Yesterday, I wrote about the importance of concessions in B2B sales negotiation. Today, I want to discuss how role playing exercises can improve a company’s sales by upgrading their sales team’s negotiation skills.
Concessions are an important aspect of negotiation, but they are only effective if the individual knows how to apply them as part of the ongoing negotiation process. Role playing is adopted in all kinds of sales training exercises, but it is especially important in improving the negotiation skills of the career sales professional. However, the following exercises also help inventory managers, in their constant pursuit of lower costs. So, what are the best kinds of negotiation role playing scenarios to adopt?
The Role of Negotiation in Our Everyday Lives
Most of us aren’t aware of how much, or how often, we negotiate. When you stop and think about it, we negotiate all the time, everyday of our lives and when we are successful, rarely do we stop to ask why. We just go about our daily routines never stopping to ask ourselves what we did right or wrong. It’s that lack of reflection on success, or failure, that impedes our ability to improve our negotiation skills. This is why role playing is so important in sales training.
Negotiation role playing affords two parties the opportunity to negotiate amongst themselves, and then debrief as to what they managed to secure, and what they gave up as part of the negotiation process. It gives both parties insight into the concerns and issues each faces during a negotiation. So, how can your company go ahead and put together its own negotiation role play?
1. Make the Negotiation Role Play Applicable to Your Market
To make the exercise a successful one, it’s important that it has a real world application. Take the time to write down the most common negotiation scenarios in your given industry or market. It could include those concessions most often pursued by your customers and those most sought by your sales team. What do your customers most often try and secure when negotiating with your company – is it pricing, payment terms, lead time or something else? What do you ask your sales department to concentrate on – is it volume, maintaining pricing, pushing cost per-use benefits, pursuing contractual supply agreements or payment terms? To help with that list of concessions, refer to yesterday’s post: The Role of Concessions in B2B Sales Negotiation.
The above video explains how you can expose your overseas competitor's offer and is from the post: Stop Losing Business to Overseas Competitors: Define Your Customer’s True Purchasing Costs
** An Excellent Negotiation Role Play: Defending Business Against Overseas Competitors**
One of the best examples of a negotiation role play is to have a salesperson try to defend his position as the incumbent supplier with a customer. One plays the role of salesperson, while the other plays the role of a customer who has been approached with a competitive bid from an overseas vendor. It's up to the sales person to defend that business.
2. Define the Conditions of the Negotiation
Once you’ve come up with your list of concessions for each party, you’ll now have to move forward on developing a real negotiation scenario. In this case, you’ll apply conditions for success for those playing the role of customer, and those playing the role of salesperson. For the customer, assign a budget that can be spent on the total purchase. Next, define the customer's incentives for securing some, or all of their concessions and demands.
Define what the customer can give up in terms of concessions and what they must not give up under any circumstances. For the sales person, provide him or her with a list of incentives as part of the negotiation – be it securing a specific price, volume, contract etc. Again, define what sales can give up in terms of concessions, and what they must not give up under any circumstances.
3. Allow the Negotiation to Unfold in Front of Peers
This exercise works best when it unfolds in front of a group of co-workers, ones who can disseminate the information and review the process. The impetus for both parties is to arrive at an agreement. This exercise is about the common thread individuals use when negotiating. It's not about a win or lose scenario, but about how each side rationalizes their decisions as part of the process. Neither can walk away without either making the purchase, or securing the order. No discussions should be taking place except for those within the sales training exercise. Onlookers should take diligent notes and save comments for after the negotiation.
The above video is taken from the post: Five Sales Competencies Every B2B Salesperson Must Master
4. Review and Debrief
Like all sales training exercises, improving negotiation skills takes practice. Each party must be able to debrief and reflect upon their performance. Encourage participation amongst those in attendance and write down the most effective tactics adopted by each side. This negotiation exercise will likely point out flaws in your company’s sales and procurement approaches, while providing insight into how to protect your company’s pursuit of future contracts, orders and volumes with customers.
Improving your sales team's, and purchasing department’s, ability to negotiate will provide substantial returns over time. After all, both sales and procurement play a pivotal role in increasing gross profit by 1) sales protecting pricing, or 2) inventory reducing the price and or costs on the parts and raw materials your company purchases.
The vehicle that helps make both happen is to adopt sales training exercises that improves the negotiation skills of both your sales team, and your procurement professionals. The key is to structure the negotiation role play around your market's unique conditions, ones that both your sales and procurement departments thoroughly understand and appreciate.
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