CHAPTER 4
Preparing for Negotiations
What we really need now is preparation and practice for action, and not just any action but a particular kind of hard, often risky, intricate value-based action.
Why Read This Chapter?
We will help you prepare for negotiations. We will give shape to the sales process by identifying the stages and phases of negotiation and explaining how you can positively affect the purchasing decision of customers even before meeting them. You will see how Sales Ethics can be extended and adapted to any sector and business environment.
The Stages of Customer Relationships and the Salesperson’s Power
Bookstores world over are full of sales manuals—at service stations and airports you can take your pick from a glut of volumes promising to transform even the most timid and inexperienced employee into a brilliant salesperson. Their eye-catching titles and enthusiastic blurb promise either a magic formula or secret with universally applicable rules that will transform the customer into putty in your hands: The Instant Salesperson, Five Rules to Beat the Customer, Fast-track Sales, and so on.1
The phases of selling that we will analyze together are not universal. They have to be adapted to your specific circumstances! You will have to do much of the work yourself to adapt the techniques explained in this book, but we will help and guide you in these pages to achieve this. Just do not expect any magic spells that will turn you into a textbook salesperson, because no sales manual can be applied everywhere to everyone.
No one can tell you the most effective formulas for you to use to improve your way of conversing with customers to achieve your goals.
Attentiveness and flexibility are fundamental to every relationship (including sales). Before you start, it is essential that you first listen to yourself so you know and understand your own needs and can interpret them. If you jump this step, you cannot provide the best customer service and get the outcome that every sales activity targets, that is, an increase in well-being.
You will remember that in the chapter devoted to definitions, we said that the building of the circle of trust is a process that can be divided into phases. The objective of Part II is to analyze each of these stages, pass the tests that customers will propose in the course of your relationship with them, and build together an empowering exchange that will generate value for both over time and expand the market.
We have developed this approach to selling based on our experience and observation. In the many years we have been working with companies as consultants and trainers, we have met thousands of sellers and we have learnt as much from their successes and their failures as from our own. What follows is an attempt to synthesize the best practices, organizing them into a single process that on completion can increase the value generated for all the actors involved in the negotiation and thereby improving the efficiency of the sale.
Before starting any negotiation, however, you have to prepare thoroughly prior to the encounter.
We will not deal with the topic of data analysis to support sales in this book because the subject is too vast and deserves to be dealt with separately, though undoubtedly this analysis is a fundamental part of a salesperson’s approach. Often what you think you know about your customers on the basis of your own experience hinders you getting to know them fully. The use of support data can help you to be more objective in your evaluations. Much of the creativity of sales work is linked to your ability to give meaning to the pool of analyses and information deriving from the market and from the customers themselves, and to weave them into a coherent system of needs and motivations that will then shape your offer. In fact, asking and listening demand considerable creative power. You must be ready to shift your point of observation and to influence an answer by asking the right questions. Even when selling you may experience the observer effect described in quantum mechanics, according to which the act of observation influences reality.2 Your responsibility as a salesperson begins then with asking the right questions and carefully observing your interlocutor’s behavior.
Before discussing the phases of Sales Ethics, we would like to reiterate the definition we gave earlier, and underline the fact that it does not refer to a single moment of the customer relationship but rather unfolds over a period. Widening the perspective further, it will encompass all the stages that customers go through in their consumer experience, so it is evident that the moment of purchase is just one of these. There is a direct relationship between buyer and seller at the moment of sale and purchase, but what happens before their encounter can influence the outcome of what will happen during the negotiation. Similarly, what happens after the sale can have an important effect on customer satisfaction. We therefore divide the customer experience into three macrostages (see Figure 4.1):3
Figure 4.1 Stages in the customer experience
• Exploration: This is the period in which the customer gathers information about you and your company independently, consulting communication tools, other customers, and the market.
• Sale: This begins when you have the first direct contact with customers and continues through the activities that accompany them toward further purchases.
