How to make concessions in negotiation is a presentation given by Michel Rozenberg, Executive & Strategic Consultant at Progress Consulting Belgium in Brussels.
To handle successfully commercial negotiations, he recommends you to follow from the discovery stage to the sale closure ‘the PCCC Process‘, which stands for:
Let me go through each stage for you.
You need to prepare your negotiation on 3 levels: technically (product features, the anticipation of questions), mentally (stress, tactics…), and understand the context (what is it about? What are the meeting objectives?).
This is the stage, where you meet people, establish a rapport, and discover facts.
We call it the ‘sales discovery stage’. It is a time when you must arouse interest in teasing your conversation partner.
However, you shouldn’t develop too much. At this point, you need to capture your interlocutor’s attention by asking strategic questions to discover your potential client’s needs. You become a customer advisor during this discovery/commercial diagnostic phase.
You need to ask open questions such as: Why? Where? How? When? How much/many?
You must stick to relevant questions about:
- Your prospect context
- The streamlined decision-making processes
- How are decisions taken
- Why you are meeting the prospect
- Why they need to alter their situation
- What they have tried before that didn’t work out for them
- How do they see things in the future
- What they would like to get.
You need to start:
- Making and exchanging opening offers
- Making concessions and offer compensations.
This is the ‘trailer’ effect, where you sell the benefits/the final result, by excessively simplifying your products and services. It is a specialised reasoning.
You make additional offers and concessions until you and your potential client reach an objective. Basically, you sell to your conversation partner the final benefit by going from the generic to the specific. You explain to the conversation partner how your solution in their context compared to the situation you mention, will help them reach their objectives.
Then you either:
- Find an agreement. This decision-making process will be speeded up according to the behavioural customer profiling (Salesforce and communication team). At this stage, you must secure a commitment and a reminder date.
- Find an agreement about a disagreement.
At each of these stages, you should make to engage your client, validate each point, build rapport, and sum up their needs. This is a sales collaboration.
Then, he recommends you to follow a process, i.e. concession patterns as shown below, which I’m going to detail further for you.
Pattern 1: Define your concessions and foresee room for maneuver
Pattern 2: Make them late, then later and later
You need to know your mandate in the selling process as well as show that you don’t give easily cheap deals, by taking your time to make negotiations, once one has been given. Get people to wait.
Pattern 3: Make them smaller and smaller, increase precision
That means give smaller and smaller concessions. You can do comma figures (e.g 1.5 instead of a round figure).
Pattern 4: If possible, make them on cheap topics
They could be concessions that cost less at the start of the negotiating process. For example, it could be a concession on payment terms, not on the product/service price.
Hint: make a list before the meeting, a list of topics.
Pattern 5: Don’t give more than necessary
For example, you could give a specific discount, not more.
Question of threshold:
- At the consultation/confrontation stages: identify this threshold by asking questions in order to get the relevant information.
- Minimum threshold versus maximum threshold. In your career, you may be happy to get a 10 % salary increase but won’t necessarily be happier if you get 20-25 % than if you only got a 10 % threshold.
Pattern 6: Almost always ask for compensation
- Make concessions deserved
- If you are hard to give concessions, they will not try as much to get further concessions.
Pattern 7: Make them conditional and temporary
They shouldn’t be part of your Terms and Conditions. You could strengthen the urgency or scarcity notion, which should be adapted to the client and product. This will motivate the client to conclude the purchase more quickly and require more effort from them.
Pattern 8: Foresee a small last one at the end
This concession should be given very late in the process.
You could grant a very small one (cheap deal) but it will give a big impact. You should only give it if necessary if it will help close the deal/get the signature or find an agreement.
Pattern 9: Don’t disclose your deadlines
If you do disclose them, it will give your potential client power over you that could be used as manipulation. This will give the conversation partner a competitive advantage and give them excuses to put pressure on you to close the deal. Do as if the end of the quarter isn’t important to you.
Finally, when possible, try to split concessions into several pieces. That will give them the impression they will gain something several times. It will have a bigger impact, even if the end value is the same. Remember, people are still hunters.