Negotiating Price

"I love the solution you guys came up with, it's just too expensive."  There's probably 20 different ways you're going to get a price objection when you're in almost any phase of the sales cycle.  If you could digest all of the situations you've been in, in regards to negotiating price, there's some key take-aways to remember.  Hope this blog helps to navigate this dicey area, WITHOUT LOWERING YOUR PRICE.

• Uncovering budget (or the way in which the customer will evaluate price) is not the same thing as negotiating a price objection.  Budget discussions should happen EARLY in the sales cycle.  Discussing how the customer will look at value is like uncovering any other piece of information that is critical in the early phase of qualifying the opportunity.  You should be talking about how they make and spend money, whether they typically pay more to get a better solution and setting expectations as to what things really cost.  A good salesperson never experiences "sticker-shock."
• Make sure you get granular as to what a price objection really means.  Many times, customers throw out a pricing problem because there are underlying product or service objections.  Maybe they don't really understand the VALUE that your solutions can bring to their organization (maybe not).  Your job is to flush this all out.  If there are hidden objections beyond price, take those on first.  No reason to discuss price if the solution isn't really valued by the customer.
• If you're confident that your solution is REALLY what they want to buy, then lowering your price should be off the table right away.  To test your confidence, ask this question, "If we can't lower the price, does that mean you're not going to buy it?"  I'm simplifying this for the purpose of this blog, but you get my meaning.  If the answer isn't a straight-out "no," it's all over.  If the answer is really "no," don't you want to know this?
• If you have to negotiate price, ask the customer FIRST what the breaking point is.  Don't offer up any discounts without knowing what they'll consider.  You may give away profit just because you spoke first.  Any good negotiating class will teach you to listen and stop talking.  The party that speaks first will likely give away more than the other.
• There are only 3 things you can do with a real price objection if you take lowering the price off the table:  1) Reconfigure the solution;  2) Show more value;  3) A combination of the two.  If you set these expectations with the customer after flushing out the objection, it's much more likely that they'll work with you to pick one of the three.  Remember, you need to do your job BEFORE you get to this point and assure that what you're selling is what they really want to buy.  If you haven't, you have bigger problems than a discount.

Lowering your price is a lose-lose for all parties.  The customer loses because it forces them into a frame-of-mind in which they have to battle to get what they want.  Nobody likes to do that.  Your industry loses because lowering pricing erodes the profit margin for everyone up and down the manufacturing/service chain.  You and your company lose because you did two things:  1) You reinforced the concept that your company doesn't already come to the table with a fair price;  2) You make less profit.

See you next time.
 

Politics and Salespeople

I just finished listening to Sarah Palin's nationally televised, seven-minute response to the recent politically-charged murders in Tucson, Arizona.  I'll go on record to note that I'm relatively a-political.  I believe in our Constitution, and ability of our country to self-govern (and self-correct).  However, I feel somewhat compelled to use this blog as a sounding board for what I believe to be an unbelievable challenge for the U.S.  What does this have to do with salespeople?  Well, I'll admit, not much; however, there are few careers that represent the sheer numbers and ability to communicate with people like salespeople.  We're out and about, talking with other people, and our influence should not be trifled with.  As a profession, let's not sit back and ignore the events that have transpired.  Here's a perfect storm:

• We're at war.  Not with one country, but many.  Our soldiers are dying.
• We're in an economic depression.  Some people call it a "recession," but that's only because we're actually printing money and giving it to the same companies and banks who got us into this mess.
• Our two primary political parties are at such odds, that a new political faction has arisen (Tea Party) seeming to indicate that there's enough Americans unhappy with the Dems/Reps to break-off into a new organization.

An isolated gunman goes on a shooting spree in Tucson, killing people at a grocery store, and we're faced with a puzzle.  Why is Sarah Palin calling a press conference to combat a frenzy of accusations that she's somehow involved?  Do you really need an answer?  Have you watched her nationally syndicated television show?  Have you been asleep since the last presidential election?  

We've got a problem.  Lots of them.  Let's turn the ship around.  Let's get the country back on-track.  Talk to people about this.  That's what you do for a living.

Salespeople can change the world.

I Know Why You Lost That Deal!

You know the deal I'm talking about, right?  That big one.  That one that you thought you had figured out. The one where you spent hours, weeks, strategizing about what you THOUGHT the customer would probably do.

We've all been there.  We cultivate a customer relationship.  We develop the opportunity.  We get to a spot where we really believed that big deal was ours.  Then we lose.  We try to figure it out.

I sat in my office the other night strategizing with four other team members trying to figure out a really complex strategy for an account.  I mean this deal had more spin on it than Kobe Bryant's layup.  The pricing scheme was a nightmare.  The customer options were staggering.  We thought we had a good lay of the competitive landscape.  This was one of dozens of hours that we had invested trying to create the perfect scenario where we'd land on top.

One of the most fascinating topics squeezed in-between the complex strategizing was one of the big reasons we were sweating it, was that they "didn't like the way the technology looked."  Are you kidding me?  Here we are looking at this thing 100 different ways and there's this funny little cosmetic issue that rears its ugly head.  It made me stop and take a look at all of our efforts.  Did we really understand all of the simple things about the customer and opportunity?  Had we taken the time to be in a position to be working long hours?  Maybe so, but it allowed me a brief glimpse of reality.

Here's why you lost that big deal:  You didn't know something really important to the customer.  Maybe it was something you couldn't know, but here's the kicker:  it's the same reason that your competitor won.

Happy Selling and Happy New Year