Times have changed. The markets have changed. Competition has changed. Customers are informed on products and services, therefore the way you handle a sale, the negotiation process and even the closing have also changed. The classic scenario was as follows: Start off with a high opening offer, customer counter offers with a very low one, and then meet somewhere in the middle. In this article, we will examine one of the new methods of handling the sales/negotiation discussion.
Below are three terminologies that will be used to better explain the sale and negotiation process:
1. ANCHORS: It refers to a target or goal. Usually associated with a price (figure). Both parties can have an anchor.
2. CHILLING EFFECT: One of the negotiators looses all motivation to continue the discussion (negotiation)
3. BATNA: This term refers to the Best Alternative Agreement ( Fisher & Ury, 1981)
Back to the present now, unfortunately the above mentioned tactic won’t even allow you to get noticed. This doesn’t mean that tactics used for the last century are no longer effective, but rather need a reexamination and adjustment. The need for this readjustment/ reexamination, is that majority of sales now happen in the faceless online world, and if your opening offer is high, then you will not even get the lead, the chance to enter the discussion with a potential customer.
The below technique is for sales people who are well informed on their product/services, understand competitive advantage and also have the stomach for it. This technique requires a lot of practicing and you must be equipped with facts, figures, and a lot of patience. Be wary of the vocabulary you will use and your attitude towards the other party, otherwise it might have a chilling effect.
How to get started is simple, but will take some time to master in order to be able to go from lead to actual sale. First off you need to lower your anchor (asking price) and bring it closer to your BATNA (Best Alternative Agreement). The higher your anchor is, the more likely is that you will get lost in the midst of the competition. Lower your anchor to stand out from the competition. When the leads come in, and they will come in, then it’s up to you and your team to turn it into a sale.
Here is how is done: Have you ever seen a movie with knights, who declare where the last stance will be, and when the battle begins how their main goal is to hold their ground? Your approach must be the same. Hold your anchor, and don’t take a step back. Potential customers will of course engage in a discussion, or even try to negotiate for better, lower price. It is in our nature. Show that your are serious about your offer, and repeat all the pros without referring to pricing as much. Always keep in mind that the main reason they have chosen to contact you, is because your pricing is better than competitors. If you take a step back, it will be the first of many.
Not stepping back shows how serious you are with reference to your product and pricing. In addition you come forth as credible, by providing facts and market knowledge while sharing them with the customer. Spend time with them and repeat the key benefits of doing business with you, whether it is about the product or your organisation. All of this comes together with a lot of patience. Take the necessary time to convince of the benefits, and when you see the customer countering his initial offer closer to your offer, then simply fall back on your BATNA (or close to it) and seal the deal. Closing the deal in that way, still leaves the customers with the feeling that they got the best bargaining price out of an already excellent package.
Two benefits from using this technique are:
1. It will bring in more leads. More leads means more potential sales.
2. Directly puts pressure on the competition. Those who can’t compete, will fade away.
Not all sales or negotiations have a simple or happy ending. For this reason, you must always have a walkaway strategy. When the customers sticks to their anchor, which is at a big distance from yours, and after all other means of persuasion have failed, then it is time to simply walk away. Have faith in your product, and more leads will follow. Being ready to walk out shows that you are not desperate for the deal, and that you are only interested in engaging in a serious conversation, and not a battle of egos.
Having used this technique myself for the last few years in sales, not only have I managed to see more customers, but also increased the conversion rate drastically. Just like the knights, declare your battlefield and hold your ground!
I hope you have found this topic interesting and useful. What do you think about it? All feedback and comments are welcomed.