Tag Archive for: Sales Negotiation

Navigating Healthcare Sales Negotiations in a Changing Landscape

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Navigating Healthcare Sales Negotiations in a Changing Landscape

Strategies and Tactics for Success in the Evolving Healthcare Market

Are you and your sales/marketing teams trying to address significant challenges and barriers when negotiating with healthcare institutions?  In the rapidly evolving and challenging world of healthcare, it’s essential to adapt sales, marketing, and negotiation strategies to address the changing dynamics successfully.

Whether you’re dealing with hospitals, clinics, dental practices, imaging centres, group purchasing organizations (GPOs), or healthcare networks, this article will illuminate the evolving healthcare landscape and provide some valuable negotiation insights, strategies, and tips to improve results.

The Reality of Healthcare Sales Negotiations:

In today’s healthcare sector, sales negotiations are more complex than ever.  Procurement teams are becoming savvier negotiators – they are becoming skilled at evaluating vendors and leveraging situational power for cost reductions, added value delivery, and better contractual terms and conditions to achieve savings for strained budgets.  Despite their significant market dominance, even the billion-dollar healthcare suppliers will eventually face customer pressure to reduce pricing and add incremental value to win deals.

The following challenges facing healthcare sales and marketing organizations are problematic:

  1. Surgeons and key opinion leaders (KOL) no longer have the influencing or decision-making power they once did.
  2. Increased sophistication in healthcare product/services sourcing and assessment processes.
  3. Companies with proprietary healthcare products and innovations struggle for market share.
  4. Tight hospital budgets with high non-clinical overhead costs.
  5. Difficulty in reaching decision-makers.
  6. Turnover in healthcare procurement personnel.
  7. Healthcare value-assessment committees lengthening the sales cycle.
  8. Challenges in scheduling product evaluations and trials.
  9. Procurement’s obsession with cost savings.
  10. The continued use of request for proposal (RFP), request for quote (RFQ), and request for information (RFI) processes.
  11. Elongated selling cycles, poorly written value propositions, and weak day-to-day communication practices.
  12. Consultants are driving cost-cutting initiatives. …and many more.

In this article, I’ll delve into some of the intricacies of healthcare sales negotiations.  While I can’t cover everything in this article, I’ll provide several helpful insights, strategies, and tips to navigate this ever-changing environment.

The Changing Face of Healthcare Sales Negotiations:

Gone are the days when surgeons and clinicians solely drove product selection in healthcare. Today, procurement departments wield significant influence, and sales teams must adapt. Investing in negotiating skills training and revising your value proposition messaging is critical for success.

The Impact of Rising Healthcare Costs:

With healthcare costs continuously rising, institutions must cut expenditures while maintaining quality, value-based patient care.  Healthcare sales teams must understand the financial pressures faced by all members of the institution’s ‘buying centre’ and align their offerings and value propositions accordingly.

Negotiating with Procurement: A New Ballgame:

Traditionally, healthcare sales negotiations focused on surgeons and clinicians.  Now, suppliers must cater to the demands of procurement teams.  Don’t overwhelm healthcare procurement and supply chain personnel with too much clinical data; put all the regulatory and clinical information and detailed product specifications in the exhibit or appendix sections at the back of your presentations or proposals (where they belong.)  Don’t waste time showing supply chain personal information that will not influence the final decision.

Additional Insights and Tips for Successful Healthcare Sales Negotiation:

  1. Understand the Procurement Process: Learn procurement teams’ decision-making criteria and priorities.
  2. Understand the Buying Centre: Most sales organizations I teach need to learn how to develop a better working knowledge of the people in any institution who make or influence decisions.
  3. The Sales/Marketing Challenge: Improve alignment and cooperation between your company’s sales, marketing, and product management teams.
  4. Do Your Research: Carefully and thoroughly research customer personnel and information about each institution or customer.
  5. Stay Informed: Keep up with non-clinical healthcare industry trends, regulations, and technologies.
  6. Customize Your Approach: Tailor sales and negotiation strategies to each healthcare institution.
  7. Contract Negotiations: Understand how negotiations impact letters of agreement, supply agreements, and contracts.  Most organizations have seriously flawed contracts.
  8. Emphasize Value and Cost Effectiveness: Highlight the value and cost-effectiveness of your products and/or services. Also, determine the ‘switching costs’ if your company is the incumbent vendor for capital equipment, medical devices, equipment or supplies, and there is a risk of losing business to a lower-priced competitor.
  9. Build Strong Relationships: Foster positive relationships with procurement professionals.  Don’t avoid these people.  Don’t wait to be told by surgeons or other clinical personnel that you must “meet with purchasing” – after you’ve let the “value cat out of the bag.”

