Sales Negotiation: The Salesperson's Dilemma
In sales negotiations, customer price objections can be seductive. You want the sale and the customer is giving you an easy way to close it: offer a discount. However, there are two essential reasons for resisting the objections and sticking to your price:
First, closing the sale means nothing if it is not profitable. Many fine companies have gone out of business after deciding to offer major discounts. Profitability is a more realistic way of measuring success than sales volume.
Second, the most satisfied customers in a sales negotiation are the ones who pay top dollar because they appreciate the value of their investment. Buyers perceive higher-priced items to be more valuable. (Think Mercedes-Benz, Rolex, and Giorgio Armani.) In my selling career, the best customers have always been the ones who have paid full price, and the most unhappy ones have been the buyers who received a discount.
Shortly after I started my speaking and training business, I received a call from Susan, a manager at a Fortune 500 company. "We want you to train a large group of our key employees in negotiation skills," she said. "I've seen your work and I think you're the best."
I was certainly very excited, as this account would be worth about $50,000. I was about to ask Susan where I should fax the contract when she dropped a bomb. "You should know," she went on, "that my boss likes somebody else, and that company is less expensive than you are. If you lower your fee, I think we can get you hired."
I was faced with the classic sales negotiation dilemma: I wanted the deal, but did I have to drop my fee to get it? What, I wondered, was really going on? I could envision the following scenarios:
a. The buyer was telling me the truth. If I lowered my fee, I might have a better chance of beating out the competition.
b. There was no competitor. The buyer was using the "squeeze" tactic ("We can get a better deal elsewhere") as a negotiating ruse to move my fee downward.
c. This was a test of my own negotiating skills. The potential client wanted to find out whether I practiced what I preached, and how I would respond when challenged on price.
d. The company had already decided to go with my competitor. They wanted a lower number from me to give them leverage in negotiating the competitor's fee.
Sales Negotiation: The Salesperson's Dilemma by Ed Brodow
Copyright © 2013 Ed Brodow
Copyright © 2013 The Negotiator Magazine
The Negotiator Magazine October 2013