In part one, we determined that negotiating is the not-so-easy task of securing the best price or other conditions in a win-win relationship once the other side starts to act on interest. To be win-win, negotiations must become give and take, careful not to give too much while allowing both sides to feel good about the outcome.
In negotiating, it is important that we decide in advance what is an acceptable profit margin and what is not. As one solution, we learned in part one how to price-merchandise our showroom to meet the needs of the bargaining customer while preserving an acceptable profit margin.
With the preliminaries of negotiating behind, let us begin in part two with some counter tactics once the best price is genuinely the last and biggest remaining concern. With our profit parameters established in advance, let the negotiations begin. Smile and have some fun.
Negotiate with logic. Although customers usually buy with emotion, in negotiating, now is the time to use logic not emotions. With negotiations, we are still dealing with a person’s pride, vanity, and other prejudices of emotion. However, it is important to counteract emotion with logic thus producing a rational willingness to support a win-win collaboration. Continue your integrity; be persuasive, but not manipulative while being enthusiastic, but stick to the facts.
Deal with the decision maker. When negotiating, always make sure you are talking to the decision maker. Simply ask upon early negotiation, “Are you the one making the final decision?” If you are not working with the decision maker, especially when it comes to negotiating the final deal, you may be wasting your time.
When dealing with husbands and wives, it is helpful to have both parties involved in negotiations. Husbands and wives often throw off to each other. While the wife may hold the final decision about fashion, he may hold the purse strings (or vice versa). Keep in mind, his difficult job is to keep her happy while constructing the best deal. Men usually know a few extra dollars are unimportant compared to the happiness of his wife – and his.
Negotiate with questions. Pertinent questions often reveal the true nature of price objections. The idea is to use questions to get our counterpart to collaborate with us and not against us. For example, “Would our same-as-cash financing plan help you?”
Next, listen to what the prospect has to say. The vaguer the answers, the more likely price is not the real problem. If the customer hesitates or stays with her choice, then the price objection is likely a ploy that says, “Just treat me right.” If, on the other hand, the customer seriously considers the opportunity to pursue cost alternatives, then pricing stands to be the likely problem. Regardless, never ignore her price tactic; just begin with some questions that keep things in perspective for everyone.
Negotiate in increments. Occasionally, you may be asked to state your best price right up front. You may then feel obliged to offer your best price at once to get a quick and easy settlement. Don’t do it. Instead, always begin your lead price with one that has wiggle room allowing your customer to feel she has won some concessions later.
Trade value with value. When and if it is time to make a concession, make it a small one and trade when possible for equal value. Change the price then change the deal. “What about a lesser grade pad” or “Who will move the furniture or old flooring?” Think, “What can I take out or put in” and then watch your prospect back-pedal. It stops nit-picking as well. In any case, do not allow your customer to give your product away.
Secure a commitment. When you are asked to consider another concession beyond your first proposal, it may be fair to ask, “If we can meet your price requirements, are you committed to purchasing this flooring?” If she stays uncommitted, suspend negotiations while staying consultative, but leave the bargaining table open.
Don’t get intimidated. Some buyers are great negotiators and thus great actors. You may have the lowest price and a one of a kind product, yet his/her body language and everything the customer has to say will make you believe unless you give her an extra 10 percent off, she’s going with the competition. Don’t buy into it easily. Be skeptical; be suspicious and draw her out with questions and see what happens.
The Flinch. Here is another great tip for negotiating. Learn to flinch. A flinch is a noticeable reaction to an offer or price. The purpose of this negotiation tactic is to make the customer feel comically embarrassed about the offer they made.
With the flinch, we might respond by exclaiming: “And you want how much?” You must communicate that you are shocked, dismayed and even stunned about the price you just heard while appearing comically amused that someone would be bold enough to request such a figure. With a well-timed flinch, unless the other person is a superb negotiator, they will respond by admitting their position may not be completely reasonable or offer a different concession. Keep it fun.
Do not use this tactic if your customer has offered a fair first offer, but don’t concede so easily that your customer may sense they offered too much of a concession. If she offers a first price and you at once say, “sold,” she may not feel so good about the offer upon later reflection.
The Pause Button. Never allow yourself to become angry during negotiations. Hence, this requires you to maintain emotional distance and sometimes the best way to do that is through a technique called the pause button. Pushing the pause button just means you are putting negotiations on hold for a moment. Whenever negotiations get heated, a short break allows you (and your customer) to take the opportunity to review the current negotiation at hand and to make sure you are not overlooking anything – especially a fair profit. You may simply state, “Hold a minute; I need to take that in.”
You can use the pause button as an excuse (or bluff) to consult with your sales manager or just confirm your cost. Customers will perceive this as a sign you are close, or too close, to your genuine rock bottom offer. So, if things get tense, give yourself a short intermission when you need to. By pushing a pause button, you keep your emotions from ruling (and ruining) the negotiations.
The Split the Difference Compromise. The concept of splitting the difference is one of the most seductive negotiating ploys. However, if we are too far apart in our deliberations, then it is too early to employ this tactic. Once you are closer with your negotiations, splitting the difference can be a good final tactic which upon acceptance will abruptly end haggling with a fair price to both parties. It becomes I win/lose some and you win/lose some. It’s just that when you “split the difference,” make sure you are preserving a fair profit margin.
The Walk Away. Sometimes we reach a point when the prospect’s proposals are just not profitable. The walk away is the point at which you must decide not to continue holding things together and you walk away from the opportunity. It is time to graciously end the discussion and watch for a sudden reversal of position from your customer. It is better to walk away from a transaction rather than give a deep discount you will regret later.
Here, of course, is where it is important to know your bottom line. When we know our bottom line, we guarantee ourselves a reasonable profit and the ability to deliver on the promises we make during the heat and greed of negotiating. It is this awareness which allows us to interconnect with confidence thus empowering us as negotiators.
Keep in mind, walking away does not mean we are withdrawing our offer. It also doesn’t mean we walk away from the relationship. Experienced salespeople often say the “walk away strategy” often provides the greatest leverage with a customer. Sometimes it is not so much whether the customer wants your product, but how bad they want it and what they are willing to pay for it. Bear in mind, either participant can revisit the transaction if either party wants to reconsider.
Be polite and courteous in your withdrawal. “It appears we have reached an impasse. I appreciate the opportunity to work with you. Please keep us in mind in the future. Should you consider the possibility of reconsidering your final offer, I would love to have your business.”
Not all deals are meant to be done. Nobody will sell everybody, and you do not want to if you plan to stay in business. There is such a thing as a “bad-news” customer who will cost you time, money and then expect the unreasonable and create a poor reputation for your company in the long run. Obviously, if we reject a one-sided proposal and in turn lose the sale, this is better than accepting an unprofitable offer.
Negotiating can be fun. If we really know the customer’s needs and wants, and if we understand some dynamics of negotiation, we can manage the process effectively. One salesperson recounts, “Negotiating is the fun part because the prospect is negotiating their interest and a desire to buy.” Another describes it, “I love negotiating…when it’s messed up and everybody’s sort of at odds, I like it even better… because I think, ‘Oh gosh, I’ll fix it.’ It’s enjoyable and intellectually thrilling.”
Others may view the process of negotiating and closing as a logical part of the conversation with a client. Another salesperson relates, “I’m always thinking: What’s the next step? What do I need to do now? And then I just keep on chiseling away at it toward the final aim. So, for me, closing is more about perseverance.”
If we negotiate in the atmosphere of trust and respect, we increase the odds that our conversation will be successful for us and our customer. Think of negotiation, when it occurs, as being a careful part of the sales process during which we try to reach common ground.
Good selling to you.