Sales Blog with Sales Tips

The most trustworthy phrase in the English language is, “Everything is negotiable.” When our customers push us for better pricing, or some other concession, we can’t condemn them. Horse-trading has been around since Adam and Eve asked God if they could get a “do over.” We all know the answer to that one.

The Customer’s Perspective
When customers are negotiating with us, it’s how we respond to their haggling that can make all the difference. We forget the following when negotiating:

• Most customers have only primitive negotiating skills, at best.
• They’re just throwing stuff “out there” to see if we’ll bite on some of it.
• Their company requires them to ask for certain concessions.
• They intend to buy from us, even if we don’t give them a green light on their last minute requests.

In short, they think, “Why not ask? We have nothing to lose.” And they’re right.

Wrong Way Example
Customer: “Debbie, we’ve been customers of yours for three years now. We’d like to get a 20% price reduction on future purchases.”

Wrong Way Salesperson: “You know I’m already giving you the best price I can.”

This customer is now quite unhappy with this salesperson. Why? Because the customer doesn’t feel heard. They feel “blown off.”

Right Way Example
Customer: “Debbie, we’ve been customers of yours for three years now. We’d like to get a 20% price reduction on future purchases.”

Right Way Salesperson: “You know that I am constantly working to find ways to secure more favorable pricing for you when possible. I think you would agree that our relationship is good and I’ve been a reliable and high quality supplier for you. I don’t know if I can reduce your price by 20%, but I can reduce your costs on all of your purchases if you source more of your fluid power products from me. Can we talk about that possibility?”

Why We Like The Right Way Sales Professional’s Response
“Right Way” has many things going for her. She provides numerous sales tips for us in her response.

• She acknowledges the customer’s attempt at negotiation. The customer feels heard.
• She reminds the customer of the value she brings to the table.
• She agrees to some kind of price reduction, but the customer will have to earn it.
• Finally, she puts the ball back in the customer’s court.

Handling negotiation in this manner does not offend customers. It recognizes the customer’s right to negotiate while simultaneously treating them with respect. If we do it right, we avoid irritating the customer and set ourselves up for additional business.

Sales Blog Epilogue
Our strongest and most powerful tool as a sales professional is our tongue. It is a rudder that steers our relationships right into icebergs or safely around them. How we craft our responses to customer negotiation can either erode a long-term customer relationship or create new opportunities and strengthen partnerships.

Further sales blog reading:
A Classic Buyers’ Discounting Tactic
What To Do When You’re In A Weak Negotiating Position

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>©2009 Scott R. Sheaffer

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It’s funny to me how many people think that it’s the sales professionals who are playing the games in the sales process. I believe that buyers play at least as many games as sellers. I’m going to address one of their most common below.

You’ve most likely been a victim of this little game many times. In retrospect, I know I certainly have.

The Game
I know a Purchasing Director at a large company. He has a staff of buyers who collectively conduct hundreds of buying transactions per week.

For all purchases above a certain dollar amount, he requires buyers to ask for a 5% discount at the very end of the negotiation process.

He estimates that 70% of the sellers give in to this request. Do the math. For each $100 his company spends, they realize, on average, a $3.50 savings. Multiply that over hundreds of millions of dollars and suddenly the Purchasing Director looks like a hero.

Why It Works
This is negotiation 101 stuff. Once sales professionals have invested time and resources in landing a sale, buyers know the selling company is frequently more willing to be flexible on pricing. The purchasing professional is counting on your thinking, “After this much time, I’d hate to lose this sale for just a 5% discount.”

Notice that the purchasers are asking for a 5% discount. They fully intend to buy the products and services, even if the discount is not given. They are bluffing. They feel there is no harm in asking. And they’re right.

Sales Tips For Handling This Tactic
If a buyer wants a last minute price concession, you can be 99% sure it’s a bluff. Remember, they’ve invested time and resources in you too.  Use one of these sales tips the next time you run into this negotiating tactic:

Your best technique is to just say no. The statistics are on your side, by the way.

Agree to the discount, but inform the purchaser that you won’t be able to deliver the products/services that had originally been discussed. This is called decoy marketing (see Further reading below).

Let the buyer know your price will soon be going up and he or she is, in effect, getting a discount by your excluding them from the price increase. Take the offensive.

Inform the buyer (after you’ve made some important looking phone calls to your sales manager) that you are in a position to give them the discount if they add an extended service plan, agree to exclusively buy a certain product from you, etc. Always make customers earn a discount.

Remind the buyer that you started negotiating with a highly discounted price. There is no more room. They’ve hit your wall.

Tell the buyer that as much as you would like his or her business, your company has never given discounts and isn’t planning to in the future. Then ask for the PO number.

Sales Blog Epilogue
I can easily steer you in the right direction on this buying tactic. If a customer asks for an 11th hour discount, say no. The odds are with you.

Further reading:

• You May Be Blind To This Customer Negotiating Tactic
• What To Do When You’re In A Weak Negotiating Position
• What is Decoy Marketing?