• Management: This includes all contacts between customers and other sectors of the enterprise that are not directly supervised by the salesperson, for instance, technical activities such as after-sales assistance, or administrative provisions.
During the exploration stage, the customer will not be consulting you directly but he will be perhaps checking out the homepage of a website or images and texts in a brochure. During the management stage the business relationship will be influenced positively or negatively by the behavior of colleagues. This causes certain experts to argue that the salesperson’s negotiating power is diminishing. These proponents claim that about 60 percent of the customer’s decision to purchase is determined in the exploration phase. If we think of the decision-making process as an empty glass and our sales arguments as the water which will fill it, we can only affect 40 percent of the capacity of the glass as the rest is already occupied by information that the prospect has gathered independently or by previous experiences (see Figure 4.2a). In our opinion, with Sales Ethics you can recover a further portion of the glass, hence recuperating some of the salesperson’s bargaining power.
The presence of information asymmetries and the effect of externalities, introduced in Chapter 2, affect customers so that when they actually meet the salesperson they have already made certain choices or formed an opinion. In some cases, an ethical salesperson can use the forces that are already underway to negotiate with the customer before their first meeting!
It is clear that by collecting information about you independently the customer will have accumulated massive amounts of information asymmetries that your limited media and marketing resources (or negative remarks made by rivals) will only exacerbate. However, the customer will not yet have experienced one of the most compelling elements of your offer system: the relationship with you.
Figure 4.2 Diagram of purchasing decision
Find out what these asymmetries may be and work on smoothing them out!
If you then realize that customer satisfaction is greatly influenced by the quality of your company’s after-sales services, start applying your negotiating skills to internal clients, that is, your colleagues in charge of those stages. Make sure you enable colleagues to appreciate fully the importance of their role and provide them with tools to cater to the customer’s needs more accurately and efficiently.
To do business today you have to orchestrate a variety of corporate functions!
We mentioned previously that it is even possible to negotiate with the customer before your first encounter. What tool, you may ask, will provide you with this telepathic ability?
The first tool for distance negotiation is the incremental negotiation introduced in Chapter 3, which envisages enriching the exchange of intangible components that, though not immediately rewarded, constitute an investment that will turn into repurchase, enhanced reputation, and referrals.
Certain information asymmetries can also be resolved before meeting the customer, thus freeing up space in the glass. For example, W. Brian Arthur with his theory of incremental returns suggested that in certain markets collaboration between competitors might create a platform of knowledge and awareness. This preparatory knowledge will help customers to gain a clearer understanding of your offer and to accept it more readily as it provides them with the basic skills required to orient their choice and avoids errors that may depend on a random search for information.
Summing up, to express your full potential you must:
• Identify the informational asymmetries plaguing your customers and help them to receive direct information on your entire offer system.
• Contribute to increase the quality of information available on the market and customers’ ability to understand it.
• Build a reputation based on positive word of mouth.
• Interact with your internal clients so they become involved in the outcome (See Figure 4.2b).
You must therefore prepare for negotiations appropriately by studying your customers and, where possible, taking charge of managing your relationship with them even before your first meeting. Remember, above all, that every sale is social because behind each customer there are other customers interested in making a purchase or influenced by referrals. Each customer’s potential involves both the opportunity for further purchases and the possibility that this person will improve your reputation with other prospects, thus widening your network of contacts.
• What are the stages in your relationship with the customer? On a piece of paper, describe all the stages that customers pass through in their relationship with your company. When do you have direct contact with customers? On the other hand, when are other colleagues involved?
• How well do you really know your customers? Imagine you are taking a virtual photo of your typical customer and describe what you see. How much of what you are writing is based on your opinion alone and how much is based on facts? What extra information do you need to move from opinion to facts? List the questions you need to ask a customer and other sources to find the missing information.
