Attitudes and perception drive behaviour, and in sales, behaviour is reflected in the salesperson’s activity, quality of execution and success.
Salespeople have specific attitudes towards different activities of the sales cycle, like negotiating. Most salespeople don’t like to do it, especially when it comes to price.
Many believe that negotations, and the resulting price concessions, are a natural part of the sales process. But I believe that less discounting would be made if the salesperson changed her attitude about the process.
Many salespeople include a ‘negotiation stage’ between their proposal and acceptance. But when I ask them if that is truly necessary, or just something they have become accustomed to (and trained their buyers to expect), they admit to the latter. Seems to me that if they changed their attitude towards negotiating, they would execute differently and eliminate loads of unnecessary negotiations. As a result, they’d also see an uptick in revenue and profits, as every dollar not negotiated away goes to the bottom line.
Some build in a cushion for themselves. They inflate the price roughly 10 per cent so they can ‘negotiate’ when the time comes. Clients learn the ritual, incorporate it into their thinking and do as the sellers have conditioned them, and push for more than 10 per cent. And why not? The prospect knows from experience that there’s wiggle room. So if they’re to socre a real bargain and get the best price, they need to extract more than the cushion the seller’s created.
All of this back-and-forth can be avoided with a change in attitude.
In any negotiation, there are two parties involved. Say the buyer shops at the Apple store. It’s unlikely that she will attempt to negotiate and the sticker price on an iPhone, and even if she did, it’s unlikely the salesperson would oblige. Sure, the buyer will shop around and maybe even choose an alternate store. But she will not say “I need 10 per cent off that iPhone, or I am buying a Samsung”.
Why? Two reasons; and both are in the seller’s control. First, stop training buyers that price concessions are available on demand. Adopt the attitude that what you are doing is delivering value and sell that way. This involves selling right through the cycle, not presenting and bargaining. You need to align with the buyers’ objectives, and mutually build value. We’ve all had buyers approach us because they realized they need what we’re offering. Did any of them negotiate?
Apple doesn’t bargain at the checkout, the attitude they sold you is you pay what’s on the ticket. Sure there are sales, but at their discretion -- not on demand. The company’s attitude and sales process has created buyers who will go to the cash register and pay what is on the ticket. These very same people will go to other retailers and bargain, again because these other retailers have made it known that they are open to that practice. Have you?
The second reason sellers play the price game is the state of their pipeline. If they have a lot of quality opportunities on the go, they can afford not to do business with people pushing on price. Walking away is an option, not an unbearable pain. If you needed three deals to make your month, and you close ratio is 3:1, things become simple. If you have seven prospects, you will bargain with each, because you have to in order to have a chance of hitting your goal. If you had 12 prospects, you could easily walk away from three, and still have enough to make your month. Again,you sell and prospect, you can avoid price negotiations by managing your pipeline and activities.
When you prospect the right buyers, in sufficient numbers, you create the option not to negotiate.