Do You Really Have To Have A Target When You Start A Sales Negotiation?

by drjim on March 12, 2010

In Sales Negotiations, You Have To Know Where To Aim In Order To Hit The Target

In Sales Negotiations, You Have To Know Where To Aim In Order To Hit The Target

The Problem With Most Sales Negotiations

So there you are, all ready to start another sales negotiation. Hold on a minute, are you really ready? Sure you’ve researched the other side of the table, you’ve created a negotiation strategy, in fact you’ve done just about everything that you can think of in order to prepare to have a successful negotiation. However, maybe you’ve overlooked the most important point of all – setting your target for the negotiation.

The Right Way To Set Sales Negotiation Targets

Doesn’t everyone know how to do this? I mean really – isn’t the goal of any sales negotiation to get the best deal? Well, yes and no. Getting the best deal is what we all want to accomplish. However, just saying that is not enough – we need to be a bit more specific and that’s where setting targets comes in.

It always helps if we have an example to make things clearer. Let’s say that you were getting ready to go buy a new car. You do your research, check out the dealer’s invoice price (what they paid for the car) and you decide that you don’t want to pay any more than $500 over invoice. However, if push came to shove, your budget would allow you to go as high as $700 over invoice.

Well wait a minute, just what is your negotiating goal here? Is it $500 over invoice or $700 over invoice? I hate to tell you this, but if you go into a negotiation with wishy-washy targets like this, you’re going to end up paying $700 over invoice every time.

In your mind you have already set $700 over invoice as a price that you are willing to pay and when the other side digs in and starts to shove back, you’re going to roll over and accept paying more than you originally wanted to. Sorry – it’s human nature.

So what are you doing wrong here? Simple, you are focusing on the wrong things. As you prepare to start a sales negotiation you should be focusing on two numbers (and only two numbers): the price that you are going to start at, and the final price that you are willing to pay. No fallback positions should cloud your mind!

In our car example, this would boil down to focusing on a starting price that was say, $300 above the invoice price and a final offer price that was $500 above the invoice price. If you were able to strike a deal with the dealer then great – you’d end up paying no more than $500 above the invoice. If not, then you’d walk away.

What To Do If You Don’t Get Your Way

So what should you do if you can’t reach an agreement that meets your target with the other side of the table? I mean come on, you really need that new car. Simple, you still walk away. Once you’ve left, you sit down and give things some thought.

If you changed your target, what would the other side have to do for you? If you decided that yes, you could pay $700 above the invoice for the car, what would you want the dealer to do for you – more options, better financing, etc. Once you’ve picked your new target, you can return to the negotiating table and restart the negotiations.

By not bending on your target price and walking away, you mentally prepared yourself to do a good job of negotiating. You had no other options to fall back on and so you didn’t.

What All Of This Means For You

Having a solid target as a part of your negotiating plan is the key to making a negotiation successful. If you confuse things by having multiple targets you’ll never be sure just exactly what you are trying to accomplish during the negotiation.

If you can’t reach a deal, walk away. You can then rethink what your target should be and what the other side would have to provide in order to support your new target.

How you set your target will determine what kind of deal you’ll eventually reach with the other side of the table. Set good targets and you’ll reach good deals.

Question For You: What could you do to make sure that you don’t set an unfeasible target for your negotiaton?

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What We’ll Be Talking About Next Time

Inexperienced sales negotiators often enter into a negotiation thinking that the price of something that they are trying to buy or sell is fixed – it’s set in concrete and cannot be changed. It turns out that the price of just about everything is constantly in flux – and we need to understand what can make it go up as well as go down…

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