Want to know the top tip on suggesting a price during sales negotiations? Be precise.
As you know from your sales negotiation training, the time inevitably comes when you must share the price of your offering. Hopefully you have already persuaded your client of the value of your service compared to the alternatives but still, putting forth an actual price can be a sensitive and important moment.
There were probably many crunched up notes as you struggled to balance the cost to you, the value to the customer and include a number that would make your time and effort worthwhile. Our advice? Do not offer a round figure. Here is why.
Our sales negotiation training experience in role plays and research from the Harvard Business School shows that precise numbers are much more believable and acceptable. Social psychology suggests that market outcomes improve when prices are not rounded off.
Just think of your own reaction to buying a car at $40,000 rather than $41,250. Even though the first price is cheaper, the second price implies that someone went through careful analysis to come up with the figures. Social psychologists say that we just naturally assume that there is more logic and thoughtful calculations behind a specific number. And, vice versa, we assume that a ballpark figure is only a guess based on vague and perhaps inaccurate knowledge.
This holds true whenever you cite numbers. How about when you agree to reconvene in a month versus in 30 days? The specific number of days shows true determination to meet. You are likely to pull out your calendar and mark just when that meeting will take place. On the other hand, a “month” is likely to become a month-and-a-half or even two months or more.
People simply attach more credence to precision. Exact numbers in a price imply that there is a lot of data to back it up. Specific timing implies that you will plan around a certain date. Be smart when you quote a price…be precise and your target will be more receptive.
Sales negotiation training programs focus on how to stay engaged in the negotiation and keep things moving forward. But there are times when it’s smart to step away for a bit and to take a break from a difficult sales negotiation.
Sales negotiations can be exhausting. They require absolute focus. You need to be watching the other side’s body language and to listen carefully for any shifts in position. You need to be clear on what you need and what you want out of the discussion to feel satisfied with the negotiated result. And yet you need to be cognizant of what would be an agreeable outcome for the person on the other side of the negotiation. Your language has to be conciliatory and tactful while still showing strength and purpose. It’s a balancing act that takes a lot of concentration and energy. Sometimes, you just need to step aside for a bit and recoup. This is a good time for a break…whether for 20 minutes or a day or two. Likely, the other side will welcome a chance, too, to let things rest for a while.
Another reason to take a break from a sales negotiation can be when you are blind-sided by a new demand or surprising new information. You may need to take time to consider this unexpected development and gather with colleagues to figure out how this affects the conversation going forward.
A third reason is when your emotions are getting the better of you. There is nothing to be gained, and much to lose, if show your anger. You need to calm down. Losing your temper would destroy all the negotiation progress you have made so far in coming to a satisfactory agreement. You need to find a way to get the sales negotiations back on track. Maybe you misunderstood the last comment. Maybe the other side was just tossing out an option that they knew would not work but might make their next idea less objectionable. Maybe you need to re-focus the sales negotiations on the common goal that put you across the same table in the first place. Whatever the reason, suggest a timely break and agree upon when you will reconvene.
According to sales negotiation training participants, some sales negotiations move along smoothly; others are lengthy and somewhat confrontational. Don’t forget a useful sales negotiations tool in dealing with those problematic negotiations…taking a smart break. It’s a situation where you are better off going slow to go fast and then reach a successful conclusion.
Download the 2 Most Common Sales Negotiation Tactics to Prepare For
Sales negotiation training experts have always considered it risky to make the first offer in a sales negotiation.
The worry was that if you showed your cards too early, you might be underselling your solution and would not be able to effectively renegotiate your position. Or you had to think about the risk of proposing a deal that was so far from what your buyer expected that they might just up and leave. Traditionalists in sales negotiation training recommended you keep your cards close to your chest and let the other person make the first move. But experts are re-thinking that advice.
Recent research has shown that there are many times when going first in a sales negotiation can be advantageous. It sets the stage for subsequent negotiations and, when set high, can keep the offers high as well. You give yourself some negotiating room and the buyer begins from the top. Just think about buying a house. The seller fixes the price to start. They want more than most buyers are willing to pay. But their starting point keeps bids higher than if a seller were to establish the price and put in a “low-ball” starting bid.
