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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