the company as soon as possible to have a new offer letter issued.

A offer letter simply reiterates the terms of employment that you have negotiated and may be conditional based on requirements such as a background check or drug test or may make reference to company documents such as the benefits summary or employee handbook. While some information in offer letters may vary depending on the company, some key information should be included in the offer letter:

• Title
• Salary
• Bonus
• All other elements of compensation (e.g., stock options, benefits)
• Start date
• Any conditions of employment

Some companies request that you sign a copy of the offer letter and return it to the company. If this is the case, sign the letter and make a copy for your files before returning it to the company. The offer letter is your documentation of the compensation the company has agreed to give you.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 212.^,John Steven Nisnick, “Job Offer Letter Sample,” About.com, http://jobsearchtech.about.com/od/jobofferletters/a/jobofferletter.htm (accessed November 21, 2009). See sample offer letters in Figure 12.8 “Sample Offer Letter” and Figure 12.9 “Sample Offer Letter”.