How to master the 5 types of negotiation
Every deal has a negotiation. And every negotiation starts with a no.
Have you ever jumped on a call with a client, and they have no requests or demands? It doesn't happen. Part of the sales game is knowing how to tilt a negotiation in your favor. But you also need to learn how to talk to every prospect so that, when the contract is signed, you’re both happy.
Whether you're negotiating with customers, partners or investors, there are five main types of negotiation that are used. These range from compromising with a prospect to walking away if the deal is going sour.
If you can master these 5 types of negotiation, you'll be able to start every new customer relationship off on the right foot and get more out of every deal in your pipeline.
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The five different types of negotiation—and how to master them
The best sales reps all have one thing in common—they don't stick to the same playbook.
They know that every prospect is different, and the way to win the deal is to talk their language. Some prospects will be nervous and won't know what they really want out of the deal, while others will come crashing out of the gates asking for all kinds of insane demands that you'll need to shut down in negotiations.
The main five types of negotiation you're about to learn will give you the tools you need to find a place of strength when negotiating with the toughest prospects in your sales pipeline.
Negotiation style #1: Accommodating
Do you feel like this prospect could turn into a lifetime customer?
Using accommodating tactics in your negotiation can help keep you in their good books and make your prospect feel like you really care about their goals. It can also be used to overcome any early tensions in the deal and help the prospect see that any differences you've had can be worked through.
I love to use the flipping questions technique to be accommodating during a negotiation because it can be applied to our software and help prospects see that we truly understand their problems.
We sell sales software here at Close, and we always get asked during negotiations about simple features like setting reminders or tasks.
If you've ever used a CRM, you'll know why they're asking this. A good CRM will do all of the repetitive tasks in the background, like sending out reminders and prompting sales reps to do certain activities. A bad CRM won't, and before you know it, you're spending hours a day setting up and tweaking the CRM instead of looking after customers.
When a prospect asks about this feature, I usually respond with something like:
"I'm glad you asked that question! Before I answer it, let me ask you, what would the answer be in an ideal world? How should reminders or tasks work?"
Mirroring the question back to them shows that I want to accommodate their needs in the negotiation and find out why this feature is so important to them. Then, I'll ask them some more qualifying questions, like what their usual workflow looks like, which will probably get an answer like:
"We send cold emails to product managers. When they respond, we then send them another email to set up an appointment, and sometimes they go silent at that point. We would like to add a reminder to get back in touch with them if they don't reply at that point."
Aha! This is my big chance to accommodate their request and walk them through exactly how Close meets their needs with something like:
"Ah, I see. There are two ways to answer that question. First, yes, you absolutely can add a reminder in Close to any lead with Tasks. But you can also set up an automated sales sequence that sends a series of emails to prospects who don’t respond. With the work set up in advance, you won’t need to manually email these leads.”
By understanding why certain features were so important to this prospect, you can accommodate their needs. In this case, you’ve also managed to do something else—instead of being just a sales rep, you’ve started to lay the groundwork of being a trusted partner, someone who cares about their team meeting their goals and getting rid of the roadblocks that they had with their last CRM.
That's the kind of sales rep a prospect wants to do business with.
Negotiation style #2: Nonresistance
This is a sales take on Napoleon's famous quote—Never interrupt your enemy when he is making a mistake.
Obviously, the person you're negotiating with isn't your enemy. But the idea with this negotiation style is to let your prospect talk (and talk), so you can avoid creating tension and get a better idea about what they really want.
The biggest killer to any negotiation is when a prospect has a wall up. They refuse to give up any information about their budget or what features they need to move forward. If they keep their cards close to their chest, the negotiation can stall and slowly die.
You need to get them to open up and start talking. Ask an open-ended question like:
"Help me out here. This negotiation has been going on for too long. What is it going to take to make this happen? What do I need to do to keep this moving?"
This will force them to the table and start talking.
When they do, use silence and nonresistance to your advantage. If the prospect starts to feel the awkwardness of the silence—it can keep them talking.
This happened to me in a negotiation with a huge contract a couple of years ago. We were changing course when Close was in the growth phase, and I wanted OUT of an expensive, three-year software contract that we no longer needed—but still owed $250,000. We tried everything we could to get out of it. We called them. We used our network. We even door-knocked.
All we heard was crickets. We were locked in.
Finally, I got an account manager on the phone for a chat. He started off with his spiel about how much he wanted to help us, but his hands were tied.
"You guys are a struggling startup and I have a huge soft spot for entrepreneurs. I put up a huge fight with the finance department and got you an amazing deal. I think you’ll love it. You’ll be super thrilled to hear that instead of $250,000 you just need to pay us $100,000 to get out of the contract.”
Before I said anything, he had already cut $150,000 off of our obligation. If I stayed silent, how much more was he willing to drop?