Conclusion:

In any aspect of healthcare, a one-size-fits-all sales, marketing, and negotiation approach no longer works.  As procurement teams gain prominence and dominance, understanding their needs is critical to successful negotiations.  As healthcare costs rise, providing cost-effective solutions becomes crucial.

Suppliers must spend less time on clinical product education/training and provide sales, marketing, and cross-functional personnel with training in real-world business skills.  Companies need expert troubleshooting advice and negotiation skills training to help build strong relationships with healthcare procurement professionals to secure mutually beneficial deals – without compromising patient care or relationships with clinical personnel.

Remember: A negotiated dollar is a bottom-line dollar.  You can’t make – or save money faster than when you’re negotiating.

Take Action and Invest in Our Expert Negotiating Training and Negotiation Coaching Packages, Negotiation Tools, and Online Course to Become a Better Negotiator.

» Negotiating Skills Training: Book a tailored in-house presentation, seminar or learning workshop for your organization.

Speaking Engagements – Industry Associations and Companies: Book a tailored, engaging, and impactful 60-minute to two-hour presentation at an upcoming meeting, conference or convention.

» Negotiating Coaching Packages: If your company is facing a challenging high-value negotiation and you need an expert to help you or your team – or you own a small business – or you’re an individual who needs practical negotiation advice, you can benefit from my investing in one of my three proven, results-producing negotiation coaching packages for individuals, small business owners or corporations.

» Digital Negotiation Learning Products: You can purchase my three E-books containing powerful strategies and tips.  E-books: Forensic Blueprinting Questions For Effectively Selling and Negotiating Price or Fee Increases and Managing the Price-driven Sale, Selling and Negotiating Price or Fee Increases in Any Economic Environment, and Strategies and Tips on How to Effectively Manage the RFP/RFQ/RFI or Bid/Tender Process to Optimize Results and Outcomes.

You can also purchase the Negotiating Personality Type and Corresponding Negotiating Style Self-Assessment Questionnaire and Interpretation Results and my NEW Digital MP3 “Greatest Hits” Verbal Negotiating Phrases, Scripts, Questions, and Questioning Techniques.  These helpful tools are in digital format and can be easily downloaded.

I provide a discounted Master Negotiator Bundle with all my Digital Learning Products.

» Online Sales Negotiation Course: If you’re in sales, sales management or a cross-functional role that supports sales, you can benefit from enrolling in my NEW self-paced Negotiating for Sales Success online course.

» Meet Negotiating Coach® Michael E. Sloopka

No part of this copyright material can be used without written permission from Selling Solutions Inc.

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The Illusion of Sales Negotiation Mastery: Unveiling the Truth About Some Sales Professionals

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The Illusion of Sales Negotiation Mastery: Unveiling the Truth About Some Sales Professionals

Overconfidence in Negotiating: A Common Pitfall

Many sales professionals believe they’re top-notch negotiators; however, are they?  This article explores why some people, especially those in the sales profession, tend to overestimate their negotiating skills.  Shockingly, eighty-seven percent of salespeople and sixty-seven percent of procurement and supply chain personnel never receive formal, in-depth negotiating skills training.

Negotiating is a crucial skill for salespeople, and while many salespeople claim they have sufficient skills, overconfidence can be their undoing.  Let’s dive into some common reasons why some salespeople and sales managers think they’re better negotiators than they actually are.  In this article, I’ll also provide some recommendations and strategies to address the pitfalls.

Lack of Self-awareness

A lack of self-awareness is one of the primary reasons some sales professionals overestimate their negotiating abilities.  Some salespeople and sales managers often fail to recognize their weaknesses, which leads to inflated self-assessments of their skill level, competency, and abilities.