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>©2009 Scott R. Sheaffer

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We feel that buyers have tremendous pricing leverage over us right now because of the recession. In most cases, I believe we give them this power because we don’t view our pricing, and all of its ramifications, from the purchaser’s perspective.

Budget And Price
After many years of selling, I learned that “price” equates to what a product/service costs and “customer budget” simply means what the prospect or customer is willing to pay for it. This is nothing more than basic price negotiation. If our conversations with customers don’t get past this, are we really selling? No.

There Has To Be A Better Way
This kind of one-dimensional price-centric dialogue puts us in a weak negotiating position. There is another variable that is ultimately more important to the customer than price – whether they know it or not. It’s called ROI (Return on Investment).

When we fail to introduce ROI into the selling process, we’ve inadvertently made the purchase price the number one issue. This is not the way to sell in 2009, especially if you’re selling a product that includes a service.

ROI 101
ROI allows the customer to have a 360° view of the costs versus benefits of purchasing your products and services. Your initial purchase price is only one of many variables.

Every product/service will have different variables, but the high level ROI formula is:

ROI% = (Benefits of your product/service – Total Cost of Ownership) ÷ Total Cost of Ownership

Your company should have a template or software wizard tool that will assist you in gathering and presenting a legitimate ROI to your customers. If you are selling a product/service combination, this is an especially important tool to have.

Sales Tips Wrap Up
By doing even a simple ROI assessment for your customer, it will require that you get involved in the operational and financial aspects of their business. This is a good thing.

This will definitely take a greater selling effort, but it is a game changer because you have moved well beyond just talking about price with your customer. You’ll better understand your customer’s business while simultaneously justifying your pricing.

Further reading:

• Rise Above Commodity Style Selling [Sales tips to keep you from becoming a commodity salesperson, regardless of what you're selling.]
• Training Your Customer, Part 1 of 2 [Sales blog post on how to break out of the discounting merry-go-round.]

>You can automatically receive this Sales Blog by Scott R. Sheaffer >by email< or >by RSS<.
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>©2009 Scott R. Sheaffer

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I have a good friend we’ll call “Jim” who has correctly not chosen a career in sales. You know the story here.  He’s smarter than Einstein and the most gifted man on earth in other areas, but he couldn’t sell a life jacket to a drowning man. Seriously.

There have been a few times in my life when I have counseled individuals to steer clear of a sales career. Jim and I had that discussion many years ago.

He Asks For My Help
He recently needed to sell his 1996 BMW 328i and had listed it on Craigslist. Someone had contacted him and was coming over to look at it. Poor Jim was a nervous wreck about the idea of having to convince someone to buy something from him. He was terrified of having to sell something.  The car wasn’t perfect either; it had problems.

The Prospect Arrives
I drove over to Jim’s house and instructed him to “be invisible.” I told him I would do all the talking to the prospect. You could sense his relief with this arrangement.

Before the prospect arrived, I asked Jim to tell me all the good, bad and ugly about the car. I needed to be prepared.

Jim Thinks He May Have Made a Big Mistake
After meeting the prospect, and much to Jim’s horror, I immediately started showing the prospect some of the obvious things that were wrong with the car. Jim just knew he had really screwed up by asking me to help.

I sold the car for Jim within about 30 minutes and only had to discount $100 off his asking price. The deal went down quickly and easily. Jim didn’t understand why my tactic of revealing the car’s weaknesses worked. It was counterintuitive to him.

Sales Tips For Jim
I explained to Jim that much of sales is counterintuitive. We don’t always have to be in a position of convincing or selling. By revealing the car’s weaknesses, I enhanced my credibility and communication with the prospect.

I merely pointed out the problems with the car that were conspicuous and indisputable. The prospect was going to see them anyway. By doing so, I didn’t come across as “salesy” which can instantly cause prospects to disengage.

The buyer knew he wasn’t getting a new car and my pointing out the car’s problems allowed both of us to get into agreement about the “product” right from the beginning. This immediately increased my believability with him.

After pointing out the third defect on the car I noticed the prospect was losing interest in what was wrong with the car. This allowed me to transition to what was right with the car. In effect, I had anticipated his objections and prevented further ones. Revealing limitations before the prospect does can be a powerful selling tool.  Prospects are aware that all products, services and companies have issues – these revelations will not be a shock to them.

Sales Is Counterintuitive
Being forthright, transparent and authentic is exactly what prospects don’t expect. This gets their attention and builds their trust in us right from the start.

Further reading:

• Selling In A Recession, The New Authenticity

>You can automatically receive this Sales Blog >by email< or >by RSS<.
>Follow >Scott R. Sheaffer< on Facebook, LinkedIn or Twitter.
>©2009 Scott R. Sheaffer

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Are you satisfied with your sales results?
Kay Ray can show you and your team how to reach
your objectives and unlock the door to success.
thekayray.com