So, I shut my mouth and let the awkwardness take over until he started talking again.
“Well, Steli, you know, it’s really important to us that our relationship stays healthy. This is really the best I can do for you, I already took a lot of heat from finance for this. I hope you’ll understand.”
I stayed silent. The awkwardness got to him. And he kept talking:
"You know, one thing we might be able to do if you postpone canceling the contract 'til January next year is to give you a much better deal, maybe something between $25,000 and $50,000 instead of $100,000."
It was already November. This was my chance. I gave him a short reply with no room for misinterpretation:
“Sure. January, $25,000, sounds good to me.”
And that was the phone call that saved our company $225,000. It turns out, silence really is golden.
Negotiation style #3: Collaborate
Use a collaborative approach to the negotiation, so you both walk away with a feeling of "you win, I win".
There's always some room to move when you're talking to a prospect, whether it's on price or contract length. Make sure you know what you're willing to negotiate (and what you're not), and then find out the same from your prospect. This negotiating style helps you get the best deal for your company without abandoning your "red lines"—the things you aren't willing to give up.
Try to soften them up with some buffer questions like:
"In an ideal world, how does our product fit into your workflow?"
"Tell me more about why you only want a contract for X months. Do you see your business growing a lot by that time?"
These questions help you get a better idea about what the prospect is willing to negotiate and if they think your product is a good fit for them. If they can't visualize how your product fits into their business, this gives you a chance to either try to convince them or accept that maybe you're not a good fit after all.
If you try the collaborative negotiation technique, think about what you're willing to give up—and when you are just happy to walk away from a deal.
Negotiation style #4: Compromise
Agreeing to compromise in a negotiation is the definition of—you win some, you lose some.
This type of negotiation can take place once you figure out what they're willing to compromise on.
Don't assume that you know the answers to these questions. Put the question straight to your prospect:
"Let's lay all our cards on the table. What's a dealbreaker, what's important, and what's nice-to-have for you in this deal?"
Asking them directly what they are willing to compromise on forces them to prioritize their wish list. You can then focus on what you can give them and what you're willing to give up on your end.
Let's say that the prospect mentioned wanting a feature that integrates their email into your product platform. The problem is that your engineers haven't built it yet, and it's not on their priority list. Instead of making false promises to your prospect, tell them the truth:
"I know that having an email integration is something that you wanted, but I wanted to be honest with you and tell you that our engineers aren't looking at building something like that within the next 12 months. If this is a dealbreaker for you, I thought it would be best to let you know now before our discussion goes any further."
If it is a dealbreaker? That's fine. Your product wasn't a good fit for them, and the incompatibility would've meant a rocky relationship once they signed the contract.
But if it's not a dealbreaker, this is a sign that your prospect is willing to compromise. Jump on this opportunity to see where you can find some middle ground with them by asking what other features they would love so you can keep the discussion positive.
Negotiation style #5: Compete
For all of the competitive sales reps out there, this last style is about doing whatever it takes to bring home the bacon.
Yes, even if your prospect isn't fully happy with the outcome.
For full transparency here: I think that this way of negotiating with prospects is dead. Obsolete. You may win quick deals by acting as a sales assassin, but this kind of aggressive negotiating leaves your prospects out in the cold. Rather than just thinking about what you want in a deal, you should always work with your prospects to achieve the best results.
Don’t be an asshole—it'll hurt your business in the long run.
Okay, back to the “compete” strategy.
This negotiating style is results-oriented and designed to get you quick wins. It keeps you focused on achieving short-term goals quickly, helps you cut through the fat in tense negotiation, and avoids the gridlock that can completely kill a deal.
I want you to think about a deal that you've negotiated with a prospect that ages. I'm talking weeks. Lots of phone calls and back and forths, with the prospect mentioning everything from product features to user experience and integrations.
It's frustrating and time-consuming.
Using this competitive negotiating strategy, you can cut to the chase and just ask them:
"What's a dealbreaker in this negotiation. Tell me what really matters to you and what would make you sign a contract or walk away?"
They'll probably come back with two or three things that are super important to them before signing a contract.
Great. Now, it's up to you to take control and try and close the deal as quickly as possible. Don't mention anything else going forward apart from what the prospect has highlighted as a dealbreaker, and be aggressive in getting everything on your list as well.
Master the art of negotiation and close more deals
The best negotiators don't have scripts or cheap tactics. They can read their prospect and decide on a whim what type of negotiating style they should use to win them over.
Figuring out whether your prospect is holding their cards close to their chest or asking for too much early on can help you decide what negotiating path to take. Then it's up to you to steer the conversation—ask them questions, figure out what their deal breakers are and if it comes down to it, walk away altogether.
If you can do this, you'll be able to meet your prospects where they are and win more business.
Want to get all our best tips on sales negotiation for startups? Download my book: The Founder’s Guide to Sales Negotiation.