David Zehren's picture
Submitted by David Zehren on Tue, 09/13/2011 - 13:43
Better negotiators close deals at higher value.

If your salespeople were really good negotiators, do you think they could close deals, on average, at a 1% higher price? If that seems reasonable, consider the value added straight to your bottom line. Consider a typical example:

Sales 100
Costs of Goods Sold 60
Selling & Administrative Expenses 25
Interest, Depreceiation, etc. 3
  ___
Net Income (Pre-Tax) 12

Now add a modest 1% to sales revenue as a result of better negotiating, making it $101. If the negotiating is skillful and graceful, the 1% higher price won't cause a loss of sales. Other expenses remain the same and the extra dollar of revenue falls straight to the bottom line. Now we have $133 of Net Income, and increase of 8.3%! If you can negotiate, on average, a 2% higher price, Net Income soars to 16.6%!

Here's some good news:  Skilled sales negotiators close more profitable deals and build better, longer lasting customer relationships at the same time.