There are many sales skills that have impact on the value of a strong sales team within an organization:
Account Management
Value Selling
Questioning
Presentation skills
as well as a number of others.
However, one of the things we love most about our work in helping B2B sales organizations improve negotiation skills is the immediate, tangible, return on investment. Unlike many sales skills, negotiation is a hard skill: meaning not only is it highly measurable, but it also delivers business results fast! The other great news is that together, we, the Think! team with the client stakeholders, can identify this potential ROI before any investment is made to build the internal business case for a negotiation improvement initiative.
Here are results from five (5) Fortune 1000 clients in these industries: logistics, packaging, energy solutions and services, information services, and healthcare.
Their returns:
466% average ROI
9-month average payback period
How is this possible?
We think in terms of leading and lagging indicators. An example for one of those clients would be:
Their VP Sales had a goal of increased revenue, margin, and decreased DSO - Days Sales Outstanding (lagging indicators).
Working with their cross-functional team, we identified the top four deal components in negotiation to include more or less of, which included: increase price %, longer contract length, shorter payment terms, and inclusion of consulting services (leading indicators).
Current and desired targets were identified for each and expectations were laid out for the salespeople.
Sales teams were trained on a strategic negotiation process that included how to improve their deal overall, and specifically how to include more of the top four deal components.
We coached teams from planning through to close.
We measured the percentage of contracts the top four deal components (and others) appeared in before and after the investment.
This work resulted in:
Improved A/R compliance 1.3%
Reduced past due balance 5.1%
Revenue Gained $7,151,913.71
ROI 510%
The focus on specific leading indicators, meaning those items sales teams can control during the negotiation, drove outstanding end results. Additionally, moving from generic negotiation training (negotiation skills process) to teaching the teams how to execute a company specific negotiation strategy, that is, alignment on what leading and lagging metrics we want more of or less of in deals, was the key.
For additional reading, review our most recent case study with Sonoco. Click here.