Recommendation: Regularly assess your negotiating skills and seek peer and senior management feedback (only if the management has the expertise to provide effective coaching.)  Consider professional negotiating skills training to improve individual and organizational performance and business results.

Limited Understanding of Negotiation Strategies

Some salespeople mistake “bargaining and haggling” for negotiation.  Negotiation is not only about negotiating volume commitments, prices, discounts, volume rebates, and promotional or merchandising programs.  Negotiating is a complex process that involves various interdependent variables, moving parts, and strategies like careful needs assessment, value creation, problem-solving, and relationship-building.

Recommendation: Expand your knowledge of negotiation strategies, tactics, techniques, phrases, questions, and questioning techniques to enhance your skills.  If your company is not investing in professional development and training, take the initiative and enrol in a negotiating skills training seminar or workshop.  While reading a book on the topic might help – live training programs are more effective and beneficial.

Ignoring Emotional Intelligence

Emotional intelligence plays a crucial role in effective negotiation. Sales professionals who focus solely on facts and figures in discussions, presentations, and price—or solution-based proposals may miss their counterparts’ emotional forensic clues, leading to suboptimal outcomes in negotiations.

Recommendation: Develop your emotional intelligence by practicing active listening, empathy, and understanding the emotional aspects of the negotiation.

Underestimating the Importance of Preparation and Planning

Many negotiators, especially in sales, need to pay more attention to the importance of preparation and planning.  Some salespeople believe their ‘charisma, natural charm, and historically based instincts’ will carry them through, neglecting to invest the time and effort into the groundwork for successful negotiation.

Recommendation: Invest the necessary time and effort in thorough research and preparation before each negotiation.  Knowing your client’s needs and potential objections can give you a significant advantage.  Unfortunately, doing live, in-person role-playing involving real-world scenarios scares the daylights out of most salespeople.  However, role-playing is an effective way to practice new skills, learn more, and adapt.

Our Negotiating for Sales Success training seminars, workshops, and coaching sessions focus on having situational application discussions using real-world negotiating scenarios facing sales organizations.  We don’t believe in artificial role-playing or telling silly stories irrelevant to the industry the salespeople work in.

Sometimes entertaining stories are fun and suitable for people to listen to, and they may help to provide context or examples of how a negotiating strategy or tactic might work; however, I’m not sure what a story about a hostage situation has to do with critical commercial negotiation involving a large club or home improvement channel customer!

Failure to Adapt and Learn from Experience

Some sales professionals fall into the trap of using the same negotiation tactics (tricks or gimmicks) repeatedly, even when these tactics consistently yield subpar results.  Some salespeople think they’re skilled enough – but most fail to adapt to different and increasingly complex negotiation situations.

Recommendation: Always do a forensic autopsy (no, not that kind of autopsy) and analyze your negotiation outcomes, learn from your mistakes, and adjust your approach based on each unique scenario.

The Dunning-Kruger Effect

The Dunning-Kruger effect is a cognitive bias where individuals with low ability at a task overestimate their ability.  This is particularly prevalent in negotiations because those with the least competence often need more knowledge to evaluate their performance accurately.

Recommendation: Stay humble and always be open to feedback.  Be aware of the Dunning-Kruger effect, and only assume you’re a good negotiator through continual training, self-assessment, practice, and improvement.

The Role of Sales Managers in Negotiation

Competent and experienced sales managers with the right expertise are essential for developing their team’s negotiating skills; however, familiar challenges arise in this context.

Ineffectiveness of Some Sales Managers as “Coaches”

One common issue I encounter during our negotiating skills training workshops and coaching sessions is that some sales managers, despite their years of experience, may not possess the coaching skills necessary to help implement and reinforce the new learning with the members of their sales teams.  Some sales managers might excel as negotiators themselves; however, teaching and mentoring their salespeople in this complex skill can be an entirely different challenge.

Recommendation: Sales managers must coach their people using a proven negotiating methodology.  Sales managers need to coach using a negotiating ‘playbook.’  The negotiating playbook includes best practices and easy-to-use tools, templates, scripts, phrases, questions, and questioning techniques.  The playbook provides the foundation for effective coaching and mentoring by sales managers.  Nothing is worse than salespeople or sales managers with fifteen years of experience – one year at a time!

