Through traditional sales negotiation training, salespeople are taught to “power up”, or gain the upper hand in a negotiation. However, it is no longer as successful as it once was due to the advanced knowledge of customers derived from the internet.
Customers currently hold all the sway. They enter discussions prepared to seek discounts and leave if they do not receive them. How, then, can you make the most of your weak negotiating position while maintaining your value? Introducing unanticipated needs such as challenges, shortcomings, or missed opportunities that the prospect is unaware of but is impeding their most important business goals.
This approach creates price uncertainty by disrupting the perceived value of your solution. In other words, you increase your value in your buyer’s minds by bringing to light insights and opportunities that are important but were not considered.
Although there are usually opportunities to raise prices, this is a limited perspective of the benefits of changing a company’s pricing strategy. Growing a firm by reactivating inactive clients demands significant creativity and frequently leads to bigger opportunities. Contrary to popular belief, this frequently calls for selective discounts or lower pricing rather than higher ones.
It would always be convenient if you could identify consumers who are price-sensitive and covertly provide them with discounts instead of raising rates for customers who are ready to pay full price. Individual negotiation aims to do precisely this.
Evaluation
When insurance salesmen (commonly known in the sales fraternity as one of the most effective) ask you where you live, what vehicles you like, and so forth, they are not chit-chatting; they are evaluating you and trying to figure out how much you are willing to spend. This allows them to charge a range of prices for the same product.
The majority of goods and services cannot be successfully marketed in this manner, as it takes a comparatively long time and effort to negotiate prices with each individual customer. However, the good news is that, in retail trade, a number of strategies can be applied to provide precisely targeted discounts.
Using obstacles to pinpoint clients who are price sensitive is a crucial pricing approach. While everyone prefers to pay less, there are barriers that separate genuine price-sensitive buyers from the pretenders. For instance, customers who make the effort to look for, cut, and use coupons are proving they are discount-worthy by overcoming a number of barriers.
The ultimate goal of every salesperson is to win a sale. However, the major obstacle almost all of them face is the price, which can often become the deciding factor. At this point, usually, even trained salesmen attempt to step back due to the fear of rejection and losing a deal.
One way of dealing with this fear is to lower your price. A better way is to overcome your fear by applying assertive negotiation techniques. When the salesman is on the right track, both the customer and the salesman feel a sense of satisfaction.
Ultimately, the confidence of the salesman in himself and the loyalty to the product they sell can bring a successful conclusion.
Let us discuss some important elements in sales negotiations that help salesmen negotiate prices in a crucial closing situation. Always keep in mind that your product also deserves reasonable compensation from the buyer. Hence, you have to convince your buyer that your product or service is worth negotiating for. The operative principle here is value. No buyer will resent you for a price that is reasonable relative to the perceived value of the product or service.
Discount
In a sales negotiation, it is important for a salesman not to sell himself short of the value the product deserves. First and foremost, the salesman himself must believe that his product is worth the price it is being sold at. Customers will pick up on the lack of assurance in the salesman’s goods or services.
I find it fascinating when certain salespeople can secure orders at a premium while others cannot, seem to survive without offering a discount. This means that if the negotiator is efficient in creating price uncertainties, the product he sells gets the best price.
In normal circumstances, salesmen fear walking away from a prospect. They know the struggle to find another one. Nevertheless, a professional salesman follows “Brodow’s Law of Negotiation,” where negotiation expert Ed Brodow explains that because the salesperson is too anxious to close a sale, he loses his ability to say no if the buyer makes unreasonable demands.
The salient fact is that the salesperson, as well as the buyer, must have equally satisfactory outcomes in a negotiation. Hence, the salesperson must be in a position to walk away even if he loses. In my experience, however, most often, your saying “no” confidently makes the buyer soften his stance. Smart salespeople make this theory their greatest bargaining chip in sales negotiations.
When the salespeople of an organisation are given a price for a product or service, in turn, they have to reasonably justify that price to their buyers. Only if your price justification is acceptable to the prospect, will he or she make the buying decision. This is the universal rule. In order to be justified, you must offer price legitimacy.
You must say that your price is reasonable in the market and must match the prevailing market price. Unless you can prove it, you must not make remarks like “the lowest, best, or highest quality product” in the market. There are plenty of other ways to imply such points without making the customers deny them.
You must focus more on the value of the product or service rather than the price. Although the salesperson may sell features or benefits, the buying decision is often based on the actual value as perceived by the buyer.
“Saving face”
The salesperson should know when to negotiate the price. There are, of course, exceptions. If it is in your best interest, you should give yourself the chance to negotiate a cheaper price. The salesman can make a “saving face” concept in these circumstances. In other words, you must not reduce your price until you can preserve the credibility of your fundamental pricing structure.
You might consider offering a discount if the customer will consider multiple purchases, repeat patronage, or any other justifiable reason. Unless there is a reasonable explanation in the buyer’s mind, you may become another typical “salesman” who tries to dump anything on him. If this does not work, it is better to apply the “Law of Brodow” and take a chance by walking away.
Remember, if you appear too eager to close, the buyer may presume that the product is worth less than you try to imply. Hence, the salesperson has to make the customer work for the concession and make him or her feel that they deserve such concessions. If you give in too fast, the value of the concession can diminish in the customer’s own mind.
Finally, it is crucially important, as a professional salesperson, that you qualify the prospects for price concessions at the beginning of the conversation.
If not, you may be wasting your valuable time and energy on a wild goose chase. Hence, inquiring initially about the purchasing budget or the product range the buyer is considering is important to work on price uncertainties.