Essential Negotiation Skills

January 13, 2022

The 5 Essential Negotiation Skills for Closing Deals

Written by Karli Stone

Negotiation is one big balancing act.

When you negotiate, it has to be a two-way street of give and take without being unfair or unjust to either party.

But as solutions have become more universal, buyers are more aware of their other options. Potential customers know about you, your prices, your offerings, your in-market competitors, who is offering solutions at the same rate, and more.

Competitive sales organizations are responding by upgrading their negotiation skills and strategy. Because, the fact of the matter is: effective negotiation closes more deals, and in turn, drives business success.

In this blog, we’ll equip you with the tips you need to become a world-class negotiator in the 21st century.


What is a Sales Negotiation?

Before we jump in head-first, it’s important that we are on the same page. Let’s define some of the terms we’re talking about:

A sales negotiation is a discussion that happens between buyer and seller. These negotiations allow sellers to address buyer concerns about a purchase by re-establishing the product’s value and/or make a compromise on the sale. A sales negotiation ideally leads to a satisfied seller, a satisfied buyer, and a closed deal.

Negotiation skills are the qualities that allow the two sides to reach a compromise. They can include hard skills like creating contracts or conducting research, but most often negotiating skills are soft skills such as communication, decision-making, rapport building, interpersonal skills, and emotional intelligence.

Types of Negotiations

Most negotiation outcomes will fall into one of two categories: “win-win” or “win-lose”. By understanding the two types of negotiations, you can determine the most relevant skills for your role and the best tactics for negotiating deals at your company:

Distributive negotiations

Also known as “distributive bargaining”, distributive negotiations are when both sides try to gain control of a limited amount of resources. So, for example, a client might feel that if your company does not lower the price for a product, they will be paying too much. In turn, your company may feel that if it decreases its price, it will lose money.

Integrative negotiations

An integrative negotiation occurs when all parties benefit from an agreement. There is usually more than one issue to be negotiated so there are opportunities for trade-offs. To reach an agreement, each side receives a value and/or finds common ground. For example, a client believes your company should reduce the cost of your product to $600, and your company believes it is valued at $800. Both sides decide to agree on a $700 sale, and both “win” $100.

Sales Negotiation Challenges

Regardless of negotiation style, there are specific challenges every salesperson faces during the negotiation process. 

Engaging in negotiation can feel like maneuvering through a landmine. Here are some of the most common negotiation pitfalls, so you can learn what they are and how to avoid them:

  • Overselling. The need to oversell your product stems from something called the endowment effect, which is the emotional bias people experience with something they own. So, in other words, salespeople can be tempted by their biases to overvalue and oversell their product during negotiations. Before negotiating, you should seek out unbiased appraisals from third-party experts. This will help you better analyze the value of your product in market.
  • Making unappealing offers. Another common negotiation mistake is failing to put your offer in the best possible light. Using language that is too assertive or using words with negative connotations can make a good offer sound unappealing to potential buyers. Instead of talking about compromises you “cannot” make, try to emphasize the things that you “can” do for them. 
  • Prospects asking for a discount before they sign the deal. Everyone loves a good deal and it can be an attractive way to tempt new prospects. But offering unnecessary discounts is an all too common negotiation mistake. According to ProfitWell, customers who are offered discounts of 30% or more, are 15-40% less willing to pay when it is time to renew. To save yourself from a discount request, encourage the customer to come back for a chat once they have tried the product for a few days.
  • Communication. Poor communication is one of the biggest reasons why negotiations fail. If one party fails to listen intently to the other party, negotiations could stall or become unproductive. During negotiations, all parties should speak directly to each other, explain their pain points, and articulate shared and unshared interests.
  • Maintaining profitability. In closing negotiations, clients often expect something extra without any additional cost. It’s tempting to agree to meet these demands in order to close the deal, but it should not be immediately agreed upon. Good negotiators consider how any deal change will affect the business, its profitability, the outcome of the deal, and the client relationship.

5 Essential Negotiation Skills

It’s important that you not only understand what it means to conduct complex negotiations, but that you are a confident and skilled negotiator who can close deals that are right for you.

So, are you ready to start sharpening those negotiation techniques?

Here are the five essential skills of effective negotiators:

1. Preparation

The best negotiators do their due diligence.

