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You finally landed your big order. You negotiated a good price. Your fellow sales professionals are excited and jealous. The boss is singing your praises. Is everyone happy with your new order? It is true that revenue hides many evils. After awhile, your boss may find fault with some of your sales.
Negotiating is a two-front battle that is hard to win. You can help yourself, and your company, by negotiating a good deal internally as well as with your prospects. Companies have a tendency to give away too much in a recession and too much in prosperity. Consider the whole package. Negotiate wisely.
Negotiating with your prospects is only half the battle. Great sales professionals look at the whole sale or negotiating process. Next time you are about to begin your negotiating process ask yourself if you want the business, can you handle the business, and is it good business. You might solve some headaches before they start.
Sales 101 teaches us that sales people instinctively get the order at all costs to beat quota. Once you achieve quota, your manager asks for more profitable business and the shift begins into more guarded sales. You negotiate cleaner deals. This causes profits to go up and you have to work harder. These deals also cause you to become a keener negotiator. You focus on the profitability of the order - today. This is a far better deal than the first example of getting the order at all costs. The only problem here might be long-term in nature. Sometimes you do not see what you have sold until something goes wrong. This is where you might want to ask yourself some questions.
First Question ~ Do We Want the Business?
How can you say this? We are in a recession! Now is a tempting time to sell your soul. As a matter of fact, it happens to the best of us. In October, some of the major auto manufacturing companies started offering zero-percent financing. This is incredible if you are in the market for a new car. Even if you are a year or two away from buying a new car, you may want to consider looking now. But, and there is always a but, what has the auto company done? First, they jacked-up orders which is a short-term fix, because zero-percent financing is not forever. Second, they exposed themselves to people with less than perfect credit which might begin to haunt them in one or two years if not sooner. Third, once they get rid of zero-percent financing orders will drop like a rock, and fourth, they just made it harder to raise prices down the road. That is a long-term problem. This short-term revenue stimulus might cause long-term negotiating problems. Watch out for being shortsighted.
Second Question ~ Can We Handle the Business?
Sometimes handling the order may be back-end loaded. Take the telecom industry eighteen to twenty-four months ago. Remember the Internet bubble? Business was so good some companies started financing future orders. The sales force and management negotiated incredible ways to jack-up revenue, but in time the back-office people, inventory, and finance bore the sins of short-term negotiated deals. If your company had deep pockets, you are probably still in business. It may not be a question of handling production, but rather handling a slowdown or recession. When orders come and production ramps-up, negotiating a clause that has recession verbiage may help long-term circumstances.
Third Question ~ Is This Good Business?
Does the idea of working with customer X make good business sense? Are the economics in place? Do you have to steal from warranty to sweeten the deal? What are the long-range ramifications? Can you handle a slowdown or loss of this business? Will you regret this deal in the coming years? If you find yourself having to steal from Peter to pay Paul or give away far more than normal, you might want to reconsider the order. Cleaner deals demand more profit.
Beware of the contradictory economic error. Beware of the expanding economy error. Look for sound negotiated solutions.
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