The Secret to Negotiating in Sales
The Secret to Negotiating in Sales
When customers are hard-nosed about getting a lower price, 80% of the time it is because they do not appreciate the value of your product and have not made a commitment to buy. Take a step back and sell benefits and solutions again;
Customer; “You’ve got to do better than that on the price”.
Sales Person: “I’m glad you mentioned price, Ms.Customer, let’s take another look at how our product is going to (save you money/make you money/increase productivity).”
Get a clear agreement from your customer that your solution works before getting into price.
Customer; “ OK, let’s talk price.”
Sales Person: “ Sure. Just so that I’m clear before we move on – we are in agreement that our product – with the modifications we discussed - is exactly what you are looking for, right?”
Customer; “Well, I don’t know about that, I’ve still got to run this by my boss…”
2. Calculate the cost-benefit for the customer.
Never take for granted that customers understand how much money your solution saves them, or what return they can expect on their investment.
Customer: “I need at least a 20% discount”.
Sales person: “Why 20%?”
Customer: “There’s no way this is worth the price you are estimating.”
Sales Person: “That depends on what return you expect from the investment. What do usually consider a good return – 3 times, 10 times? …..Earlier we estimated that you could get an additional 10% more business from your customers with our product. I figured that translates into an additional $5 million, and that’s just on your major accounts. Not a bad return on a $100,000 investment don’t you think?”
3. Know your bottom-line
Obviously you know the limits of your ability to discount. But do you also know how much room you have to maneuver with delivery schedules, product quantities or quality, and payment terms? If you don’t know the bottom line on all these variables, you might lose the deal, or get the deal but lose the profit margin. Knowing your bottom line also gives you more power, and more confidence in negotiating.
4. Determine what you want from this negotiation.
It is not always the same objective. Sometimes I may want to “buy” my way into the account by delivering at cost, because it is a cornerstone customer. Other times, I might want to demonstrate to the buyer that the days of “off the rate-card pricing” are over. Or because there is a large backlog of orders, I must hold the line on delivery times, but can give a little on payment terms.
5. Calculate the most likely outcome.
Know the answers to these questions. What is my customer’s position (Vs. real need)?
What negotiating tactics might my customer use?
How has my customer negotiated in the past?
6. Identify your “deal sweeteners”.
These are one-time-only incentives. They are not standard discounts, “ rush” services or other negotiables. They are “perks’ or incentives that you use to close the deal NOW. You bring them out at the last minute and only if the deal is at risk. Do not include them as part of a “package”. Do not offer them if the deal is going to close anyway.
Customer; “I appreciate your flexibility on delivery, and the extended warranty, too – I’ll think it over this weekend and let you know Monday.”
Sales Person: “I’d really like to wrap this up before then; I’ll tell you what, you give me the go-ahead now, and I’ll throw in a couple of tickets to the Bills game Sunday for you and your family. How about it?”
Customer; “Can I take a rain check on the Sunday game? Actually, can you guys get your hands on a couple of tickets to the ballet next month?
7. Be fully aware of any resource, time, or money constraints your company may be under.
Maybe production is slow, you have a surplus of product, and deliveries are running behind, cash flow is critical, it’s the end of the month and you need just one more order. This information is critical in putting together an attractive package for the customer, and one that helps solve a problem on your side.
Sample Negotiables
Discounts
Payment terms
Payment methods
Financing
Bonuses
Cancellation penalties
Resources
Quality/performance standards
Information
Warranties
Access to experts
Additional customer support
Seminars/Workshops
Presentations
Training
Delivery timetable
Delivery destination
Delivery method
Packaging
Insurance
Licenses
Customization
Private label
The Secret to Negotiating in Sales - To learn more about this author, visit John Brennan's Website.
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1. First, sell your customer on the value of your proposal.
When customers are hard-nosed about getting a lower price, 80% of the time it is because they do not appreciate the value of your product and have not made a commitment to buy. Take a step back and sell benefits and solutions again;
Customer; “You’ve got to do better than that on the price”.
Sales Person: “I’m glad you mentioned price, Ms.Customer, let’s take another look at how our product is going to (save you money/make you money/increase productivity).”
Get a clear agreement from your customer that your solution works before getting into price.
