Categories Articles, Sales and Marketing

I’d love to write a blog about how to avoid ever giving discounts, but I don’t think that’s really possible. Or smart.

If you truly want a transactional business; if you want to partner and have customers for life; if you want to remove friction from the sales process, there is a world where a fair and modest discount – a token amount – can be exchanged for healthy buyer-seller engagements.

The challenge is that B2B sales negotiation is not easy; it’s a delicate dance that requires careful steps by both parties, but especially the sales rep. To get better at negotiations and achieve more win-win’s, follow these 5 keys of B2B sales negotiations.

1) Only enter into a negotiation when you have an agreement in principle

People want to know if you discount. They want to know the pricing model, and they’re curious about where they can poke holes. While they should be focused on the total cost of project, and whether or not that’s within a justifiable ROI, the early discount questions can be a major blocker and distraction.

 If you engage in real money talks too early, you may be opening yourself up to contentious, money-only conversations. Let’s first just make sure that the software solves a problem, and that it’s financially worth solving.

“Can our product solve your problem? Can we provide demonstrated proof of ROI? Are there any tech concerns about onboarding or usage? Is there real interest to buy?”

Can our product solve your problem?

Once those questions have been definitively answered – and the deal to buy your product agreed upon – then can you start talking about discounts. Solve the problem first, get the agreement in principle, and then you can open up to negotiation.

2) Give up something only if you’re getting something else of equal or greater value in return

Of course, you’re not just discounting for the sake of discounting – giving away too many (or too big) discounts will invariably hurt your company’s bottom line, so make sure you’re getting something back in return. Some things you could ask for in return after agreeing to the deal include a referral to another likely customer, signing earlier to make the end of the quarter, or agreeing to be used in a case study.

I’ll agree to talk discounts if the prospect gives me some information.

However, such trade-offs can also happen early in the conversation. I actually prefer these type of information trade-offs for discounts. For example, I’ll agree to talk about discounts early in the conversation if the prospect gives me some information early. Telling me about the details of their buying process, giving me a real timeline or sharing with me what competitors they’re also looking at are all valuable assets early in a sales conversation. It’s not just about tit for tat. It’s about ensuring that we continue to work together. It has to be win-win.

3) Introduce as many non-monetary points of negotiation as possible

As we just mentioned, information early in the buying process is a valuable asset, and a great example of a non-monetary point of negotiation. Steering the discount negotiation away from pure monetary agreements will allow both parties to get value without significantly hurting your revenue. Some examples of non-monetary points of negotiation include:

  • Professional services, such as a full-service training program, where our customer support team will help you and your users get fully onboarded and up to speed.

  • A shorter contract than typically required of new customers.

  • A mention of your company in our blog, giving you free marketing publicity

  • Concessions on certain contractual terms, such as auto-renewal

  • A company t-shirt, fleece or other branded gear. Everyone loves SWAG!

You might be overlooking some real areas of value for your customers if you focus solely on the money. Not every favor you do has to cost you money in order to create benefit for the prospect. Be creative and you could be surprised how many of what you considered to be “easy gives” could actually mean a lot to the other person.

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4) Be aware of the differences between a trade-off and a concession

A trade-off conversation might go like this: “If you give me a 5% discount, we’ll sign right now, two weeks earlier than we had planned to, and letting this deal come in before the end of the quarter.

A concessions conversation might go like this: “Give us a 10% discount, or we’ll take our business elsewhere.”

See the difference?

Slow Down

Finally, the last – and perhaps most important – key to a successful sales negotiation is to just. Slow. Down.

In the heat of the moment – right in the middle of the sales process – a request for a discount might catch you off-guard. In your flustered state, and given your desperation to close the deal quickly and help you hit your goals, you might agree to a discount that really isn’t in line with your company’s principles, and really hurt both your and your company’s bottom line. Any time you’re being asked about concessions, it’s important to take a deep breath, take a step back and truly evaluate how to get to a good win-win state. There’s no need to rush the negotiation aspect of the buying process. You can always call them back with an answer.

These are the 5 principles of negotiation that I coach my closing sales reps on, and that I adhere to strictly myself. Negotiation for discounts can be a great win-win experience for both parties. Don’t settle for less than you deserve or allow yourself to be strong-armed into doing something you’re not comfortable with. Remember that it takes two to negotiate.

Joe Caprio
Joe Caprio is the ‎Senior Director, West Coast Sales at InsightSquared.
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Showing 5 comments
  • Mediation Practice

    Negotiations are an essential part of business and when studying negotiations, you learn that there are three types of negotiator: Competitor, avoider and accommodator. Learning to deal with those three types of negotiators can be the difference in negotiating a great deal.

  • Khaled Shaheen

    Thanks Joe, very important tips to remember before starting negotiation. I would like to highlight the the following:
    – Preparation: deal with the right person, know him/her well and understand well your products or services.
    – Watch for the body language during negotiating.
    – Focus on your strengths.
    – Get everything in writing.
    – Make notes so you can track why you made the offer.

  • Bandar Bola

    In order to succeed, your desire for success should be greater than your fear of failure
    Nice share dude

  • Anthony Ochieng

    Very very informative. I have added knowledge to my consultative sales skills. Thanks Joe.

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  • […] on this particular opportunity and will be discussing the prospect’s buying process and doing a final negotiation. During the call we discuss who puts pen to paper and if their CFO has any remaining questions […]

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