Negotiating a Sale Without Losing Your Shirt

 

You know how it is; you have knocked yourself out trying to land this account. You spent a lot of time researching the needs of this customer and put a lot of time into customizing a product package that would serve them well both now and well into the future. Along the way you have developed great rapport with your contacts at their firm, and you can tell they are very pleased about the deliverables you have created. Of course, you are ecstatic that all this hard work is about to pay off and you are finally about to sign the order. Your customer smiles as she reads over the agreement while fiddling with her pen. You can almost smell the commission check. Suddenly, the customer puts down the contract.

Customer: "You know, this is all great but the price is still a bit too high. Can you drop it by just another two percent? Two percent isn’t much, you know, but it will help me out."

Surprise! The customer is nibbling for just a little more?

You: (sensing the loss of the sale) "Yes? yes, of course! I can do that. Here? let me mark over that price and initial it."

Kudos to the customer! She just saved her company thousands of dollars. What you probably didn’t realize is that the customer still would’ve signed. You’ve just been "punked" by a common negotiation tactic. Yes, you got your sale, but you also left money on the table. How long can you continue to give money away and still stay in business?

This situation is a standard part of all sales negotiations. Customers nibble for extra concessions all the time. Ask for a little bit here or a little bit there. Add up those "little bits" and you will end up with a lot of lost revenue. This brings us to a key rule of sales negotiations:

NEVER MAKE A CONCESSION

WITHOUT RECEIVING A CONCESSION IN RETURN

The rule is very simple. If the customer asks for something more, that’s fine. But in order to get that something, they must be willing to give you something, too. Otherwise, customers will sense that you are desperate or are willing to give away the farm to sell the cow. Here are a few examples of how to counter the nibble and receive a concession in return.

Let’s begin with the scene we just described:

Customer: "You know, this is all great but the price is still a bit too high. Can you drop it by just another two percent? Two percent isn’t much, you know, but it will help me out."

To Which You Might Respond: "If you are willing to switch the terms from net 90 days to net 30 days, I am sure we can work something out."

See how simple and smooth that is? Don’t blink, don’t hesitate, and by all means, don’t give money away. Instead ask for a concession of your own. Here are a few more examples:

Scenario Two:

Customer: "I’ll have our accounting department contact you to arrange for payment. I’m assuming shipping is included in that price, correct?"

Sales Rep: "If your accounting department is willing to wire the payment to us by Friday, I can arrange for shipping to be included."

Scenario Three

Customer: "The Statement of Work looks perfect. We are getting a capacity planning study as part of this, right?"

Sales Rep: "If you would be willing to use us to deploy our products in the Tampa facility, we could arrange to provide a capacity planning study as part of the overall package."

I understand that, as a sales rep, your job is to close deals and, once you are at the signing stage, you are afraid to jeopardize the agreement by appearing uncooperative. For this reason, you just give in. Maybe you rationalize it by calling it a "down payment on future business;" maybe it is just an act of desperation because you are falling behind on quota for the quarter. What you need to understand is that your customer is counting on this pressure to shave money off of your profit and put into his pocket!

However, once you call his bluff by asking for a concession of your own (in a friendly, professional way, of course), the equilibrium of the negotiation is quickly reestablished. The customer will probably retract his demands, accept your offer or expand the negotiation to include other terms or issues. It is very rare that you will lose the deal by asking for a concession in return. As a matter of fact, you might end up with an even better deal as a result.

 

Re-Print Permission
This article may be reprinted in it's entirety if the following conditions are met:

1. The complete tag with the author's name and contact information is included immediately after the article.
2. A copy of the printed article is mailed to the author at 10101 SW Freeway Suite 630 Houston, Texas 77074 within 30 days of publication.
3. The article is presented in a positive light as part of an appropriate business related publication.

June Negotiation Quick Tip of the Month – Read Between the Lines

During a negotiation process, the other side may dig in on some item or issue that just won’t work for you. The more you discuss it, the more things grind to a halt. This is called taking a "position," and it is one of the most difficult obstacles to overcome in any negotiation. Before you can find a way to resolve this impasse, you will need to read between the lines. Shift your focus away from the "What," -- the specifics of the position itself -- and try to understand more about the "Why;" why is this position so important to them? Carefully, patiently, ask a few questions; see if you can get them to open up and explain why they value this particular item so much. You may discover an underlying need or fear that you didn’t know existed before, such as a concern that if they let go of this item their profitability in a certain market will be damaged going forward. Once you identify the underlying need hidden between the lines, you can begin to offer concessions to address those fears, and perhaps get things back on track again.