Before engaging in an actual negotiation, you should know who your potential buyer is, what their pain points are, their goals and motivations, etc. Try to understand their limitations and expectations as best as you can beforehand.

This is the kind of information that will help you strategize and offer them specific and personalized compromises that will hopefully help you close the deal.

Aside from doing research on your potential buyer, you should also prepare your talking points, analyze your own goals, and consider potential pitfalls.

Lucky for you, we’ve built a  negotiation preparation checklist, so you can be sure you’ve covered all your bases.

2. Active Listening

The second (and arguably one of the most important) negotiation skills is active listening.

When negotiating with a customer, it’s important to make a conscious effort to not only hear the words they are saying, but also the complete message they are trying to communicate. This often means picking up on their non-verbal cues.

Behavioral psychologist Dr. Albert Mehrabian found that only 7% of all communication is done verbally, with tonality and body language making up the other 38% and 55% respectively. 

Salespeople who are able to develop strong nonverbal communication skills will be able to reap significantly more benefits in their negotiations, because they will have a better understanding of what a client is trying to tell them.

Everybody likes to feel heard. Use your own body language like a head nod, a smile, a simple “uh huh” to demonstrate to your client that you are actively listening to their needs. Try to avoid being distracted by environmental factors and show them that their needs are your top priority.

This will help you gain a person’s trust, confidence, and respect, building a strong relationship and, ultimately, closing more deals.

3. Creating Value

When a prospective client understands the value of a solution, they are much more likely to pay what it is worth.

That’s why, as a negotiator, it’s important to focus on value rather than cost.

In their study of over 500 organizations, the RAIN Group Centre for Sales Research found that businesses who focused on “driving value” in sales had higher sales win rates, were more likely to grow revenue, had lower sales staff turnover, and had more highly-motivated sellers.

There’s no question: a good negotiator focuses on driving value.

The primary way to drive value is to emphasize the underlying interest of the disputing parties – why do they want what they want? How does your product or service provide it to them?

Emphasizing value can make customers feel like they have “won” a negotiation, even when they are agreeing to a compromise.

4. Maintaining Control

A different study from the RAIN Group analyzed data from 449 buyers and found that the best performing negotiators understand the power and leverage held by each side. 

The key is to increase your leverage and maintain your control.

Customer demands are inevitable in negotiations, and sales professionals need to learn how to manage these demands without relinquishing their leverage.

To manage customer demands, sales professionals must remember that there is an important distinction between a demand and a need. A demand is an ultimatum, while a need is a requirement that can be met in a variety of ways. Try to convert a demand into a need, this way you can meet this need in a way that does not require sacrificing factors like payment terms, pricing, or scope.

In a negotiation situation, sales professional can execute control strategies by:

  • Neutrally acknowledging the demand without agreeing or disagreeing
  • Uncovering the detailed needs that reside below the surface of the demand
  • Shaping perceptions of value by reasserting the benefits of the solution

5. Using Data

A good practice when negotiating: sell more, negotiate less.

One way to go about this is to utilize data and analytics in your negotiation strategy. Allow customers to see and evaluate your successful results themselves.

Rather than saying: “People like our product”; try something more tangible such as: “Over 80% of our customers say they are ‘extremely satisfied’ with our product’s ease of usability”.

A data-driven approach is not only more attention-grabbing during negotiation, but it stops you from chasing unproductive leads and transforms your sales process both before and after the negotiation stage.

Implementing data in your sales process doesn’t have to be difficult, either! 

Check out Apollo plans and pricing and gain instant access to verified leads and contact information, analytics and reporting, sales automation tools, CRM enrichment, and more!

The negotiating process and closing deals is arguably the most important (not to mention, nerve wracking) stage in the sales process. Every prospect is different, with unique wants, needs, and pain points.

But if you implement and practice the key tactics and skills in this guide, you can feel confident in your ability to hold your ground, negotiate a deal that is beneficial to both parties involved, and reach new heights of sales success!

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Karli Stone headshot Karli Stone

Karli Stone is copy writer and content creator living in Los Angeles, CA and a proud University of Washington grad. When she’s not wordsmith-ing, you can find her biking along Santa Monica Beach, following the Seattle Seahawks, or catching a flick at her local cinema.