Just when you thought it safe to go back into the water, along comes another “shark” known as the negotiating prospect.
Negotiating is typically associated with commercial clients or in a business-to-business relationship, but don’t be lured into thinking it won’t happen at the kitchen table.
Negotiating prospects happens because either qualifying wasn’t handled properly, or there were problems with the presentation, overcoming of objections, or the final close. Thus the prospect saw an opening to get another need met at your expense.
Ultimately, you want to avoid negotiating at all. But it’s going to happen.
Before you dive into your presentation and close, be prepared to deal with the sharks. They are lurking deep and constantly roving for new prey.
If customers want to look at our tactics, we should look at theirs. By understanding certain ploys and being prepared to address them, you can continue to focus on working with the customer to develop a mutually beneficial solution.
The 7 Most Common Customer Negotiating Tactics
Budget limitation. "We've only got $5,000. You’re going to have to come in under that figure to earn our business.”
The best strategy for handling this tactic is to find out about their budget earlier in the sales process. If the money wasn't in the budget, why have they spent the time and energy talking to you?
Other options. "The quote from your competitor is for much less. If you don't lower your price, I'll buy from them.”
If you did a good job in the competitive analysis stage of the sale, your prospect has already recognized your unique capabilities because they’re embedded in his must-have and nice-to-have criteria. To win your customer's business without chopping price, justify why you are worth it.
Have at least three reasons why your customer should buy from you.
Foggy recall. “Didn't you say the extra ductwork was included in the purchase price? That's what I told my husband. There's no way I can get any more money for this.”
The best way to handle foggy recall is to prevent it in advance by putting everything in writing. Don't trust memory, either yours or your customers, on important terms and conditions.
Good Guy/Bad Guy. One spouse tells you the sale was a sure thing, then the other spouse gets involved and says there’s no way the deal will get approved with the existing terms.
The best way to handle this is for you, The Negotiator, to see it as a tactic designed to make you feel powerless. If your customer is going through all this effort, you know they are desperate to do a deal with you.
Wince. When a price is quoted, the prospect winces or acts angry. Your prospect may then become silent, waiting to see how you’ll respond.
Again, see it as a tactic and it loses its effectiveness.
Bait and switch. The prospect requests a price on a large quantity of items. At the last-minute, the prospect decides to buy a lesser amount. Of course, the prospect still expects the large quantity volume discounted price.
Alternatively, your prospect asks, “If I buy your Supreme system, what kind of deal can you work for me?” knowing that not many people buy that system due to its price and that you would love to sell such a large ticket item.
You respond by offering a 15% discount if they sign today, and after much “grunting and groaning” the prospect says they’ll take your Premium (the next lower grade system) if you’ll extend them the same 15% discount.
You can prevent this tactic in your sales proposal by being specific about the terms of your offer or never negotiating your price to start. Price negotiations and discounts will always come back to haunt you, and by doing so you treat your product as a commodity, and your prices lose integrity and you lose credibility.
Nibbling. I hate this one. The prospect makes small additional requests, either before or after a deal was done, such as “By the way, if you can go ahead and fix that ductwork we talked about at no additional charge, we would really appreciate it. And, if you can throw in that humidifier I am certain I can get you a few referrals on my street and you can use me as a reference. What do you say?”
The best strategy for handling nibbling is to keep your guard up. When you hear the first one or two sneak in, say, “I can try to get that for you, but that may affect the price. Let me make a note of that.”
Or say, “If I can get the <singular request> for you, do you want to go ahead and schedule installation?” This puts an end to the nibbling and the beginning of the close.
Negotiating power plays a major role in every type of negotiation. Both you and the prospect have power in a negotiation. Power is each side's perception of its strength or weakness in comparison to the other.
This perception of power affects the ability of each party to achieve its own goals. The more negotiating power you have in comparison to that of your prospect, the fewer concessions you'll have to make.
Conversely, do a better job of qualifying your prospect and you’ll eliminate the need to negotiate or make concessions after the fact since all negotiations and concessions are handled before a presentation or price is given.
In the next issue, Adams Hudson continues this discussion by addressing the three biggest negotiation mistakes and the top 10 tips for successful negotiation.
Adams Hudson is president of Hudson, Ink, a creative marketing firm for contractors. Readers can get a free marketing newsletter and a free 16-page report called “Get More Leads in Less Time” by faxing their letterhead with the request to 334-262-1115 or emailing to [email protected].You can also call Hudson, Ink at 1-800-489-9099 for help or visit www.hudsonink.com for other free marketing articles and reports.