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Why invest in negotiation skills training?

Doing the job that I do engenders some interesting responses from people in social settings. some people love the idea of it and want to find out more about the psychology involved. Some people think it is machiavellian and has its roots in manipulating people, but whatever their thoughts on it, they always have an opinion, and it usually leads to some great conversation.

i was speaking to someone at a dinner party just last week who told me that negotiation was a discipline which he had never seen the benefit in developing amongst his sales-force. he said he knew that the buyers they dealt with had probably been ‘trained to the teeth’ in how to negotiate, but that was why ‘buyers were paid so much less than salespeople’. he was relying on their ‘wit’, and ‘ability to think on their feet’. he didn’t mind spending money on sales training, and he said that if they got this bit of the process right, then they shouldn’t need to negotiate.

it wasn’t the first time that i had heard this type of mentality, but it was maybe the most explicit, so i was fascinated to explore it further with him. for context he is the general manager of a company that produces electronic parts that are supplied to the automotive industry, and he has about 12 salespeople.

i asked him how often his salespeople give discounts, and he said that although he didn’t keep such statistics (or management info as i called it), he said it was rare that they didn’t give any discount at all, and he followed this with some fantastic justification; ‘but it’s a really tough environment out there – of course you have to give discounts…’, and ‘that’s why they are empowered to give up to 20% off if they need to…’

we spoke about the people that his salespeople were dealing with, and he explained to me how things have changed. he said that until fairly recently all dealings would be with the ‘customer’, but now, his customers have started to introduce ‘procurement’. he said the word as if he was talking about the bogey man! he was bemoaning this process as it ‘took the relationship out of selling’. he said that they were doing this just to drive the price down, and this was not their type of business. as a business they were finding it incredibly frustrating, because once procurement were introduced, the ‘customer’ was removed from the scenario completely, ‘rendering all those years of relationship building absolutely useless…’

as he opened up, he said that his real concern was that he now needed to put through a price increase, because of the increases he has had to absorb, and didn’t know what to do. he knew he had some fantastic products, and a team of salespeople who were great at selling these products, but none of that seemed to matter when it came to pricing, because of the pressures that his customers are under.

the fact is that the story he told is not uncommon, but not realising how to solve the problem he faces will hold his business back. we explored some numbers, and if he was able to reduce the average discount by 3 percentage points he would generate enough (bottom line) revenue to hit this year’s targets. if he was able to achieve a 5 percent price increase (and still discount from it as necessary), he said he would ‘dance down regents street in his underpants’.

he can achieve these things, but it will be through negotiation skills, not selling skills. his customers know all about his products and slas and customer support after all.

i am delighted to say that by the time the cheese came out he had asked me to come and see him at his office to talk through how we can help.

how much would it be worth to your business if you could generate an extra 2 or 3 percent from all of your customer or supplier negotiations?

Dan Hughes

He has specialised in negotiation consulting since 2005, and set up his own business in 2012 bringing this expertise to businesses small and large in all parts of the world. This company - bridge][ability ltd - runs behavioural and strategic planning negotiation skills programs which transform capabilities and has a client list which includes Tesco, The FA, Fujitsu, Capita, Reiss, Take 2 Interactive (the company behind Grand Theft Auto), BBC Worldwide and Channel 4.

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