By Nancy Friedman, Special to Tire Business
ST. LOUIS (Aug. 9, 2013) — If you've ever trained a puppy, you learned how to negotiate.
"SIT! Good boy. Here's a treat."
That's negotiation.
Have children? We negotiate with them every day, don't we? "If/when you finish your veggies, you can have the ice cream."
That's negotiation.
And what about our spouses? "Honey, if I go out to the paint store and pick up the paint, will you paint the kitchen?"
Yep, that's definitely negotiation.
The point is, while negotiation is thought of as a sales skill, it really is an everyday life skill we use a lot more than we realize.
There are some areas that are non-negotiable. For example, try getting a discount at a department store. Unless it's on sale, the price is the price. In some industries, negotiation is the norm—real estate for example.
What about a car? It's pretty common knowledge that there's a window sticker price and the price that you pay: a negotiated price. That's an "up front" negotiation. It's expected. And sometimes it doesn't go well. One side won't budge or won't negotiate to your satisfaction, so someone loses. Usually both parties.
For negotiation to be successful, both parties need to feel good at the conclusion. If you're in sales, price cutting can be a daily negotiation.
Here are some tips to help make you better at the art of negotiating:
1. Never, ever discount the price right off the bat.
Often a price cut will get the salesperson more excited than the prospect. You may think going in with a lower price will make the prospect grateful and give you an easy go of it right away. It usually won't. If they take your offer of the lower price, that indicates they might have taken it at the rate card price—which is where you should be quoting from right from the start.
2. When you talk price, be strong and confident.
A weak or hesitant delivery makes the salesperson sound soft. Then the price sounds soft and thereby invites a lower offer.
3. Delay giving any concessions until the end of the conversation. A concession given too early is just a giveaway.
Save it for closing the sale by saying, "That's an interesting idea. Let's come back to that a bit later."
4. When there is a request for a price concession, have a nice way to reject it.
Just because they have dealt with other weak salespeople doesn't mean you need to be that way. You can use a very effective, "I wish we could; however, that's not an option we have" technique. Or you can say, "Since you only have $4,000 and the project is $5,500, we can work to remove a few parts of the package."
5. Never underestimate your strength in a negotiating situation.
Some prospects assume a salesperson is in the position of weakness. If you fall for that, it will weaken your resolve and soften your backbone.
Understand this: If the prospect is bargaining with you or even discussing the proposal with you, that's an indicator of interest—a buying sign. Their actions are telling you—without saying it outright—that you have something they need or want.
6. When do negotiations begin?
When you say hello.
Negotiations, in general, are ongoing all day long at work and at home. And it's often a subtle thing. Recognizing you're constantly involved in negotiation gives you an advantage. Be aware that life itself is a series of negotiating situations. You often are negotiating without realizing it.
7. Avoid goodwill conceding.
The principle of "goodwill conceding" is this: The salesperson thinks that if they are nice and give a price concession to the other side, the other side will reciprocate with a concession back to you. In other words, they'll buy.
Nice idea. Only it backfires with a professional buyer. What they do is take what you offer and try to get more. (After all you're giving things away.)
8. When you give—get.
When you do give a price concession, use the "if/then" technique so that you get something in return. "Mr. Jones, if I can get you the widgets at that price, are you able to give me the go-ahead today (or can we do business today)?" or, "Mr. Jones, if I can give you that price, can I get a referral from you?"
There are dozens of other "gets" when you give. Salespeople don't mind giving when they are getting something in return. But perhaps the most important reason to take something back when you give a concession is this: It puts a "price" on your concession. No longer are concession requests free. By asking for something in return, it keeps you from getting additional requests for concessions.
9. Why is it important to be a good negotiator?
Because a bad negotiator leaks dollars and reduces the all-important profit to the company. Profit is what's needed to run a company. No profit, no company.
Now, one closing suggestion: Whenever you can, substitute the word "investment" for the word "price." In most cases, the prospect is making an investment—and a good one at that.
Nancy Friedman's Op-Ed columns appear periodically in Tire Business. She is president of Telephone Doctor Inc., an international customer service training company based in St. Louis. She can be reached via email at [email protected].