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Negotiation is a skill that most people practice every day, sometimes without even realizing it. Parents negotiate to get their kids to willingly clean their rooms. Lawyers hash through terms of contracts with dozens of clauses and conditions. Politicians try to compromise with peers from other parties to establish policies they’re passionate about.
For business owners, negotiation happens frequently, but when they have to negotiate over the phone, they face unique challenges. Some even dread phone negotiations so much that they avoid calling entirely. Thankfully, it’s possible to negotiate successfully over the phone.
Tips for Successful Phone Negotiations
Here are ten tips to negotiate well over a phone call. These tips won’t work for every single conversation (business owners still need to use their best judgment), but they’re a great place to start.
Define all potential negotiables, not just price points.
When a business owner is pursuing a lead, the most common thing they’ll talk about is the price point. And that’s understandable; for many people, money is the be-all, end-all factor driving their decisions. But one strategy to entice people to buy is to throw in other perks before dropping the price.
For example, a savvy business owner might charge the same amount but give the buyer perks like additional services or products, faster shipping, or a longer warranty period. These perks might not cost the company much (if anything), but the client might perceive them as valuable and agree to the original price.
But to negotiate this successfully, the business owner needs to decide what they’re willing to give before they get on the phone. That way, they can avoid floundering mid-negotiation and giving too much away to be profitable.
Analyze the customer’s needs and the company’s strengths.
Before calling, a business owner should be able to list what they know about their potential customer. What do they need? What emotions do they have surrounding those needs? And how can the company meet those needs?
For example, if a business owner knows that their client highly values a low price, but they are also unwilling to compromise on quality. The business owner can leverage the fact that no one else provides the same quality product or service as them.
Set objectives for the phone call.
What does the business owner want their call to accomplish? Is the goal to strike a final deal? Take the first step on a lead that a business partner suggested? Establish a revised due date for the project? Business owners can speak more succinctly when they know exactly what they’re trying to accomplish with the call.
It can also be helpful to consider the other side’s perspective, too. What do they want to accomplish when they answer the phone? Maybe they want to get more information about the company’s services, or perhaps they want to investigate potential discounts. Maybe they have a tight schedule and want to keep things brief as their secondary objective.
Setting objectives helps a business owner approach the call with confidence.
Aim high, but set minimum requirements.
This tip is closely related to setting objectives; business owners should set their goals for price and other terms before picking up the phone. And it’s great to aim high. For example, what is the most favorable outcome the owner could reasonably hope for? Negotiators never know the maximum price that their client would be willing to pay.
But it’s essential to set minimums for the lowest possible price that’s acceptable. Knowing this range can make selling easier because the negotiator knows exactly how much wiggle room they have. If the client isn’t willing to accept a sale within that range, the negotiation can end cleanly (and without wasting time).
Prepare for the other person’s possible tactics.
This one can be tricky, especially if a business owner doesn’t know the person well. But it’s good to anticipate the strategy the other party might take. For example, one prospective buyer might open the conversation by making outrageous demands to negotiate down to their ideal terms. Knowing that gives the owner the ability to formulate counter-tactics that help protect their interests. No one wants to be blindsided into giving something away without meaning to.
Gather information.
It’s a business owner’s job to know as much as they can about their prospective buyer. Information is power, and it can help them tailor their message for an effective sale.
Don’t give up more information than necessary.
Imagine this scenario: a landscaping business owner wants to charge $12,000 for a backyard renovation project, but they’re willing to accept just $11,000 if the project completion date is pushed back by three days.
Those savings might be enticing, but they shouldn’t start the conversation that way. They should begin by presenting their original quote. Who knows? The client might pay the $12,000 without question. But if the $11,000 option was also presented to them, they might prefer that option, and the company loses the chance of an extra $1,000.
This is, of course, an oversimplification of the idea, but it’s prudent to keep cards close to the chest. Reveal information at the moment it’s needed, not before.
Don’t meet in the middle (if possible).
Human nature often suggests that compromise should always be 50-50: the business says their price point is $50, and the buyer offers $30. It’s tempting for the business owner to counter with $40, thinking that splitting the difference is fair.
But doing that costs a business owner money. Whenever possible, it’s better for an owner to concede on a price point that works more in their favor. For example, they could say, “I can’t do $30, but I might be able to do $46 or $47” (with an appropriately strained tone of voice so the customer perceives that the $4 price drop is a big concession on their part). Even if they eventually drop all the way to $44, they’ve still gotten more profit than meeting their customer in the middle.
Trade concessions.
A business owner doesn’t have to lose complete control when they make a concession in a negotiation. It’s perfectly valid to ask for something in return. For instance, suppose a business owner gives a better price in the form of a volume discount; it’s perfectly reasonable for them to ask the buyer to agree to purchase a certain volume for that year. A business relationship that’s built on one-sided giving is rarely healthy.
Get firm commitments about what the client will give in return.
This one goes hand in hand with the previous tip: before a business owner agrees to what the buyer wants, they can try to get the customer to commit to specific terms (ideally in writing, but a verbal agreement is a good start). Maybe they’ll agree to move the customer’s request to the front of the line, provided the buyer agrees to increase their order by 500.
Trying to Negotiate Over the Phone: Part Art, Part Science
There’s no script for a successful negotiation; even if a business owner connects well with the buyer by understanding their needs and they speak with authority, they might not walk away with the terms they’re hoping for. The tips included in this blog entry can be incredibly helpful, but they aren’t a guarantee.
Prudent business owners will keep in mind that negotiation is like any skill; it takes practice and trial and error. What works for one professional might not work for another. With dedicated, concentrated effort, any business owner can find the negotiation tactics that work best for them.
Good luck!
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. For specific questions about any of these topics, seek the counsel of a licensed professional.