When is it unwise to go first in the sales negotiation process? When you don’t know enough about how the buyer values your offer. You may seriously underprice your offering and leave value on the table.
To be smart as you negotiate an important sales deal, learn as much as you can about what your solution can do for the customer and their business. Why do they need it and what are the consequences to them if they don’t buy? The more information you have, the better. If, for instance, you are recommending a sales negotiation training program and follow-up coaching process that is guaranteed to boost margins by 20%, figure out how much that can mean to your customer and set your price accordingly. When you sell value rather than price, you avoid tangling over the cost and, instead, spend more time on the specifics of the overall solution.
When you don’t know enough about the customer and their priorities, invite them to make the first offer. However, when you know what would be a reasonable price to pay for the value you provide, it is smart for you to quote numbers first.
Every sales negotiation can be stymied along the way by customer objections. The trick is not to be tripped up by these sales hurdles but to overcome them and continue on toward a mutually beneficial agreement.
No sales negotiation training program worth its salt would be complete without a section on handling buyer objections effectively. At some point, your customer, their boss, another stakeholder, or their procurement department will voice a concern that stands in the way of gaining a common accord. It could be around price; it could be around timing; it could be preference for another approach or provider; or it could be more substantive around the solution’s real effectiveness at solving the core issue. Whatever the objection, it needs to be addressed as part of the sales negotiation process before a buying decision is made.
We believe that the simpler the process, the more likely it is to be remembered and put into practice. Here is a three-step sales negotiation methodology that can be followed to address any obstacle that is thrown in your path.
- Stop.When an objection is raised during the sales process, you need to stop and acknowledge it. You may be tempted to ignore it, but it rarely goes away. If you have a simple reply that addresses the problem, handle it on the spot. If it requires more thought and some research, say so and commit to reporting back on the issue. And then do so.
- Look.Explore the issue further to make sure you understand what is behind the objection. Is it simply price, for instance, or is your customer looking for an easy excuse to disengage? You need to uncover the root cause of their hesitation before you can respond appropriately and effectively deal with it. During sales negotiations, price is often a red herring for an underlying problem that has not been fully articulated. It is your job to probe for the real cause all the while reminding yourself that objections are a natural part of the sales negotiation process. The good news is that stating an objection means your prospective buyer is still engaged.
- Listen.Clarify your understanding of the problem and then propose a solution. Listen with both your eyes and ears. Body language may tell you more about how your solution is received than the words your customer uses. Your challenge is to remain focused on the ultimate prize…the negotiated deal that represents an agreement that satisfies both parties and helps your client to succeed.
For more information, please visit: http://www.lsaglobal.com/sales-negotiation-training/
Do you feel that your sales negotiations have two competing goals…one to maintain the relationship with your customer and the other to get the deal you want?
When you are in the midst of a tough sales negotiation, it is tempting to think that you can satisfy only one of those goals and will have to sacrifice the other. It would be a painful (and we maintain) and unnecessary choice to make. Our years of working with clients toward win-win sales negotiations have convinced us that both goals are attainable as long as you have the right approach and attitude.
Here are some sales negotiation tips we cover in our sales negotiations training programs that allow you to protect both the relationship and your business outcome:
- Don’t be in a hurry.Don’t rush the sales negotiations…either at the beginning or during the negotiation process. Research has shown that conversations unrelated to the negotiation can help build bridges that can smooth the path toward agreement. Allow time for introductions and then chat about anything when you first meet—the weather, last night’s sports event, what kind of refreshment you all would prefer during the session, or even how long the talks should take. This rapport building gives you an opportunity to get to know who you’ll be working with…how they communicate and how they act.
Slow down, too, in the middle of the sales negotiation. Getting “back to the drawing board” and stalling the sales process for a bit shows that you are willing to consider the other side’s point of view and want to do the best you can on your end to respect their wants and needs.
