What are the 5 Stages of Negotiation and How to Use Them in B2B Sales

What are the 5 Stages of Negotiation and How to Use Them in B2B Sales
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David Chevalier
by David Chevalier

2 Min. Read

Sometimes it feels like our whole lives have been leading up to one moment. 

Take the last time you debated with your sibling on who got the last biscuit. The time you argued with your housemate about whether it’s acceptable to have the heating on. Even when you accepted your last job offer and managed to wrangle a higher salary than you were initially offered. 

You probably didn’t know it, but all of these moments were leading up to one thing: negotiating in your B2B sales job. 

Okay, we’re (sort of) joking. But guiding opposing parties to an agreement is a delicate dance; one that requires skill, patience and talent. We can’t make any promises about the latter two – but we can help you with the former. 

In this blog post, we’re going to brush up on your negotiation skills by deep diving into the 5 stages of negotiation. You’ll come away ready to tackle any difficult situations head-on – and come away from them with better deals, stronger relationships, and ultimately, long-term success. 

Want to skip ahead? 

Let’s get into it.

Preparation and Planning

Remember the phrase “Fail to prepare, prepare to fail”? One of your teachers probably said it right before that test you hadn’t studied for – and as irritating a phrase as it is, they were right. Preparation is the foundation of any successful negotiation. Here’s how to nail it:

Do Your Research

First of all, you want to gather detailed information about your client – including their business’s needs, industry trends, competitors, and insights from your previous interactions. Go through everything you know about them with a fine-toothed comb, and you should have an idea of how they’re going to approach the negotiation, what they’ll ask for, and how you should work with them during the conversation. 

Set Your Goals 

Define clear objectives for the negotiation. Just as important – identify your best alternative to a negotiated agreement (BATNA) to understand the options you have to fall back on. Doing so in advance means you’ll be prepared for any outcome – and avoids you having to make any decisions on the spot which you might come to regret. 

A good tip here is to think about what your prospect’s BATNA will be, as well as your own – the better you can anticipate what will make them tick, the better position you’ll be in to handle the conversation. 

Develop Your Strategy 

Plan your negotiation approach in advance: we’re talking key messages you want to get across and how you’ll respond to potential objections. Common objections can be grouped into: 

  • Price
  • Need
  • Trust 
  • Stalling

Make sure you know your opening offer, and what concessions you’ll be prepared to make. 

A few more tips (we’re full of them today):

  • Use your CRM to help you with your preparation, so you can see everything you need in one place
  • Run a competitive analysis so you can demonstrate how your product offers more value 
  • Align your negotiation goals with your sales targets and clients’ needs

Definition of Ground Rules

Setting clear parameters for your negotiation is really important. You want to set the right tone from the start – and making sure that both parties are prepared and comfortable will enable you to get the best out of the conversation. You’ll want to consider: 

Logistics: where’s the meeting going to be held, when, and is it in-person or virtual? We’d recommend scheduling meetings in a way that accommodates all stakeholders. You might hear of some people trying to pull a weird power move by doing the opposite. Our take? It just makes you look desperate. Ensure a conducive environment from the start, and you’re much more likely to have a positive experience all-round. 

Agenda setting: get something down in writing and send it to all involved parties well in advance, so everyone knows what they need to prepare. It also makes sure that everything will be covered – you don’t want anything left off the table, so to speak.  

Communication protocols: define how information will be shared between the two parties, and how decisions will be made and finalized. For example, who’s going to lead the discussions? How will decisions be communicated externally? It’s also worth thinking about confidentiality here; does anything need to be signed to make sure things stay in the room? Equally, do any third parties need to be present?

Clarification and Justification

Ok, so you’ve done your preparation, you’ve set the tone, and now you’re actually in the room. Gulp. What happens next? 

First of all, both parties are likely to present and explain their initial positions and requirements for the agreement. Here’s how to nail this bit: 

Present your position: clearly articulate your value proposition (remember to keep it short!) and support it with data and case studies where necessary. For example, if you’re presenting your pricing to the interested party, you might want to reiterate the type of ROI you know they can expect once everything’s set up. Key performance metrics are also good to include here too, to get the prospect in the mindset of getting signatures on the dotted line. Make sure to run through any terms (such as the length of the contract) and any conditions, too. 

Listen and understand: actively listen to the client’s concerns and needs. This means listening with the goal of understanding, not listening with the goal of answering. If you need to ask questions, go ahead and ask them – you don’t want to be left in the dark on any points. If you hear any objections at this point, provide well-supported counterarguments. This shouldn’t be a problem as you’ve already done your preparation 😉. 

Bargaining and Problem Solving

At this point, the negotiation really begins. This doesn’t have to be awkward or have any animosity attached to it – rather, think of it as both parties working together to iron out a difficult problem. 

