(By Alec Drake) When walking the tightrope in sales negotiations, how do you find balance?
Daily, as managers and sellers, we face the balancing act of protecting the product’s value while responding to the client’s agenda for purchase. Walking away is one negotiation tactic that provides substantial leverage, but walking away without compromise is a failure for both sides.
Comprehensive terms and conditions allow for balance in negotiation and a backdrop of finer points to discuss. They facilitate the engagement to reach an agreement once the value is established. The terms will shift the focus from confrontation to positive progress in the negotiation.
What Terms and Conditions Work Best?
Step one, meet with your sales team and have this conversation. Terms and conditions are not a grab bag of stalls, false roadblocks, or details for manipulation in sales. You must consider a clear list of terms and conditions that will benefit all sides, the seller, the customer, and the company.
Where do we start in building our terms and conditions list for sales?
- What terms and conditions are you already using?
- Does the list need review to keep it fresh with current circumstances?
- Can pain points be addressed with better terms for your team or customers?
Terms and Conditions Starters
If some on this list are in practice, think about how they can be more helpful in your situation.
• The length of contract commitment or order volume
• Flexibility in the parameters of orders
• Limits on how discounted inventory is involved
• Lead times on orders — pricing benefits for placing in advance
• Change provisions, including cancellation clauses and order modifications
• Investment levels required for bundled assets
• A hiatus month built into a client’s annual agreement for critical business changes
• Expiration dates on proposals and turnaround timeframes on orders
• Multi-year agreements with pre-established definitions or limits on price increases
Keep It Positive
Role-play with your sales team. Remember, terms and conditions are not a one-way street; they should help all sides in the selling process. It is essential that any terms and conditions be beneficial and convenient for your customers, and not used as sticks or fences to seem punitive. You should bundle specific terms and conditions that consider your better customers. Think of no annual fee on a credit card as an example of a positive marketing point in finance. In the negotiations, make it the customer’s choice for what is essential; this supports why they are paying a specific price or giving you options on deliverables.
One Rule
There is one fundamental rule for any list of terms and conditions; if not enforced, leave them off the list. Terms and conditions used as window dressing in sales help no one, not the salesperson or the customer. Refrain from cluttering up the conversation, hiding things in the fine print, or showing weakness in your business process. Everyone is familiar with terms and conditions, so use them openly and back up why they support integrity.
In closing, my experience with terms and conditions validated that the structure for how we did business with our customers was well received. As a result, I was not concerned about any of my clients talking and finding out that they were mistreated doing business with us. As you face 2023 and the downdraft predicted in sales, your terms and conditions can create limited discount options until the demand returns to support a stronger pricing position.
Alec Drake is the President of Drake Media Group and a revenue management advisor to media sales. You can reach him at [email protected] and find more helpful articles in his “Sales Success Library” at Drakemediagroup.com.
