“When it comes to negotiating a sale, the person who addresses price first, loses.”
There‘s a ton of truth in that saying, especially for companies with tiered pricing models. If your organization has that kind of price flexibility, negotiation is an important stage in the sales process.
Before you jump into the negotiating stage, preparation is crucial. One of my favorite movie scenes is from the 1992 classic, Glengarry Glen Ross. The scene features a sales manager who walks into the middle of a conversation between a salesperson and an angry customer. After the customer leaves, the salesperson is furious with the manager for getting involved in the negotiation without knowing the back story. A good negotiator goes in prepared, knowing the full story. With that in mind, here are four tips for negotiating and closing better deals.
Know your prospect’s appetite for the product.
Be sure you understand the value of your product from your prospect’s point of view. For example, if your prospect is red-hot, wants the product and is ready to buy, it’s a high-value and premium price situation.
Understand the prospect’s return on investment.
How much will your product save the prospect? If your product can save them $1,000 a month, for example, your pricing should reflect some of that return on investment.
Know your competitors and offer intangible benefits.
Negotiating isn’t always about price. Sometimes the value-added benefits you provide can close the deal. How do your competition’s products compare on quality and what ROI do they offer the prospect? If their ROI is higher than your product, offer an intangible benefit. Better customer service or free delivery can add value to the deal.
Redirect a need.
I love selling this way. Initially, the prospect believes they want a particular product or service, but after digging deeper, you discover an ancillary need you can resolve for them.
Let’s pretend you’re selling payroll services. Switching payroll services is painful and companies won’t do it without receiving great value or a cheaper price – or both. Let’s also imagine you can provide the payroll services at a cheaper price, but from the customer’s perspective, it’s an administrative hassle to change providers.
In this case, you can include an amazing level of support in the proposal. You might put a payroll specialist onsite to help the office manager during the first week of using the service. You might also include an analysis of employee turnover, or offer employee exit surveys to help the customer understand the causes of turnover. Now you’re selling more than payroll services and competing on more than price.
Take the extra time to learn your customers’ needs and your competitors’ products. Knowing the score is a big deal – and it can make a huge difference to the outcome of your next deal.