Customer; “ OK, let’s talk price.”
Sales Person: “ Sure. Just so that I’m clear before we move on – we are in agreement that our product – with the modifications we discussed - is exactly what you are looking for, right?”
Customer; “Well, I don’t know about that, I’ve still got to run this by my boss…”
2. Calculate the cost-benefit for the customer.
Never take for granted that customers understand how much money your solution saves them, or what return they can expect on their investment.
Customer: “I need at least a 20% discount”.
Sales person: “Why 20%?”
Customer: “There’s no way this is worth the price you are estimating.”
Sales Person: “That depends on what return you expect from the investment. What do usually consider a good return – 3 times, 10 times? …..Earlier we estimated that you could get an additional 10% more business from your customers with our product. I figured that translates into an additional $5 million, and that’s just on your major accounts. Not a bad return on a $100,000 investment don’t you think?”
3. Know your bottom-line
Obviously you know the limits of your ability to discount. But do you also know how much room you have to maneuver with delivery schedules, product quantities or quality, and payment terms? If you don’t know the bottom line on all these variables, you might lose the deal, or get the deal but lose the profit margin. Knowing your bottom line also gives you more power, and more confidence in negotiating.
4. Determine what you want from this negotiation.
It is not always the same objective. Sometimes I may want to “buy” my way into the account by delivering at cost, because it is a cornerstone customer. Other times, I might want to demonstrate to the buyer that the days of “off the rate-card pricing” are over. Or because there is a large backlog of orders, I must hold the line on delivery times, but can give a little on payment terms.
5. Calculate the most likely outcome.
Know the answers to these questions. What is my customer’s position (Vs. real need)?
What negotiating tactics might my customer use?
How has my customer negotiated in the past?
6. Identify your “deal sweeteners”.
These are one-time-only incentives. They are not standard discounts, “ rush” services or other negotiables. They are “perks’ or incentives that you use to close the deal NOW. You bring them out at the last minute and only if the deal is at risk. Do not include them as part of a “package”. Do not offer them if the deal is going to close anyway.
Customer; “I appreciate your flexibility on delivery, and the extended warranty, too – I’ll think it over this weekend and let you know Monday.”
Sales Person: “I’d really like to wrap this up before then; I’ll tell you what, you give me the go-ahead now, and I’ll throw in a couple of tickets to the Bills game Sunday for you and your family. How about it?”
Customer; “Can I take a rain check on the Sunday game? Actually, can you guys get your hands on a couple of tickets to the ballet next month?
7. Be fully aware of any resource, time, or money constraints your company may be under.
Maybe production is slow, you have a surplus of product, and deliveries are running behind, cash flow is critical, it’s the end of the month and you need just one more order. This information is critical in putting together an attractive package for the customer, and one that helps solve a problem on your side.
Sample Negotiables
Discounts
Payment terms
Payment methods
Financing
Bonuses
Cancellation penalties
Resources
Quality/performance standards
Information
Warranties
Access to experts
Additional customer support
Seminars/Workshops
Presentations
Training
Delivery timetable
Delivery destination
Delivery method
Packaging
Insurance
Licenses
Customization
Private label
The Secret to Negotiating in Sales - To learn more about this author, visit John Brennan's Website.
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David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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George LudwigGeorge Ludwig is a recognized authority on sales strategy and peak performance psychology. An international speaker, trainer, and corporate consultant, he helps clients like Johnson & Johnson, Abbott Laboratories, Northwestern Mutual, CIGNA, and numerous others improve sales force effectiveness and performance. Though it's George's strategies and processes that help corporations increase productivity and performance, it's his tremendous energy and dynamism that spark the transformation. Again and again, clients remark on his amazing ability to unleash human capacity and inspire men and women to break out of their comfort zones. The result is a whole new type of salesperson. His customized presentations teach achievers to make stunning advances in their lives. From helping salespeople realize cherished dreams to helping corporations exponentially accelerate revenue streams, George Ludwig leaves audiences and individuals empowered, emboldened, and clamoring for more. George is the best-selling author of Power Selling: Seven Strategies for Cracking the Sales Code and Wise Moves: 60 Quick Tips to Improve Your Position in Life & Business. - Visit George Ludwig's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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