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Step-By-Step Guide To Bomb Any Pricing Negotiations

Posted by Katharine Derum on Fri, Mar 22, 2013 @ 00:03 AM

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Atomic Bomb

Ever had a deal go down in flames at the final hour? It can happen to anyone in sales. Pricing negotiations can be a field of unmarked land mines that are easy to trigger for those who are unfamiliar with the territory. Here are some basic rules to help you trip every possible wire, make every price negotiation an explosive ground, and allow for any deal to go up in smoke. 

Without further ado, your step-by-step guide to bombing any price/contracts negotiation:

Land Mine 1 – “No Commander-in-Chief”: In order to trip the first wire, one should definitely negotiate with the person who can only say no, maybe or play operator. Negotiating with an influencer or champion instead of a decision maker (not the recommender - big difference) is a fabulous way to negotiate at a disadvantage.

How to Avoid Tripping This Wire: If a rep would prefer not to have the negotiations go up in smoke, work only with the person who can say yes. If the influencer wants to enter into negotiations the rep should avoid the conversation. While you don’t want to ignore their request, this is actually a great opportunity to get the Decision Maker involved. Here’s how a rep can avoid tripping this wire and use the situation to their advantage:

“I’d be glad to come up with customized packaging. However, I’m worried we’d be playing operator as I’m not authorized to offer anything exciting. It also sounds like you’d need to check with ______ (insert decision makers name here). Here’s an idea, I’ll grab my manager/director and you grab _________ and we can all schedule a time to talk further. This seems like the fastest way to get a customized package. What time works best with your schedules?”

The above technique allows a sales person to turn a potentially dangerous situation into an opportunity to engage and/or re-engage with power. First, disarm the prospect by acknowledging a willingness to do customized pricing however commit to nothing specific. When a sales rep offers to bring in their boss it serves as collateral for getting the prospect's decision maker. The influencer will feel as though the rep is being accommodating, which the rep is by offering someone of greater power on their end. The influencer is also given a compelling reason to take time out of their boss’ calendar.

Land Mine 2 – “The Cart Before The Horse”: It is best to negotiate prior to knowing if they have decided to go with the rep’s solution or if the prospect is still evaluating other vendors. Even better, negotiate prior to knowing if the prospect has already picked another vendor and are using the sales person as leverage to lower the other vendor’s price. Can you smell the smoke yet?

Elude Tripping This Wire: Only negotiate once there is confirmation the prospect has selected the rep’s product or service. Even if the rep is working with the decision maker do not move forward until they have made a decision. In order to do so, make the assumption the prospect has made decision when they ask for a discount or option. The prospect will have to correct the rep’s assumption. The prospect is lead to their own conclusion they are ahead of themselves.

“Great! We’re looking forward to having you on board. It sounds like you’ve made the decision to go with _______ (insert company name here)?”

The prospect will either say yes or they will have to correct the rep. The rep can then disarm the prospect by acknowledging they will negotiate but put them back in to an accurate timeline.  Here’s how:

“I’d be glad to discuss a customized package, however I don’t want to put the cart before the horse. Let’s first make sure _________(insert company name) is the solution that will take care of your issues/meet your goals”.

Land Mine 3 – “O’Dark Hundred”: Enter into a negotiation without knowing the timeline of the prospect. It’s best to work a deal and have no idea when the prospect is looking to sign up. It's safe for the rep to assume they can do their next pipeline review with smoke signals.

Smokey The Bear’s PSA: The rep should know when the prospect intends to become a customer. A prospect might be asking for options because they’re budgeting for their next fiscal year, which could be months away. In order to clarify timeline, the rep should first disarm the prospect by acknowledging they will address their request while offering no details and then ask for a timeframe. 

“I’d be glad to work on a customized package. It sounds like you’ve decided to go with _______ (insert company name).  When are you planning to finalize a contract?”

Land Mine 4 - “The Mail Carrier”: The best way to bomb a negotiation is to do so via email. It’s best to avoid doing important and time sensitive conversations over the phone or face to face. In order to blow a deal it’s best to lose control of the process, allow the prospect to disappear, let the prospect forward the email to a competitor, and/or let them try to sell the customized package internally. 

Alert! Detour! Bypass! Do not have important conversations via email. Let me repeat, DO NOT EMAIL. DO NOT EMAIL! If you haven’t already read the article why things should not be emailed, do so now. If the prospect disappears the rep will be left with heart palpitations desperately calling the prospect as if it were a bad breakup. Don’t be that rep. Here is the voicemail and email script a rep can use to eliminate negotiating via email:

Bob, per my message –

Thanks for the note. I’d be glad to discuss some customized options. We should discuss on the phone to make sure we cover all details.

Would 10:30EST or 3:00EST work with your schedule?

Best,
ME

I’d recommend avoiding negotiations over email 99.9% of the time. It is VERY rare a rep should resort to email. An example of the .01% of the time would be if the decision maker is on the wing of Captain Sully’s plane floating on The Hudson River with only access to email. If the prospect won’t get on the phone or meet to discuss options, this is an indication of the seriousness of the buyer. Seller beware.

