Consider this scenario: The customer says, “The competition has the same thing you have, but the price is lower.” What does the sales rep do? Possibly point out differentiators and highlight the value to the customer. If that doesn’t work, free value-adds might be thrown out to entice the customer to buy. And what if the customer continues to maintain a hard price position? In my experience, the salesperson will often end up giving in to the customer’s demands, lowering the price or margin or both, sacrificing profitability to save the sale.
As managers, most of us spend considerable effort on training our sales teams to handle objections effectively. But it’s difficult to overcome the perception—true to some extent—that customers hold the winning card in their ability to buy elsewhere. So the question is, how do we even the playing field and equip our people to see more options and gain more win-win deals?
It’s my belief that one of the best tools to add to the sales toolbox is the skill of principled negotiation; specifically, the ability to uncover the interests behind a customer’s position. Instead of sitting opposite the customer at the bargaining table and feeling in a one-down position, the salesperson focuses on the interests behind the customer’s position and looks for ways to align with those interests.
How does it work? Let’s go back to the scenario we started with—a combination of commoditization and price objection. The customer takes a firm position: “I will only buy if you drop your price by 20% to meet the competitor’s price.” Instead of trying to convince the customer that the price is worth it, or offering an unprofitable price adjustment, a skilled negotiator will ask, “What’s most important to you about the price?” Or “What are some of your concerns about our price?” Questions like this are designed to reveal the customer’s real interests—the motivations or concerns behind the position. In this case, the interest might be to stay within a limited budget, meet a company cost reduction guideline, or please a demanding boss who has set a price limitation for this purchase.
Once these kinds of issues are out in the open, the salesperson has something to work with, and the conversation can turn to options: a creative approach to financing, unbundling a solution to allow incremental installation, or combining funding from several different sources. Effectively, customer and salesperson are now sitting on the same side of the table and working together to satisfy both their interests.
The most important advantage is a change in mindset from “I must deal with the customer’s objections” to “I need to understand and respond creatively to the customer’s real interests.” Instead of seeing the customer as a potential adversary, the sales rep can see the customer as an ally in solving problems and generating options to gain a win-win agreement. By consistently using principled negotiation skills instead of objection handling skills, sales reps will actually hear far fewer objections in the first place; and if they do, they’ll be better prepared to respond effectively to achieve that genuine win-win agreement.
Have you tried getting your salespeople to negotiate rather than just respond to objections as they come up? What have been the results?
Do your salespeople have trouble handling price objections? What problems have you noticed? What have you done to help your salespeople overcome their difficulties?
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