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The Power Of No In A Sales Negotiation
We’ve learned this the hard and expensive way.
When we first started we were developing custom software for clients. We wanted to get money coming in and so we were afraid of saying no.
What did that lead to? A lot of bad deals. By being so willing to say yes we were ground down on price and we allowed for bloated specs that we struggled to bring in on time.
On one deal it cost us $50k and we were in the red for the year because of multiple projects being bad deals.
Long term this was not going to work so we worked and worked to get through those bad deals and then learn, and not repeat the mistakes we made that got us into the hole.
No comes into it
So we’re negotiating with a prospect and he’s listing off the things he wants. It’s a lot of stuff that his app will do, really it's too much.
Now here’s where we differed from our previous approach instead of saying yes to everything and trying to come up with how we could do it we ripped apart his most excessive desires and explained why they wouldn’t work and certainly couldn’t be done in the time frame he wanted. We said no.
We were not the only people that he was talking to but when we said no he didn’t up and leave, it wasn’t the end of the conversation but the beginning.
A little digression now but useful to note; don’t just say no, be quiet and listen to and never negotiate with yourself.
The prospect could talk about a lower price he’s getting from an alternative supplier, just be quiet and don’t negotiate down from your list price. In your silence he’ll keep talking and realise he’s not going to get anything from it and move on from that. You haven’t engaged and made it into a big thing and you’ve closed off that line of questioning which is not where you want to be.
Silence is powerful because it stops you from saying something that might disadvantage you, it helps you keep in control of your emotions and therefore think, let the other guy talk and talk and make a mistake or give away some useful piece of information.
We continue talking to the prospect and whittling down his specs list to something that makes more sense and isn’t pie in the sky I want everything under the sun, as well as being achievable by his deadline.
Lastly, we make it abundantly clear you want more stuff, you pay more. You want to go faster then you have to cut and have a leaner app.
So the meeting ends and a couple of weeks later we make the deal and it’s a good deal for him but also for us. We make a profit on it and a little while later we asked him why he went with us, afterall a large part of our meeting and negotiation was us saying no to him.
He told us that’s why he went with us that we were willing to tell him the truth and that therefore he could trust us, that was worth the premium over the alternatives he had who were a bunch of yes men.
Since learning to and actually saying no we’ve gone from the red into the black and our surplus has been invested into developing RealtimeCRM which helps small business and sales teams track and manage their opportunities.
If we had stuck with our old ways of thinking, that only yes leads to making deals we’d be dead in the water and RealtimeCRM would not exist. We haven’t made a loss on a deal since and we wished we realised earlier the power of saying no and being quiet when negotiating because it would have saved us a shed load of trouble.
Some of you might be afraid of saying no and losing a deal, look think about losing $50k on every deal and then think about saying no, which hurts you more. Don’t look at saying no as the end but the beginning, the base from which to start the discussion. If you don’t signal your belief in your value proposition the person you’re negotiating with certainly won’t.
It signals self confidence and where you won’t retreat from. If you start from yes you might have just given away time or money and every time you come to negotiate with that same prospect they’ll expect that same starting place, and believe me they won’t thank you for it and will push further. Hold the line and say no you’ll be much better off.