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Focus
on a Trade - Not a Discount
by: Kelley Robertson
Smart buyers
will always ask for a better price. Unfortunately, too many sales people
and business owners automatically think that reducing their price is the
most effective way to respond to this request.
However,
negotiating is not always about price. Although price is a factor in
virtually every sale it is not usually the primary or motivating factor.
Everything you say and do from the first contact with a prospect affects
the value of your product or service in their mind. That’s why I believe
it is important to look at the negotiating process differently in order to
achieve better results.
First of all,
invest time gathering information about your prospective customer, his
needs, situation, and buying motives. The more information you have the
more prepared you will be to negotiate later in the sales process.
Regardless of what you sell, and to whom, information will help you
negotiate more effectively. Many of my clients tell me that their
customers care only about price, but upon further exploration, other
issues usually arise. Uncovering the key issues your customer is facing is
critical to your negotiating success.
The second
most important step is to establish the value of your product or service
to your customer. Positioning is an important factor and will affect the
price your customer is willing to pay. What pain does your product or
service eliminate? How does it solve a problem they are experiencing? How
do your products and service differ from your competitors? Most of my
clients sell premium products at a premium price. In exchange, their
customers receive better than average service, faster response times, or
higher quality products. What is your leverage and how can you use it to
increase the value of what you sell?
You have
executed the above steps but price is still an issue for your customer.
What do you do now? Instead of conceding to their request and giving them
a discount, focus on creating a trade. This means you should ask for
something in exchange for making a concession. What can you trade or ask
for? Almost anything!
A longer
contract, a bigger order, more add-on items, an introduction to another
key decision-maker in the company, access to their mailing list or client
database, or payment terms. You can negotiate for products and services
that the other person or company offers such as consulting, office
equipment, computers, furniture, business services, etc. I once worked for
an electronics company and my boss offered a big-screen as payment for
services to a potential vendor. I was shocked when the vendor eagerly
accepted because I always had the impression that business people focused
strictly on cash.
Here are a
few ways you can effectively position this request.
“If I could
do that price for you would you be willing to extend the length of the
contract for an additional three months?”
“If I could
work that out would you be prepared to give me advertising space?”
“The only way
I could give you that is if you add one more line of products.”
“Let’s put
that aside for the time being. Would you be able to give a similar amount
of…in exchange for that concession?”
The key here
is to think outside the box and explore other options available to you.
I recall
speaking to a prospective client about a training workshop and was asked
to make a concession that amounted to a fifteen percent discount. I was
not comfortable with this so I asked my prospect if he would be willing to
give me a comparable amount of his product instead. He did not have the
authority to make such a decision but spoke to someone who did. My request
was eventually denied so my client conceded to my initial offer.
Another
effective approach is to make the concession but take something away from
the initial offer. For example, you could say, “I can do that. However, I
will have to charge you for…” or “I can do that. Do you want free delivery
or after-hours service taken out of the contract?”
Most people
will expect you to keep all the conditions “as is” but they will want the
lower price. By demonstrating how much the concession is worth you can
reduce the effectiveness of their request.
Finally,
another strategy is to always ask for something in return for making a
concession even if you don’t need it. I have been surprised how many times
I have gotten something extra simply by asking. Plus, it often prevents
the other person from asking for an additional concession because they
know you will ask for something in return.
Remember,
your ultimate goal is to give away as little as possible in order to close
the sale. Every time you discount your product or service you discount
yourself and eat away your profits.
Kelley
Robertson, President of the Robertson Training Group, is a professional
speaker and trainer on sales and employee motivation. He is also the
author of “Stop, Ask & Listen – Proven Sales Techniques to Turn
Browsers into Buyers.” Receive a FREE copy of “100 Ways to Increase Your
Sales” by subscribing to his 59-Second Tip, a free weekly e-zine at
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