The Bad Habit of Taking Over Negotiations

Another problem is that some sales managers, eager to secure a deal, often take over negotiations their salespeople should be capable of handling.  This habit has nothing to do with the use of the ‘Higher Authority Gambit’ in a negotiation.  When a sales manager takes over a negotiation, it not only robs the salesperson of getting valuable experience but also sends a message that the manager may not have confidence in their team’s abilities.

Recommendation: Sales managers should empower their team by allowing salespeople to lead negotiations.  They can provide guidance and support from the sidelines.  The salesperson should have the opportunity to learn and grow through practice.  I realize valuable deals are in play, and some sales managers may be unwilling to risk blowing a deal so that a salesperson can get some much-needed experience.

Conclusion: Empowering Sales Teams for Negotiating Success

To address these challenges and maximize the potential of your sales team, it’s crucial to strike a balance.  Sales managers can become more effective negotiation coaches by improving their understanding of negotiating, mastering their coaching skills, and empowering their salespeople to take the lead in negotiations.

In the competitive world of sales, self-awareness and constant improvement are essential.  By addressing the challenges within the team and providing the proper fundamental training and guidance, sales professionals and their sales managers can collectively work towards becoming exceptional negotiators.  This approach will lead to better results and foster a culture of continuous learning and growth in the sales organization.

Take Action and Invest in Our Expert Negotiating Training and Negotiation Coaching Packages, Negotiation Tools, and Online Course to Become a Better Negotiator.

» Negotiating Skills Training: Book a tailored in-house presentation, seminar or learning workshop for your organization.

Speaking Engagements – Industry Associations and Companies: Book a tailored, engaging, and impactful 60-minute to two-hour presentation at an upcoming meeting, conference or convention.

» Negotiating Coaching Packages: If your company is facing a challenging high-value negotiation and you need an expert to help you or your team – or you own a small business – or you’re an individual who needs practical negotiation advice, you can benefit from my investing in one of my three proven, results-producing negotiation coaching packages for individuals, small business owners or corporations.

» Digital Negotiation Learning Products: You can purchase my three E-books containing powerful strategies and tips.  E-books: Forensic Blueprinting Questions For Effectively Selling and Negotiating Price or Fee Increases and Managing the Price-driven Sale, Selling and Negotiating Price or Fee Increases in Any Economic Environment, and Strategies and Tips on How to Effectively Manage the RFP/RFQ/RFI or Bid/Tender Process to Optimize Results and Outcomes.

You can also purchase the Negotiating Personality Type and Corresponding Negotiating Style Self-Assessment Questionnaire and Interpretation Results and my NEW Digital MP3 “Greatest Hits” Verbal Negotiating Phrases, Scripts, Questions, and Questioning Techniques.  These helpful tools are in digital format and can be easily downloaded.

I provide a discounted Master Negotiator Bundle with all my Digital Learning Products.

» Online Sales Negotiation Course: If you’re in sales, sales management or a cross-functional role that supports sales, you can benefit from enrolling in my NEW self-paced Negotiating for Sales Success online course.

» Meet Negotiating Coach® Michael E. Sloopka

No part of this copyright material can be used without written permission from Selling Solutions Inc.

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Mastering Mortgage Negotiation: A Practical Guide for Homeowners in the US and Canada

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Mastering Mortgage Negotiation: A Practical Guide for Homeowners in the US and Canada

Unlock Potential Savings with Smart Mortgage Negotiation Strategies

The looming mortgage situation for the rest of 2023, 2024, and probably 2025 indicates that a staggering wave of mortgage challenges is hurtling toward homeowners that will undoubtedly cause stress, anxiety, and financial hardship for tens of thousands of people.

Brace yourself for the thunderous impact of 10.1 million mortgages set to mature this coming year in North America, shaking the very foundations of the real estate market.  Here’s the spine-chilling twist: a vast number of homeowners are about to plunge headfirst into a financial abyss, shackled by interest rates that rival “loan shark” territory, with some borrowers teetering on the precipice of ruin, paying a staggering average of 5.1% to 8.3% interest on their life’s most significant investment.

