Negotiating a sale can be a daunting challenge or an exhilarating opportunity to exercise your ingenuity and judgment. Even if you are doing it all the time, it is still likely to involve emotions as well as logic.
Of course, no team likes to lose a sale, but making the wrong sale can be even worse. Below are my top tips for negotiating a sale that will be beneficial for both your company and your customer.
1. Understanding what the customer wants
Understanding and working with your customer’s needs is the key to a successful sales negotiation. Do you understand what the customer is asking for? What are the customer’s purchasing priorities, and how can you help them achieve these?
To ensure a good sale, the following are vital pieces of information you can learn about your customer. These will ensure you are selling the correct product, as well as identifying other areas of upsell to generate more revenue:
- What is the customer’s position?
- What is the value of your product to the customer?
- What problem can your product can solve?
- What money will your customer save through buying your product?
- What other benefits you can offer that they would be happy to pay for?
2. Understanding your competition
Your competitors are your customer’s alternative suppliers. To gain a competitive advantage in any market place, you need to find out what your competition can offer that you can’t, and what they are charging. You can’t operate effectively unless you first understand the marketplace.
Related: Performing a competitor analysis – how and why
3. ‘No budget’ customers
If you are told the customer you are talking to has no budget for what you are selling, you need to find out what this means. The phrase ‘no budget’ may refer to several different situations. Once you know which one you are dealing with, you can begin to devise a way around the problem.
- The individual you are negotiating with may not have budget authority (‘sign-off’) for the level of spend you are proposing. Consider breaking the sale up into several smaller, more manageable, deals.
- There may be no budget left for this financial year. Find out if there is scope to strike a deal that would fall into next year’s budget.
- There may be no money under a particular budget heading, so think about recasting your proposal.
4. Setting your objectives
Your particular selling objectives may fall under a number of different headings, including price, volume or timing. These may affect the way you need to sell and the technique you undertake. To ensure you meet your objectives, while also meeting the customer’s needs, you can ask yourself a number of questions regarding the sale, including whether any areas of the sale are negotiable and how important the deal is to you.
Ensure you develop a negotiating strategy that covers the overall approach you will adopt. Be clear about the type of deal you want and the priority you will give it, while understanding your strengths and how you plan to use them. Make sure you stick to this strategy until the deal is done.
5. Selling at a higher price
Always pitch your opening price high and only make concessions that work to your advantage. Show the customer that he or she is getting good value by detailing the component parts of the deal.
Be clever about your pricing strategy, by charging a psychologically attractive price, ie some people see £99 as being more than a pound less than £100. You can also put related products together and charge a package price, but only if this costs you less than dropping the price of a particular item.
Another tip would be to build in value by giving the customer non-price related concessions, for example better payment terms, out-of-hours delivery or customised specifications. This can make a proposal more attractive, without compromising your bottom line. Do not get drawn into an auction; normalise the price. Link it to the industry standard and let the customer know that others have paid it.
Once you are there, confirm the key points in writing immediately, even if only by jotting down the details. And finally, confirm the deal with a handshake – no-one likes going back on a handshake!
