By John Holland, Chief Content Officer, CustomerCentric Selling®
Years ago I met someone that personified everything that was wrong with salespeople. Bill was aggressive, manipulative and a high pressure closer as you’d expect. One day he provided his definition of selling: “Saying yes to buyers until you have to say no.”
I suppose there are remnants of the sentiment that the customer is always right, but I feel:
Sellers that constantly say yes to buyers compromise their position of power as they become subordinates.
I was working with a company that offered month-to-month leases of furnished condos for people that had extended stays in various cities. They offered an attractive alternative to checking in and out of the same hotel week after week. The CEO and CFO were working on a major opportunity with a large consulting company. I was aware that negotiations had been ongoing for some time.
I was teaching a workshop for them and at a break stopped by to visit the CEO who was in a heated conversation with the CFO. As it turns out the prospect had been grinding them down on the original rates they had quoted.
Most buyers realize the longer negotiations go on, the more attractive the rates become.
The purpose of the meeting between the CEO and the CFO was to determine whether or not the transaction was going to be profitable! At that point coming in from the outside I told both executives that they had to say NO to any further price concessions. They put up some token resistance but finally got back to the prospect saying the price was firm and valid for one week.
The order closed the following day.
Chinese water torture is slowly and continuously dripping water on a person’s forehead to wear them down into providing information the torturer seeks. It seems that negotiations are often handled in a similar manner. Once sellers drop price, it becomes a slippery slope. Buyers conclude that further concessions are not only possible they become likely.
I call discounting “the gift that keeps on giving.” In discounting, to close prospects sellers set a precedent. Smart buyers will expect that future orders will be at the lower rate.
Here are five (5) tips for negotiations:
- When pressured for better pricing, ask if you are the vendor of choice and whether price is the only issue. If not, suggest waiting to discuss price if and when the buyer gets to that point.
- When negotiating and asked for lower pricing, be prepared with 2 or 3 ways to say no.
- If a buyer keeps asking, first get something from them that is worth something to you (increase the transaction size, serve as a reference, etc.).
- Offer a concession conditionally: “If you’ll do that for me then I’d be willing to…” In order to avoid ongoing discounting, I encourage you to offer somethingbesides a discount.
- Ask if the buyer can move forward. If the buyer says no, take everything off the table and suggest revisiting negotiations in a few days.
The key elements for sellers in negotiating is having buyers understand the value/payback of offerings and to offer concessions conditionally to avoid erosion over time as buyers try to grind you on price.
Remember: There is great power in using NO with buyers, so don’t be afraid to use it. (Keep the infographic below handy in case you need to refer to these tips in your next negotiation.)