Hold onto your seats as we delve into the treacherous landscape of mortgage negotiations and renegotiations – where the stakes have never been higher, and the consequences will reverberate throughout the North American economy.

Negotiating your mortgage terms can yield significant savings and favourable conditions. This article’s insights, strategies, and tips will help you negotiate confidently in the United States or Canada.  In today’s challenging mortgage market, understanding the nuances of the negotiating process is essential for success.

A few words of caution.  Make sure you investigate your local lending regulations and mortgage broker licensing requirements.  Also, pay attention to details and have a qualified person carefully review legal documentation.  You don’t need to make your situation worse by having to live with problems associated with legal documents. Remember, a mortgage is a legal document.

Get Help: While I’m not a mortgage broker, I specialize in negotiation coaching, consultancy, and training.  Contact me for personalized guidance in navigating the complex world of mortgage negotiations.  With my tailored coaching packages, I provide expert advice and empower you with the applicable negotiation strategies, tactics, techniques, phrases, scripts, questions, and questioning techniques to help you improve your outcomes. Let’s work together to gain a negotiating advantage in the mortgage market.

Know When and How to Negotiate

Understanding the Art of Mortgage Negotiation

When securing a mortgage for the first time or a renewal, you’ll often encounter posted rates at various traditional and non-traditional financial institutions.  However, during these difficult economic times, people might be so anxious to apply for a mortgage – or desperate to renew a current mortgage that they don’t start researching, gathering information, and negotiating early enough.  Some people don’t bother negotiating mortgage rates, terms, and conditions – some believe mortgage rates are set in stone.

You can secure a better outcome with the proper negotiation approach, strategies, and tactics.

For instance, negotiating skills could reduce the interest rate if the advertised five-year fixed mortgage rate is 5.5% with a reasonable amortization period.  Besides the interest rate, you can also discuss contract details like prepayment options, cash-back benefits, and terms and conditions. Your ability to negotiate depends on your preparation, planning, and negotiating skills – and the skills of your mortgage broker, should you decide to use one.

Strategic Timing for Mortgage Negotiation

To maximize your negotiation power, there are three key things to consider:

  1. Securing a New Mortgage
    This is a prime time for negotiation, as multiple lenders may be interested in vying for your business – as long as your application is solid.  Take your time; shop around and see if your preferred lender can match or surpass their competition’s offers.  Remember, financial institutions need to get profitable, low-risk loans on their books.  Therefore, there is some pressure on lenders to loan mortgage money – as long as your income supports loan repayment and the loan-to-value ratio is acceptable to the lender’s mortgage underwriters.
  2. Renewing Your Mortgage
    You receive a renewal letter from your current lender a few months before your mortgage term ends. Instead of accepting it immediately, take your time to do research and explore other offers.  Switching lenders may save you enough money to make the negotiating effort worth it.
  3. During Your Mortgage Term
    If market conditions favour it, you might renegotiate or refinance your mortgage for a better rate even before the term expires.  Ensure you understand the prepayment fees, terms, conditions, and any potential risks involved.

Don’t Hesitate to Ask and Negotiate for a Discount

Most financial institutions publish mortgage interest rates, which can often be negotiated lower, especially with a strong application and credit rating.  The size of any potential discount depends on market conditions and the lender’s policies.

While you might wonder why they publish rates if discounts are possible, it’s because some homebuyers or homeowners accept the published rates, and these rates are used to calculate penalties in case you need to break your mortgage early.

Shop Around for Savings

Always shop around, whether getting a new mortgage or renewing the current one. Even though various lenders offer similar rates, slight differences can lead to substantial savings.  Contact multiple lenders to find the best rate; your preferred lender may be willing to match the lowest offer.

The Power of Using Mortgage Brokers

Consider using a mortgage broker.  These licensed professionals work with multiple lenders, ensuring they can provide you with a cross-section of offers and the best terms available.  Sometimes, mortgage brokers can be beneficial for unique situations like self-employment.  If things get “desperate,” mortgage brokers may be able to access different types of lenders (including hard money lenders) with more flexible lending criteria.  Origination fees and interest rates will be higher for these types of scenarios.