Offers will be made and rejected, and counteroffers will pop up in their place. All being well, you should eventually land on something that suits everyone:

Give and take: you’ll want to use strategic concessions to advance towards a mutually beneficial agreement. Assuming you’ve over-egged your opening position (stated a higher price than you think you could get, for example), you should have some wriggle room to use to your advantage when making concessions. Something that can help here is to have a list of negotiable items – these might be certain features or a level of support, for example – and their relative value. 

A good mindset to have here is that you’re creating value for the prospect. This helps you keep their best interests at heart, even when you’re working toward the best deal for you. 

Problem-solving: if there are any sticky points, or objections, now’s the time to address and resolve them. Get creative with your solution to make sure you land on something that satisfies both sides. A win-win solution is going to strengthen the partnership – which is important later down the line when it comes to upselling opportunities and renewal stages. 

Tip: now’s the time to put all the communication skills you’ve learned while on the job into practice. We’re talking active listening, clear articulation and emotional intelligence to navigate the bargaining stage effectively.

Closure and Implementation 

Time to close the deal. By now, the end is in sight. Both parties should (unless something’s gone drastically wrong) be feeling positive about the discussion, and ready to wrap up. 

When you finalize the agreement, you’re likely to recap the conversation you’ve had and then run through a summary of the final agreement. Make sure to confirm mutual understanding before formalizing the arrangement through a contract or written agreement. All terms should be documented and signed off by all parties. 

 Then, you’ll want to discuss the next steps – which both parties should be aware of already. Outline key milestones (such as when you expect to launch the partnership, and what metrics you expect to hit in the first three, six and nine months) and what responsibilities both parties have to make this happen.  

It’s also important to organize follow-ups, to make sure that you’re on top of your progress and addressing any issues. Regular check-ins will ensure smooth implementation, and a smooth relationship too. 

Applying the 5 stages in B2B sales: tips and tricks 

So there you have it! Now for some tips and tricks to really seal the deal: 

Leveraging preparation: utilize CRM tools and market research to gather comprehensive data on the client. If you need a tool to help you nail this area, might we suggest Surfe? It’s really, really good and making sure all the contact data in your CRM is accurate and up-to-date – plus, it keeps track of your conversations with prospects over social, too. The more detailed your client profiles are, the better your sales strategies will be. Simple! 

Setting ground rules: clearly communicate the negotiation agenda and process to the prospect. Ideally, you should do this in writing and give them plenty of time to reply and request any changes. A structured approach will make sure no stone’s left unturned when it comes to the real conversation. 

Effective clarification: you don’t have to turn into a soulless robot just because you’re negotiating. Bring your value proposition to life with storytelling and real-world examples. The more vividly you can paint a picture to your prospect, the more likely they are to be able to see themselves using the same solution. You should also be proactive about addressing concerns (rather than pretending they don’t exist – as tempting as that might be). 

Strategic bargaining: remember that list of potential concessions we mentioned earlier? Another thing you can do with it is figure out the impact of each one on both parties. 

Ensuring closure: as we mentioned earlier, a clear implementation plan with defined roles and timelines here is super important. Maintain open communication to make sure everyone’s happy – and if there are any issues after the event, be sure to address them in the same way as before. By that, we mean from a place of empathy, curiosity and problem-solving.

Let’s Wrap It Up!

That’s it! By now, you should be ready and raring to jump into your next negotiation session. By taking the time to prepare properly and set the scene, you’ll be able to handle making your opening statement, working through the finer details and finalizing the agreement with ease. 

Next up: who gets that last biscuit. Your sibling’s not going to know what’s hit them. 

 

Surfe trusted chrome extension for LinkedIn

Ready to show off your negotiating skills?

First up: research.

You know what helps with research? Surfe. Don’t believe us? Guess you’ll just have to try it.

FAQs About the 5 Stages of Negotiation 

What Are The 5 Stages of Negotiation? 

The five stages of negotiation are: 

  • Preparation and Planning
  • Definition of Ground Rules
  • Clarification and Justification
  • Bargaining and Problem Solving
  • Closure and Implementation

Get these right, and you’ll be able to easily navigate any B2B sales negotiation from start to finish. Sales stardom is nearly yours. 

How do you convince customers in B2B sales? 

Convincing your customers in B2B sales comes from a place of problem-solving and collaboration. When you are genuinely focused on creating value for your prospect and working with them to find the best solution for your needs, you shouldn’t have to justify or argue your way to a deal. Instead, the proof is in the pudding – the deal that’s on the table, and how much value it will bring. 

What is the most effective approach to B2B sales? 

The most effective approach to doing B2B sales is to be well-researched and prepared. For example, before a negotiation we’d recommend doing a thorough run-through of your prospect, their current solution, potential competitors and any objections you think they’re likely to have. If you really know your stuff, you’ll be less likely to be stumped by an objection or situation that you’re not expecting. Winning.