Making
Concessions When Negotiating a Sale
You’ve
been dealing with your customer for six months. Meetings, focus groups, conference
calls… they’ve worn you out. The formula that your team of scientists created
for a new mango flavored liqueur is exactly what the manufacturer has been looking
for. They’re excited and you’re finally about to sign the order. Your
customer smiles as she reads over the agreement while fiddling with her pen.
You can almost smell the commission check. Suddenly, the customer puts down
the contract.
Customer: “You know, this is all great but the price
is still a bit too high. Can you drop it by just another two percent? Two
percent isn’t much, you know, but it will help me out.”
WHAM!
The customer is nibbling for just a little more…
Sales Rep: (sensing the loss of the sale) “Yes…
yes, of course! I can do that. Here… let me mark over that price and initial
it.”
Kudos
to the customer! She just saved her company a couple hundred thousand dollars.
The sales rep got his sale but left money on the table. What the sales rep
didn’t know is that the customer still would’ve signed. He’s just been duped.
This
situation is more common than you might think. Customers nibble for extra concessions
all the time. It’s a typical negotiation tactic. Ask for a little bit here
or a little bit there. Add up those “little bits” and end up with a lot of
lost revenue. This brings us to a key rule of sales negotiations:
Never
Make a Concession
without
Receiving a Concession in Return
The
rule is very simple. If the customer asks for something more, that’s fine.
Be sure that in order to get that something, they are willing to give you something,
too. Otherwise, customers will sense that you are desperate or are willing
to give away the farm to sell the cow. Here are a few examples of how to counter
the nibble and receive a concession in return.
Scenario
One:
Customer: “Our customers really like your cleaning
solutions so we’d like to reorder four pallets of all three products. Can you
drop the price by five percent?”
Sales Rep: “If you can order a fifth pallet for
each product, I can drop the price by five percent. Would that work?”
Scenario
Two:
Customer: “I’ll have our accounting department contact
you to arrange for payment. I’m assuming shipping is included in that price,
correct?”
Sales Rep: “If your accounting department
is willing to wire the payment to us by Friday, I can arrange for shipping to
be included.”
Scenario
Three
Customer: “The Statement of Work looks perfect.
We are getting a capacity planning study as part of this, right?”
Sales Rep: “If you would be willing
to use us to deploy our products in the Tampa facility, we could arrange to
provide a capacity planning study as part of the overall package.”
Always
ask for a concession before giving up a concession.
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