Remember, the lender compensates mortgage brokers; therefore, using a mortgage broker is a convenient option for borrowers.

Warning: Be very careful of mortgage brokers or lenders presenting you with potential solutions for your mortgage who may unintentionally or intentionally mislead – or misinform you and don’t deliver the solution.  Also, don’t assume the mortgage broker is negotiating the best possible outcome for you.  The commissions a mortgage broker could potentially earn may not justify them spending an excessive amount of time on negotiation.

Recommendation: If you’re looking for a trustworthy professional mortgage broker, contact David Pipe.  David is licensed in the Province of Ontario, Canada.  David can also help Canadian out-of-province clients with their mortgage needs.  He has the necessary experience, expertise, industry connections, and skills to help people find mortgage solutions.  David provides a complimentary, no-obligation consultation for his potential clients.

Strategies for Successful Mortgage Renewal Negotiation

Keep an Eye on Market Interest Rates

Even if you’re not currently in the market for a new mortgage, monitoring interest rates is wise.  If you’re on a fixed-rate mortgage and rates drop, inquire with your lender about blending and extending your mortgage, potentially saving you money.  Conversely, if you have a variable-rate mortgage and rates increase, consider switching to a fixed-rate mortgage for potential savings.

Beyond Interest Rates: Consider Your Prepayment Options

When negotiating your mortgage, don’t fixate solely on interest rates. Consider the prepayment privileges offered. Making extra payments without incurring fees can be immensely beneficial, especially if you anticipate a windfall of funds in the near future.

Optimize Your Mortgage Application

A strong and thorough application can lead to better interest rates – or a less stressful approval process.  A substantial down payment, a good credit history/rating, and a reasonably stable income are factors that lenders consider favourably. If you have outstanding debts, consider reducing them before applying, as this can improve your overall financial picture.

It’s a good idea to check your credit report using one of the major credit reporting companies.  If you notice discrepancies on your credit report, make sure you get those corrected – before you apply for a mortgage.

Your Mortgage Renewal – A Golden Opportunity:

Renewing your mortgage isn’t a task to take lightly.  Instead of settling for the first offer, invest time researching and negotiating to secure terms that align with your financial goals. By following these seven strategies, you can optimize your outcome.

Don’t Overlook Your Mortgage Renewal Letter

Don’t wait until the last minute to take action.  Upon receiving your mortgage renewal letter, paying attention to it is vital. Failing to contact your lender may result in automatic renewal into an open mortgage term with considerably higher interest rates.

Study the Renewal Offer Thoroughly

Before negotiations, thoroughly understand the renewal offer, including the offered interest rate, term length, prepayment privileges, and amortization period.  Adjusting the term may affect your rate.

Research for the Best Rates

Do an Internet search for “best mortgage rates + your city/province/state” to find the most competitive rates in your local area.

Compare Apples to Apples

Ensure you’re comparing the same type of mortgage as the one in your renewal letter.  Some lenders offer better rates for insured mortgages, so verify that you’re comparing the correct type of mortgage.

Seek Professional Advice

Consider consulting a qualified Financial Planner, Accountant, Mortgage Advisor or Mortgage Broker for expert guidance regarding the lowest rates, terms, and conditions to understand your mortgage’s role in your overall financial plan.

Initiate Negotiations

Approach your lender with the rate and conditions you prefer.  Ensure you’re clear and concise in your communication.  Be careful of “Funny Money” and using percentages when you negotiate.  Always deal in real money terms when negotiating.  Understand the financial impact of a 0.25% increase – or reduction in your mortgage interest rate – in real money.

Clarify Switching Costs

If you’re considering switching lenders, understand the associated costs and inquire if the new lender can cover them.  Be careful of the “fine print.”  Switching costs can be expensive.

Summary

Negotiating your mortgage, whether for a new purchase or renewal, demands your attention and proactive efforts.  You can secure the best possible rates and terms with the right strategies and information.

Your mortgage renewal negotiation allows you to align your financial situation with your goals and save money. So, feel free to explore your options and negotiate until you find the perfect mortgage agreement for your needs and your circumstances.

