Why Hard Negotiations Can Lead to Future Disaster

hardnegotiations

Have you been trained to use hard negotiations when it’s time to close a contract? If you successfully close the deal, you could be courting trouble for the future. New research shows that hard negotiations can lead to client disaster.

The Impact of Hard Negotiations

Maurice Schweitzer, Wharton professor of operations, information and decisions, and research partner Einav Hart ,who also works as a data scientist at Uber, have studied the impact of hard negotiations. Most sales reps and sales managers are focused on closing the deal. Then they hand off the new client to the next person in the sales process, often an account manager or a customer service rep. These employees may not realize that the new client is unhappy with the way the negotiations worked out. That unhappiness is not a good way to start the new business relationship.

If you convince a prospect to pay 5% more than they anticipated for a product or service, it’s easy to assume you’ve won. In truth, what you may have done is emphasize the differences between your company and the client’s. And the client may be looking for ways to get back what they gave up as the relationship progresses.

Remember the Long-​Term Goals

During negotiations, keep Hart’s advice in mind: “In a lot of cases, the negotiation is only the beginning of our relationship or interaction.” While the initial sale is often the core goal for many sales reps, you should be thinking of the future. You want this client to stay with you for the long term. Once they are on board and use your product or service, they’ll likely buy from you again. And the cost of selling to an existing client is much lower than convincing a new client to buy from you.

In addition, you may want this client to act as a reference for you. If you’ve engaged in a negotiating session that’s been less than courteous, you might have a problem getting that recommendation.

To achieve a better long-​term relationship with a client, approach the negotiating session through a different prism. Take time to emphasize what you have in common. Engage in some give and take. And, remember that hard negotiations can lead to disaster. To learn more about negotiating, check out our Sell Smarter video on this topic.

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.