The Phases of Sales Ethics
A Buddhist mantra states, “The journey is the reward.” Sales Ethics can also be seen as a journey whose final destination is a relationship of trust on which to base an exchange of value with the customer, and thus to satisfy the need that brought you together. No one can travel this road for you, but as with all journeys, it will be easier to complete if you break it up into phases before setting out. The reasons are as follows:
• You will always know where you are.
• If you need to stop, you can take up where you left off.
• You can review your route and decide to change it.
Figure 4.3 illustrates the sales process. As you can see, the phases of the sale, ordered from bottom to top, are connected to the levels of the circle of trust described in Chapter 2. As we progress from one sales phase to the next, we are in fact moving closer to customers and forging a stronger relationship with them.
Figure 4.3 Phases in Sales Ethics
You will have noticed from the diagram that we left both the first ring of the circle of trust, and the first phase of the sale, in gray. A number of factors are involved to move beyond the circle called indifference, which in the early phases of the sale corresponds to exploration. In fact, this area is affected not only by the activities of the salesperson but also by the use of communication and marketing tools with which this book is not concerned. Nevertheless, even at this stage, we sellers can do something. As you may remember, in the opening paragraphs of this chapter, we provided some suggestions on how to manage distance negotiations; we will now add some advice on how to approach a customer that has not yet noticed you.
Collective action, involving our internal clients or colleagues, is required to reach the last level of the circle of trust where the customer rewards us through active promotion. In this delicate phase, our business negotiations will be aimed primarily at them; in the final part of the discussion, you will find some helpful advice
The fact that we have divided the process of the Sales Ethics into phases does not mean that each one is closed and compartmentalized, but rather that they flow one into the other in a harmonious movement. In particular, the initial phase of construction and maintenance of the relationship should act throughout as a beacon to guide your way: You must not forget that you are dealing with another human being and your relationship with him or her should be constantly nurtured.
During the sale, you might commit an error and be forced to retrace your steps to rebuild the lost trust. Bear in mind that even the circles of trust are not static but dynamic and can expand or shrink depending on how the relationship is progressing.
How do we know when one phase is completed and it is time to move on to the next one? The answer lies in observation and attentiveness, as the customers themselves will send out signals to which you must be receptive.
In the next chapters, we will explain what to look for and how to train yourself to use the tools, but it is also important to listen to yourself and be guided by your personal feelings. Selling is an activity based on relationships and, as we said earlier, all relationships are personal. You should always ask yourself “Do I feel good about what I’m saying and doing now?”
The key to Sales Ethics is to understand fully that if each phase is handled well and produces a positive experience, you have achieved a result. Obviously, the final objective is to close the deal, but this may require a number of meetings or visits over time. If you value and understand each intermediate result, then you will be ready to continue along the path to achieve your outcome, while creating value along the way!
You will find the phases described as if they all occurred in a single meeting with the customer, though in reality these negotiations may continue over a period with breaks between them. This is particularly true for complex bargaining involving goods such as highly technical equipment, custom machinery (machines for assembly lines, etc.), high-value goods (houses, cars), or strategic services.
You must bear in mind that, for a variety of possible reasons, not all your appointments will end with a sale; for instance, your product may not meet the prospect’s needs, your arguments were perhaps not effective, the customer may not actually be able to afford your offer, and so on. Is it still possible to derive pleasure from the seller–customer relationship regardless of any immediate profit or gain? There will be times when you fail to close a deal but find yourself richer because you have learnt new things or improved your reputation, or simply because the experience made you feel good!
The only real rule that characterizes the six phases is that they must follow one another in the order given, because each is a prerequisite to the next.
Only if you have made sure that customers are aware of you and have overcome their skepticism, thanks to a good job of building and maintaining the relationship (Phase 1), will these customers respond frankly to your questions (Phase 2) focusing their attention and explaining their needs and the motivations for their desired purchase. Once you have this precious information you will be better equipped to present your offer system (Phase 3) tailoring it to generate interest in a specific customer. You will then respond to the more detailed questions and objections that crop up (Phase 4), thus passing the test of trust that will enable you to close the deal and make the first sale (Phase 5) and then qualify to enter into the area we defined as conditional trust in the customer relationship. It will take time and competent after-sales services (Phase 6) to reach the inner ring of broader or rewarded trust that will trigger a virtuous circle.