As we draw the curtains on this expedition into the intricate world of mortgage negotiations, it’s abundantly clear that arming oneself with knowledge, negotiating skills, strategies, tactics, phrases, questions, and questioning techniques could be the key to weathering the storm and emerging victorious.

Numerous interdependent variables and moving parts are involved in negotiating or renegotiating your mortgage.  In a landscape where hundreds of thousands of mortgages hang in the balance and interest rates continue to cast their ominous shadow, the power to secure your financial future lies in your hands.

Your mortgage is more than just a loan; it’s a financial instrument that can shape your life for years to come. So, remember this: knowledge is your sword, patience is your shield, and persistence is your armour. By negotiating intelligently, you can transform the daunting mortgage market into a realm of opportunity and financial well-being.

Remember: A negotiated dollar is a bottom-line dollar.  You can’t make – or save money faster than when you’re negotiating.

Take Action and Invest in Our Expert Negotiating Training and Negotiation Coaching Packages, Negotiation Tools, and Online Course to Become a Better Negotiator.

» Negotiating Skills Training: Book a tailored in-house presentation, seminar or learning workshop for your organization.

Speaking Engagements – Industry Associations and Companies: Book a tailored, engaging, and impactful 60-minute to two-hour presentation at an upcoming meeting, conference or convention.

» Negotiating Coaching Packages: If your company is facing a challenging high-value negotiation and you need an expert to help you or your team – or you own a small business – or you’re an individual who needs practical negotiation advice, you can benefit from my investing in one of my three proven, results-producing negotiation coaching packages for individuals, small business owners or corporations.

» Digital Negotiation Learning Products: You can purchase my three E-books containing powerful strategies and tips.  E-books: Forensic Blueprinting Questions For Effectively Selling and Negotiating Price or Fee Increases and Managing the Price-driven Sale, Selling and Negotiating Price or Fee Increases in Any Economic Environment, and Strategies and Tips on How to Effectively Manage the RFP/RFQ/RFI or Bid/Tender Process to Optimize Results and Outcomes.

You can also purchase the Negotiating Personality Type and Corresponding Negotiating Style Self-Assessment Questionnaire and Interpretation Results and my NEW Digital MP3 “Greatest Hits” Verbal Negotiating Phrases, Scripts, Questions, and Questioning Techniques.  These helpful tools are in digital format and can be easily downloaded.

I provide a discounted Master Negotiator Bundle with all my Digital Learning Products.

» Online Sales Negotiation Course: If you’re in sales, sales management or a cross-functional role that supports sales, you can benefit from enrolling in my NEW self-paced Negotiating for Sales Success online course.

» Meet Negotiating Coach® Michael E. Sloopka

No part of this copyright material can be used without written permission from Selling Solutions Inc.

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Is Splitting the Difference a Winning Negotiation Strategy or a Flawed Approach?

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Is Splitting the Difference a Winning Negotiation Strategy or a Flawed Approach?

Unpacking the Pros and Cons of Splitting the Difference in Negotiations

Negotiation is a dynamic art that requires a deep and thorough understanding of negotiating strategies, tactics, techniques, and tips and the ability to adapt to various situations. One common and often misunderstood and misapplied strategy in negotiation is “splitting the difference.”

This is especially true in commercial negotiations involving monetary and non-monetary concessions that provide value.

While “splitting the difference” may seem straightforward and fair, there are pros and cons to consider when deciding whether to employ this strategy in your negotiations.  In our negotiating skills training programs and negotiation coaching sessions, we encourage “splitting the difference” when the circumstances support using this negotiating gambit (chess parlance meaning manoeuvre for advantage.)

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The Pros of Splitting the Difference:

  1. Quick Resolution: Splitting the difference can expedite the negotiation process, making it an attractive option when time is of the essence.  It’s a simple way to find a middle ground and move forward.
  2. Fairness: This method can create a perception of fairness in the negotiation.  Parties may feel both sides are making equal concessions, promoting goodwill and cooperation.
  3. Maintaining Relationships: When dealing with long-term “partners” or maintaining professional relationships, splitting the difference can prevent hard feelings and keep lines of communication open.
  4. Simplicity: When appropriately taught and understood in the proper context, splitting the difference is easy to understand and execute, making it accessible for experienced and novice negotiators.  When splitting the difference, people must learn and use correct verbal and written phrases and scripts – or using this negotiation gambit could backfire.

