When I’m working with a salesman to debug a thorny sale in process, I always say, “tell me about the people” before any other question.
The secret of successful negotiation of any sales process is: handle the people first – and the business will take care of itself.
Graduates of business schools can deal with spread sheets, graphs, case analysis and more but they traditionally never get one hour of training on negotiating skills with a live person. What they get is a clinical, ivory tower approach to business, which is vastly different than real life as any entrepreneur can attest.
How you sell something is often the key to keeping the customer satisfied, and price is not always the crucial point. Everyone likes a good deal and no one likes to feel that they’ve been taken advantage of.
For example, have you ever noticed that if someone jumps at your first offer or mention of price, you’re left just a little bit unsatisfied? In this circumstance, no matter what the price is, you’re left with the feeling that you overlooked something, undersold the account or that your competition is charging much more for the same service, and you go away with the feeling, “I could have done better.”
For example, if you’re selling ads in a magazine and you quote the price as $2,000 for a full-page ad. If they immediately jump at your quote, you’ll go away feeling you could have done better.
You say, “It’s certainly worth it, but I can’t afford that much just now; the best I could possibly do is $750.” If he jumps at that price you’ve offered, you’ll end up thinking that you should have bid less as he was too anxious to take the lower price. This is true even if you put the price ridiculously low. If you had said, I can only afford $300, and the salesman quickly accepted the offer, you’ll still end up thinking you could have done better.
On the other side of the coin, if you’re offering something for sale, a product or a service, and they jump at your first mention of price, you’ll always feel somewhat dissatisfied, like they got the best of you in the negotiation somehow. This is true even if you normally would have been very happy with the sale.
For example, if you are selling a service, you explain what you can offer and they are interested. They say, “What does this cost?” You say, “The best I can do is $2,500.” They say, “Great, I’ll do it!” You’ll be left thinking you should have expanded your service offer or that you overlooked something in what you have agreed to do. You’ll feel they got the better of the deal even though your prices where reasonable.
Try to find out what their negotiating range is. Usually a buyer of services or products will have a buying range that will give him some flexibility in authorizing the purchase.
Before stating your price, always ask, “What is your budget?” If they can’t or won’t give you the number, ask,
“Do you have any flexibility in the price.”
Often they will give away the bulk of their negotiating range before you offer your price, offering up not only their budget but also how high they are authorized to go without approval from a superior.
This information gives you an enormous advantage in how to adjust your first mention of the costs of your services.
For example, lets say that your normal fee range is between $3,000 and $4,000 and when price comes up they say that they can instantly approve anything up to $5,000 but that if it’s going to be more than that, they’ll have to get approval from their superior.
You say, “That should be fine, but I’ll have to check with my partner.” Then excuse yourself, step outside their office for a minute to call your partner. It is important to have a “partner” even if it is your wife or husband to provide a layer of credibility into your dealings. Then when you come back you can say that your fee is normally a bit higher but that you are willing to accept the $5,000 so you can get started on the project now.
Just remember to handle the people first and the business second. They’ll feel better about the purchase and you’ll feel better about the sale. This is where a “win-win” comes into the picture.
daniel w. jacobs
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