Land Mine 5 – “Vegas Loves You”: It’s best to start offering whatever options one has available without knowing what the prospect might need. It’s best to let the prospect know all the options they can pick from or better yet pick ‘em all! Why not show the prospect all the cards in your hand? If this were a game of poker, the rep would be broke. Vegas baby.

Don’t Be the Oldest Hotel On the Strip Waiting for Implosion: He who says a number or option first loses. Always disarm the prospect by acknowledging you’ll work with them, but offer no details and instead turn the spotlight on them.

“I’d be glad to work on some options. What do you have in mind?”

Land Mine 6 – “The Freddie Krueger”: We’ve all watched the scary movie where the bad guy dies at the end. But we've also seen enough of these movies to know the bad guy always comes magically back to life when it's time for the sequel to come out. How frustrating is it to watch the movie, knowing the bad guy isn’t dead yet and noticing that, once again, blondie doesn’t check to make sure?! He’s behind you!! If you want to bomb your negotiations, proceed without caution and without confirming the first 5 land mines are in the clear. In other words, proceed without checking that the bad guy is actually dead.

Escape the Sequel: Don’t assume you’re on safe ground, yet. Confirm all 5 of the first land mines are cleared before continuing pursuit. Here are some options to confirm you’ve made it safely across the mine field and confirm the bad guy is dead:

“If I’m able to offer ______ (insert what they’ve asked for), what else stands in the way of finalizing the contract?”

“If I’m able to offer ______ (insert what they’ve asked for), when will you be signing the contract?”

“If I’m able to offer ______ (insert what they’ve asked for), would you be able to sign up today?

By starting the sentence with “if”, the rep is not definitively committing to anything. However the rep has still disarmed the prospect by addressing what the prospect has asked for. The prospect should confirm there is nothing in the way and should willingly give a verbal commitment - a conclusive yes.

If the prospect won’t give a verbal commitment, the rep then needs to handle objections. The rep has earned the right to ask why as they are only offering what the prospect wanted and asked for. If the prospect won’t offer verbal commitment or clarification as to why, there are serious red flags with this buyer. Seller beware.

Bombs away! 

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Topics: Sales, email, Price Negotiations

The Most Common Mistake in Pricing Negotiations

Posted by Katharine Derum on Thu, Mar 21, 2013 @ 05:03 AM

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There are several rules to negotiating but the first one is the most important, the easiest to abide by and the one most frequently broken.  cards

Years ago I had a manager who could never be found in his office. He was always outside smoking. For the two years I reported to him my biggest take alway was to quit smoking and to do it right then and there. Good lord he smoked a lot. I’m happy to report I’ve been smoke free ever since.

While The Marlboro Manager offered a good lesson in health, he also taught me the first lesson in negotiating. One day as I was walking in from lunch, I passed him as he was walking out for yet another cigarette. He asked if one of my deals was coming in (this was his form of a pipeline review). I explained I’d given my contact two options and waiting to hear back from them. Smokey The Bear replied in a very husky voice “he who says a number first loses” and he walked away. 

The 1st rule of negotiating: He who says a number first loses.

With that one piece of advice I’d learned the most important rule of negotiation – never say a number (discount) or option (billing terms, shorter contract, etc.) first. Smokey was referring to leverage. If you’ve ever walked into a car dealership, the first thing you’ll be ask is “how much do you want for the trade in?”. The sales person is trained to get the buyer to say a number first. Don’t answer; instead tell them you aren’t sure. The most fun part is the sales person is not trained on what to do if you don’t give a number first.

Think of it as if it were a poker game. One doesn’t want the other player to know what cards are in your hand. As soon as you tell the other person a number, you’re essentially telling them one of your cards. You have now given them leverage. Instead you should find out what’s in their hand first. Here’s how:

When a prospect asks about options, promotions, discounts etc. there are two paths to choose from. The rep can either tell the prospect there are no options, discounts or promotions. The other option is to play ball. Here’s how:

1) Do Not Answer - The are asking you to break the first rule and show your hand and say a number or options firsyt. Hence giving them the leverage.

2) Acknowledge Without Committing - Don’t ignore the question but offer no details. Disarm them, reassure and seem accommodating by saying something generic “I’d be glad to come up with some customized packaging”. You’ve committed to nothing specific at this point.

3) Tipping the Other Hand First - Now get them to show their card and have them say a number or option first “What do you have in mind?”

This is a great way to have a more balanced negotiation. The last thing a rep would want to do is offer a discount when the prospect needed billing installments. Now the rep is stuck having to honor both! Knowledge is leverage and as a sales person you have the tables in your favor. 

Stay tuned! Tomorrow's Article:

5 Step Guide to Bombing Pricing Negotiations

 

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Topics: Sales, Price Negotiations