The Cons of Splitting the Difference:

  1. Missed Value: Splitting the difference might mean leaving value on the table.  It must consider each party’s specific needs and priorities, potentially resulting in a suboptimal outcome.
  2. Lack of Creativity: This strategy can stifle creative problem-solving.  Instead of exploring innovative solutions, negotiators settle for the middle ground.
  3. Ineffective in Complex Negotiations: In intricate or high-stakes negotiations, splitting the difference often needs to be revised.  It needs to have the sophistication required for complicated deals.
  4. Presumption of Equal Concessions: While it may seem fair, in some cases, one side may be making a more significant concession, creating an imbalance.

How Splitting The Difference Can Be Used to Your Advantage

The Negotiating Gambit: It’s generally a good strategy in a negotiation not to offer to split the difference.  There are some situations during a negotiation where it’s an excellent strategy to get the other side to split the difference.

The use of this negotiation strategy depends on where you are in your negotiating range during the negotiation.  Your negotiating range is between your opening negotiating position (initially, ask for more than you want and expect to get – based on the Maximum Plausible Position – MPP) and your desired outcome (your goal).

Suppose you are on the high side of your desired outcome (goal), between your desired outcome and opening negotiating position.  In that case, you can suggest to the other side to split the difference, which would result in your successfully being able to bracket between your high position on your negotiating range.  It creates the perception that you made a concession, and what you did was simply bracket to achieve a better outcome.

Example: In a sales negotiation, you proposed a price for a new piece of equipment to a customer at $31,997.95, plus taxes and shipping.  The price you proposed is based on your opening negotiating position.  Your desired outcome (goal) for the negotiation is to sell the equipment at $26,995.95, plus taxes and shipping.

The customer doesn’t have the budget for your proposed asking price and suggests a price of $25,000.00.  Based on this, you’re $6,997.95 lower than your opening negotiating position and $1,995.95 lower than your desired outcome.  Now, it’s an intelligent strategy to suggest to the other side to split the difference.

You could say something like this to the customer: “We’re not that far apart, so does it make sense to split the difference?  We’ll each compromise $3,498.55 and agree on the purchase price of $28,499.40, plus taxes and shipping.”

By suggesting to the other side to split the difference and by properly bracketing between your opening negotiating position and your desired outcome, you have effectively indicated that the equipment be sold for $1,503.45 more than your desired outcome (your goal).  You’ve created a Win-Win outcome by conceding some of your negotiating range to the customer.

The Negotiating Countergambit: You can protect yourself from splitting the difference yourself in a negotiation by using the Higher Authority gambit.

You can say the following to a customer: “We’re only a few thousand dollars apart on a piece of equipment that will improve your operations.  It seems a shame to walk away from this after the time we’ve both invested.  If you propose a reasonable compromise between our initial competitive price proposal and your counteroffer, I’ll take it to my finance people and see what I can do.”

Why a Former FBI Hostage Negotiator’s Approach Differs:

A former FBI hostage negotiator advocates for an alternative approach in his co-authored book, “Never Split the Difference.”  In the book, the co-author proposes that splitting the difference only sometimes serves a person’s best interests.  The co-author emphasizes using “tactical empathy, active listening, and calibrated questions” to uncover your counterpart’s true motivations and priorities.

In contrast to splitting the difference, the co-author encourages people to seek out “black swans” –unexpected and valuable concessions that might result in a more favourable deal.

At negotiatingcoach.com, we call this “Broadening the Scope” of the negotiation.  It’s important to understand when and how to properly split the difference in a negotiation.

Conclusion

While splitting the difference can be a quick and straightforward way to resolve negotiations and maintain relationships, it may not always be the most effective strategy.  Understanding the pros and cons of this approach is essential for any negotiator. There are alternative perspectives on this topic that challenge the status quo.

In your next negotiation, consider the specific circumstances and your counterpart’s motivations before deciding to split the difference – or aim for something more.  Remember, successful negotiation requires a versatile toolkit of strategies and tactics, and the right one depends on the situation.

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