- Don’t give in if the going gets tough.Some sales negotiations become very difficult when the two sides are adamant about holding on to what they consider unnegotiable terms. You may be inclined to just cave in order to preserve the relationship. But it is unwise to set this precedent. Be respectful but push back in a professional way. Try to be really creative in looking for common ground and an alternative third solution that satisfies both parties. If you do compromise, make sure that you get something of equal value in return. If you are unwilling to compromise on price, for example, perhaps you can offer faster delivery or add a guarantee that will appeal to the other side.
Sales negotiations have been compared to a “dance” where both partners do best when they are in sync. If you spend some time relating and then are respectful but firm when challenged, you will leave the dance floor with both your relationship and your business outcome intact.
For more information, please visit: http://www.lsaglobal.com/sales-negotiation-training/
There is little worse as a sales negotiator than losing control of the negotiation process and being squeezed by the customer into a deal that is unbalanced in their favor. A successful sales negotiation should satisfy both parties.
When price becomes the critical issue and you feel powerless to shift the client’s thinking, the deal is already going down the tubes. Part of the way to keep control is to plan ahead and foresee any potential problems that might arise. Negotiating is an art…it requires finesse, excellent communication skills, confidence in the solution you provide, and deep knowledge of your customer’s situation, priorities and alternatives.
Short of taking a quality sales negotiation training program, try following these three tips for success:
1. Plan ahead
Outline the specific steps you will take to come to closure. This should include the contacts you will need to convince that your solution makes sense, a timeline that works for both you and the client, and a budget that takes into account the client’s ability to pay and what you need to make the deal worthwhile. From your first interaction to the last, this sales negotiation roadmap will help you guide the customer through a well-considered route to a win-win agreement.
2. Focus on value, not price
If you have done your homework, you know what inaction could cost the customer. Make sure this is clearly known on both sides. The cost of your service should become far less important than the agreed-upon value of solving the problem that faces them compared to the other available alternatives.
3. Stay in the driver’s seat
There is a fine line between being assertive and being aggressive. As you drive toward closing the deal in a way that makes sense, you will need to identify what really matters most to the client, their boss and their organization. Would a guarantee of results make a difference? Are they in a hurry to implement your solution? Might they be more ready to sign if they were able to test out your solution? All of these tactics—guarantees, speed of delivery, preview—are yours to explore and bring to bear. Use them as ways to add value without lowering the price.
Sales negotiations that end up as a tug of war rarely have satisfactory conclusions. Neither do the negotiations where the two sides become combative. Both result in lopsided agreements that are doomed to fail in the end. Experts in sales negotiation training advocate for another way to handle the stalemates that put deals at risk. Change it up!
The best baseball pitchers are adept at delivering a pitch that is unexpected and throws off the batter’s timing and balance. Changeups may look like a fastball but arrive much more slowly. The batter expects a fastball by observing the pitcher’s windup. When the ball finally gets to the plate, the batter’s timing is off. The advantage goes to the defense.
In complex and important sales negotiations, there is little to be gained by trying to be more aggressive than your opponent. Just think of the recent Republican Primary Debates. In early debates, the candidates attacked one another personally and viciously. Their reputations were suffering because of the unbridled antagonism and un-Presidential behavior. Apparently, public outcry at their unprofessionalism reached them. The March 10th debate was almost “civil” in Donald Trump’s words. Now the issues can be discussed and the voting public has a chance to evaluate the candidates and make a more informed choice.
Instead of trying to dominate at the same time as your opponent is trying to dominate, sales negotiation experts recommend that you change it up. When one advances, the other can retreat. When your opponent comes on strong, don’t give in but be respectful. If you can lessen the heat, you can both work more on important issues than on personalities. After all, the goal is not unilateral victory but to bring two sides to an agreement that works for both in the long-term.
You don’t need to end up as buddies, but you owe it to your stakeholders to do your best to resolve problems and make workable and mutually beneficial deals. Try changing it up to put your opponent off balance and re-visit the negotiating points in a less confrontational way.
For more information, please visit: http://www.lsaglobal.com/sales-negotiation-training/
