Don’t Be A Price CrumblerPosted on March 3rd, 2015
So you have identified a potential customer, built rapport with them and used your sales skills to get them to want to buy from you. But once they have decided to buy, they turn their attention to getting the best deal, the best price, the best terms. They start to negotiate.
The customer you speak to on Monday morning is almost certain to have received training on how to improve the terms they get from their suppliers. The popularity of negotiating skills training for buyers has grown dramatically in recent years.
It’s worth remembering that not all buyers want partnerships. Some are quite happy with transactional relationships and will negotiate terms strongly. And those who do extol the virtues of buyer/seller partnerships want to negotiate most of the profit from such arrangements for themselves. Put another way, they may talk win-win, but what they really want is WIN-win: a big win for them and a little win for us.
In a sales negotiation, your objective is to reach agreement without sacrificing margin. The overriding secret is to negotiate in a way that leaves both parties satisfied with the final agreement.
We’d like a discount please
Don’t be a price crumbler. The buyer says, ‘We’d like a discount please.’ The seller responds, ‘OK, since you’re a new customer, as a gesture of goodwill we’ll give you 8 per cent.’
That’s not being a negotiator, that’s being a wimp! Anyone can give the profit margin away. Some people are so used to crumbling that they mention discount before they mention price. If you have a sales team make sure your sales training highlights the concept – ‘be proud of your price’.
Your first response to the buyer’s price challenge should be to defend your price persistently. Persuade the buyer that the benefits of the solution as quoted still justify acceptance.
Simply put, when the buyer says ‘You’ve got to be joking at that price’, your response should be ‘No, I’m not joking, look at what you get. You get this . . . and this . . . and this . . .’ What you are really saying is, ‘Mr Customer, your negotiating ploy isn’t working here – we’re not going to crumble on price.’
In many cases, solidly defending your price is enough to achieve agreement. But what if it’s not? What if the buyer persists in their demands and it becomes obvious that you are going to have to concede something?
The answer is at the heart of negotiation: don’t just give it away, trade it.
Also beware the common delusion that the buyer will recognise a good competitive offer and deal with it as such. Part of their satisfaction comes from playing the game well, from their enjoyment of the negotiation process. Here is a great technique for trading concessions.
If you … then we can …
This phrase is an excellent, tried-and-tested method of exploring negotiable areas and avoiding unilateral concessions.The concept is mutual movement. If you move towards us, then we can move towards you.
Here’s an example of how it works. The buyer says, ‘We’d like a discount please.’
You reply, ‘We can’t afford to discount as things stand, however, if you were to increase your order from three to four units, then we can agree a 5 per cent discount. How does that sound?’
You are effectively offering the buyer a concession without taking your hands off it. If you get nothing in return, you simply take it back.
To learn more about effective negotiation tactics that improve your margin, you can read our free resource ‘Six Tips to Help You Negotiate Effectively‘, or have a look at our Professional Negotiation Skills training course.