Negotiating is an integral ingredient of the selling process. However, problems can occur when salespeople don't know when and how to shift into the negotiating mode. They must recognize the difference between selling and negotiating and then make the move when the timing is right. It's important to know when to begin negotiating, but it's equally important to understand how effective negotiating allows salespeople to meet customers' needs. This helps enhance the personal relationship between salespeople and customers that drives their performance in the field.
Preventing customer ‘interruptus.’
When speaking to a group of sales professionals, I use anecdotes to illustrate the importance of knowing when to begin negotiating. For instance, I ask my audience what they would do to maintain control over the selling process to ensure they don't begin negotiating too soon. They know this is an important consideration, but they've never thought about it this way. They really never put their finger on the difference between selling and negotiating. The easiest way for the customer to interrupt the process and to gain control is to voice an objection and ask for something. Too often, it's at this point that salespeople allow themselves to fall into a trap and give in to the customer. The customer has then taken control of the process and lost confidence in the salesperson's ability to meet their needs.
I recently witnessed this scenario while in the field, working with a salesperson. She was attempting to up-sell the product line. In an effort to do that, she brought with her a hand tool that was new to the line — something that was smaller, different and “better.” During her presentation, the customer asked if he could take a closer look at the tool. When I saw that happen, I knew it was going to go downhill in a hurry. The salesperson continued trying to promote and sell the line. The customer interrupted again and said, “I don't mean to interrupt, but I hope this tool is better than the previous one.”
With that she was taken completely off track and it only got worse. The customer then asked if he could have the tool. I'm not adverse to salespeople giving away tools, especially if it will help in the long run. And this one only cost $60, so she said sure. I could tell she knew something was going wrong but wasn't quite sure what. This customer was really old school and he promptly took the tool, tossed it into a box in the corner of the room and said, “What I really need is a better price than what we've been getting from you folks.”
The salesperson had been taken completely off track, lost her confidence, and the customer had taken over the meeting. Say “so long” to a well-thought out sales presentation.
Is this customer really a jerk? When we left the unsuccessful presentation, her reaction to the customer was “What a jerk! Why would he do something like that?” I told her the customer was hardly a jerk. She had given him the opportunity, and he took advantage of it. By giving the customer the product and abandoning her selling objective, she had given the customer a clear signal that she was done selling and now entering the negotiating phase. The customer was an opportunist and he said to himself, “This is a piece of cake!”
This is a clear example of the salesperson falling into the trap of negotiating too soon. Too many salespeople believe selling and negotiating are the same. They're not. Always remember that negotiating must follow the selling process. If the customer interrupts the process and the salesperson falls into the trap, problems follow.
Once salespeople get sidetracked, it's almost impossible to get their sales strategy started up again. Once a salesperson takes out his wallet, it's easy for the customer to get him to start trading and ultimately give things away. When I'm with a salesperson and I see that we've entered that trading-off phase, I won't let him or her continue, because it's a losing proposition. Salespeople must accomplish at least five specific activities while still in the selling phase:
Obtain assurance the customer understands the value your solution could provide.
Review key aspects of your sales proposal.
Sell to objections with benefits to eliminate or minimize as many as you can.
Ask for some level of conditional commitment.
Isolate remaining differences (unresolved objections).
Steps four and five often can be accomplished at the same time. Start negotiating when these five elements have been completed. It's important to trade values on these remaining differences. Try to concede only on issues that don't cost your organization much and are of some value to the customer. Then make sure it's the remaining difference to be negotiated to secure the business.
Changing customer behavior
To alter the outcome of sales presentations, you must get customers to stop asking for something unless it really means something to them. If a customer asks for something, then ask for something of substance in return. For instance, if the customer is insistent upon an “X” percent discount or free training, that's fine. But before granting his request ask him, “How about giving us in writing a commitment for Phase II of this project?” This approach will go a long way toward getting you what you want.
Finally, it's important for the salesperson to recognize and identify the individual with whom to negotiate. It's not uncommon for salespeople to not understand the difference between a technical buyer and an economic buyer. The former is an individual with a literal set of criteria. He could be anyone from the environmental engineer, the quality guy, the legal department or even the purchasing agent. The latter, on the other hand, can be anyone. Most importantly, this person has 100 percent discretionary use of company resources for that particular selling objective. Salespeople must be able to identify and negotiate with economic buyers, but they must always sell to everyone.
If I ever needed any feedback to confirm that this message resonates with sales professionals, I received it earlier this year when I spoke to an audience of more than 40 reps and electrical distributors at Nelson & Associates, Sante Fe Springs, Calif. Following a four-day training program, Kurt Nelson, the company's president, let me know I had struck such a chord.
“Selling a customer and negotiating with a customer are two very different processes,” he says. “When selling, it's important to use open-ended questions to determine needs and problems the customer might have. Once these needs/problems/concerns have been identified, then we can match them up with benefits that can provide a solution for the customer. Once the customer recognizes that our product is the solution, reps must move from selling to negotiating.
“One of the key benefits of knowing when to negotiate is margin enhancement,” Nelson continued. “If the customer truly recognizes your product as a solution, they understand the value and are more willing to pay for that value. If it's not understood, the customer views the product as a generic solution and something that can be negotiated. Each of us loves the feeling of a good deal. However, a good deal is not always a low price. Many times a good deal includes features that do not come with another model. They often are the reason why we choose a particular model. The same is true for our customers. We just need to help them see the value they are looking for and when they understand it, they will be happy paying for it.”
Bill Heyden is the president of Heyden Training, Chicago, Ill. In addition to working with a national network of sales organizations, he works with electrical, electronic and data communications sales professionals to effectively penetrate and grow market position. He may be contacted at: [email protected] or by phone at (630) 305-7267.