This approach to selling in phases or stages may seem rigid: Very often, we think of a sale as a performance based solely on the talent and improvisational skills of the seller. When we described the context and the changes occurring in the salesperson’s profession at the beginning of the book, we wanted to highlight just how complex today’s workplace is, and the specific training and development of management skills it requires to back up the individual’s talent and eye for business. It is necessary to have a method to develop skills and abilities and organize efficiently.
We like to compare the seller to a cook who is about to prepare a plate of spaghetti. She cannot just throw her carefully prepared sauce directly into the water where the pasta is boiling; it is essential to follow the steps of the recipe carefully and faithfully in the correct order if you want to sit down and enjoy a tasty dish. Of course, our cook may be forced to adapt the recipe to make the most of the ingredients available—having method in your work is not a straitjacket—it is in fact essential to adapt and tailor your style according to the context and the guests invited to your table. You need not worry that a methodical approach to selling will block your creativity and limit your uniqueness in the negotiation: We assure you that with constant and sensible training everything you learn will become part of your natural approach and suit your particular personality.
One last piece of advice before you start: Put into practice what you learn as you read the various phases of Sales Ethics by trying it out in your professional life immediately. It is not enough to look at a map of Nepal to get to the top of Mount Everest! Theory alone will take us nowhere: You need specific, consistent, and motivated action to advance your projects and fulfill your dreams.
This brings to mind an article we came across a few years ago stating that the United States is the country with the greatest number of tread-mills per inhabitant coupled with the highest rate of obesity. Obviously, even if you have the best fitness equipment you have to use it once a day if you want to lose weight.
While trying out this new approach to sales, we remind you to stay connected with your inner emotions, so you can perceive whether this way of working makes you feel better, if you gain greater satisfaction. Then check on whether it is also improving your performance and your sales results.
Sales Ethics: For All Sellers and All Markets
Perhaps you are asking yourself: “I work in a bar, how does Sales Ethics apply to me?” “I sell homes and have to meet prospects at least 10 times before closing a deal, are these steps relevant for me?” “I work in the administration office of a company; do I have a role in the Sales Ethics too?” The answer for all these questions is yes, Sales Ethics is for you too!
This book is for anyone who is selling something: Whether you go out to visit customers or they come to you, whether you sell goods—candy, cars, packaging equipment, high-tech tools—or services such as banking, insurance, leisure activities, or whatever.
Of course, the phases have to be adapted to different situations and tailored to the context; they will vary in length and intensity and may require one or multiple meetings, but the basic method remains the same.
In companies, it is not only the salespeople who interact with customers (acquired or potential) but also all those staff involved in the sale: receptionists, secretaries, service technicians, installers, and maintenance operators of all kinds. Each person is responsible for a part of the customer experience and participates more or less directly in your offer system, thus influencing sales results. All the company staff must therefore be clear about the role they play in customer care and be properly trained to contribute to customer satisfaction: Your role as an expert in negotiation will be to educate your colleagues by communicating the message and the method of Sales Ethics!
Selling is the pivotal action in the life of a company, the indispensable ingredient or conditio sine qua non of its existence. The seller, therefore, should be seen as a key figure in the organization and sales as the most strategically significant act to which the bulk of internal resources must be devoted. Sales Ethics thus gives new value to the role of the salesperson, a role that we are obliged to carry out with responsibility and professionalism.
1 The authors invented these titles; any resemblance to books existing on the market is purely casual. The authors do not intend to refer to any specific book or author.
2 The following publication is interesting in this regard: Capra (1975).
3 The diagram provided is generalized; we advise you to create your own diagram based on the stages that your customer experiences in the relationship with your company.