7 Common Customer Negotiating Tactics
You can have the best product, with the lowest price and the best terms, and still your customers will ask for a better deal. Why? Because it usually works! Customers know that when they maneuver for a better deal, they usually get it. However, when you are prepared for their ploys, and respond appropriately, you’ll close more sales without giving away the store. Here are seven common negotiating tactics that customers get taught in negotiations school:
1. Budget limitation. “We’ve only got $10,000. You 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 budget earlier in the sales process. If the money wasn’t in the budget why have they spent all this time and energy talking to you?
2. Other options. “The quote from your competitor is for much less. If you don’t lower your price, I’ll have to buy from them.”
The best strategy for handling this ploy is to do a good job differentiating your offering earlier in the sales process. When both you and your buyer arrive at the negotiating table understanding why you are the best choice, then this ploy loses its effectiveness. The rule is to, as soon as possible, identify at least three reasons why each customer should buy from you. These reasons are your competitive advantage.
How do you identify your competitive advantage? Simple. Pay more attention to identifying each customer’s needs. When you a) understand your customers’ needs and, b) know how your offering is different from your competitors, you can prove to your customer why your solution is the best choice.
3. Foggy recall. “Didn’t you say installation was included in the purchase price? That’s what I told the committee. 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.
4. Good Guy/Bad Guy. One buyer tells you that the sale was a sure thing, then another buyer gets involved and says there’s no way the deal will get approved on the existing terms.
The best way to handle this is for you 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.
5. Wince. When a price is quoted, the buyer winces or acts angry. Your buyer may then become silent, waiting to see how you respond.
Again, if you see it as a tactic, it loses its effectiveness.
6. Bait and switch. The buyer requests a price on a large quantity of items, say 100 units. At the last-minute, the buyer decides to buy 25 units per year for the next four years. Of course, the buyer still expects the 100 unit price, as if all units had been bought at one time.
You can prevent this tactic in your sales proposal by being specific about the terms of your offer.
7. Nibbling. The buyer makes small additional requests, either before or after a deal was done, such as “by the way, if you can give us an extra 5 percent off, it would really help my boss out and it will give you an advantage on our next purchase. What do you say?”
The best strategy for handling nibbling is to keep your guard up.
How to Respond to a Negotiating Ploy
When faced with one of these tactics, or any unreasonable demand, first paraphrase the demand. For example, “I hear that you want a 35% discount. Is that correct?” Next, ask a question that requests your prospect to justify the demand. For example, “How did you arrive at that figure?” There may be several reasons how he arrived at the 35% figure, including a) your competitor offered that amount off, in which case you’ll want to show why your product is worth the extra investment, b) other vendors offer him between 10% and 35% discounts, so he figured he ask you for the most possible, c) his instructor in negotiations school told him to ask for more. Remember, many buyers challenge sellers for reasons unrelated to the transaction – admiration or a desire to win. If a buyer can’t justify a request, he probably wants a deal just for the sake of winning. He may modify his position when he realizes he can’t justify it.
Review this article again before your next major sales negotiation. Chances are you’ll close the sale without losing your shirt.
More on Negotiations:
1. Carefully consider the consequences of any concession you make. Today’s concession becomes tomorrow’s expectation.
2. Never give a concession without getting one in return. When presented with a demand, the best response is, “If I could do give you a 10% discount, would you be willing to purchase a second year of service coverage?”
3. Negotiate late in the sales process, not early. Some salespeople discount price as a means of building interest. The key point is that price is a meaningless topic until the customer’s needs and the value of fulfilling those needs has been established.
4. Be patient. Often, salespeople feel pressured to get the contract signed, as if the prospect has all the power. This is an invalid assumption. The prospect wouldn’t be negotiating with you if there was no desire to buy. So, relax and slow down!
Kevin Davis delivers dynamic seminars on consultative sales and sales management/leadership skills. His ideas are the result of almost 25 years of corporate sales, sales management and training experience. A former executive with Lanier Worldwide, Kevin is the author of the award-winning book, Getting Into Your Customer’s Head. For additional information, call 1-888-545-SELL, or visit his company’s website at http://www.toplineleadership.com