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Negotiation!!! - I'm a Salesperson, get me out of here
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Why do salespeople fear negotiating with a customer, why do some of them wish they were elsewhere when the bargaining starts.
Negotiate with the right person
Negotiate with the person who has the means, the authority and the need. The prospect must have the ability, the financial means or money to pay for your products and services. In addition they must have the authority to make a decision and lastly the prospect must require or believe they require what you’re offering. You can’t negotiate with anyone else.
Both parties should be happy
I know it sounds like a terrible cliché but you are striving for a Win /Win. This is where you the salesperson collect a profitable order and the customer makes a value for money purchase.
Let’s examine the alternatives starting with a Win /lose.
Although you get the deal, the customer however makes a bad purchase. There will be no repeat business and no referrals, even though you might seem to have gained in the short term, but in the long term you could well be the loser. Unhappy customers complain both to the supplier and usually to anyone else that will listen. You do not want a bad reputation.
Equally a Lose/Win is not good. Your company either cannot accept the order or cannot deliver the level of service the customer expects. Although the customer seemed to get the better part of the deal in the longer term they also may suffer. A wise prospect knows that it is in their interest for you the supplier to make a fair profit.
Nobody wants a Lose/Lose as there’s no deal for you the supplier and no product or service for the prospect. You don’t make any profit and indeed may have well lost time and money in trying to win the order. The prospect will also have invested some time but cannot experience any of the benefits of ownership of your offering.
You could try the following: “Mr Prospect, we have both invested a great deal of time. We both want to conclude this matter if we can. Let’s just go through it one more time before we admit defeat.”
Maximise on price.
Understand the quality of a sale is just as important as the quantity of sales as often two sales made at a good price will earn as much profit as three sales made at a give-away price.
Don’t give up your concessions “without a fight”,
trade them reluctantly one by one. Try and persuade the prospect that the benefits of the deal, without any concessions at all, still justify them making a purchase.
Aim high and you will get more.
There are a number of things that the prospect might say that will lower your aspirations. For example: “We’ve already been offered a good price,” or “This isn’t really top priority for us right now.” But on the other hand, there are a number of things that you can say that will raise your aspirations but lower the prospects. For example: “This is proving to be very popular,” or “There is a very long waiting list,” or “Our products show very little depreciation,” or “Our renewal rate is quite phenomenal.”
Knowledge is Power
For years people have been saying that knowledge is power, today we tend to say that applying that knowledge is real power. Try to find out all the concessions that a prospect is looking for and do this very early on in the negotiation. Otherwise every time you make a concession you will think you have a sale but low and behold up will pop another request.
Scaled Concessions
A superb tactic is to concede in reducing amounts. A reasonable first concession indicates a willingness to negotiate and this pulls the buyer in. The closer they get to ownership the more they want it. Although you should never make a concession that is too large in relation to the total price, so for example: If you are supplying a product with a suggested price of £20,000 offering a discount of £,000’s is likely to be received with disbelief and distrust.
If you offer a reasonable first concession you should then reduce concessions sharply i.e. if the first discount was £1,000 off something with an opening price of £20,000 then the second discount might be no more than £100.
Perceived Value of Concessions
Another approach is to reduce the value of the prospect’s concessions. Skilled negotiation involves reducing the prospect’s perception of his or her concessions, for example: “It is fairly normal to do that,” or “Most Companies do that,” or “That won’t help us very much,” or “That’s not much good to us.”
Non-Financial Concessions
One of the best strategies you can use is to make non-financial concessions. Include more products or service as this has a higher perceived value than straight cash discounts. The price of your goods include a profit margin so they only cost you a part of the recommended price, whereas to the prospect they perceive the total price as the value of what is being offered. In the example of selling a house you throw in the carpets and curtains. These often have a very low value to the seller as they don’t want to re-use them but a much higher value to the buyer who would have to replace them if they weren’t included.
Change the price, change the package
If the prospect wants to change the price, make sure you change the package. If you were offering 10 top of the range widgets and 5 mid range widgets for £X and the prospect offers £Y then you can counter offer to swap out some of the top of the range widgets for more medium quality ones. If the price isn’t fixed then why should the package be.
Concession Trading
Wherever possible, don’t give concessions away for nothing. Always try to trade them for something in return. The most common example is where in return for an immediate decision the prospect can have a discount.
Consider agreeing to a small discount in return for a promise of referrals. This serves several purposes not least it allows you to reduce the price and maintain credibility. In addition you stand to gain substantially should any of the referrals become future clients. You may have to persuade the prospect that they will find it easy to refer others to you and it might be sensible to make it clear they are not obligated to do so unless they are completely satisfied with your services.
Handling Deadlines
If a prospect makes you aware that they have a deadline by which time business must be concluded, understand it is their negotiating skills that are reduced. However don’t let an impending deadline that has been imposed by your company put you in a position of weakness. A prospect will be put off by a desperate salesperson.
The 'But' Close
Another fantastic tactic to apply is to close the deal with a final “but”. If you are willing to accept the buyer’s last offer or you are making your final offer, instigate a minor clause that distracts from the overall deal. For example, “ Okay I’ll meet your budget providing we can deliver before the 17th.” This stops the buyer asking for more. Their decision becomes one of accepting the minor clause and by agreeing to the “but” they are agreeing to go ahead.
Negotiation Top Tips
- Look for a win / win
- Maximise on price
- Aim high
- Concede in reducing amounts
- Make non-financial concessions
- Close with a “but”
