NEGOTIATION

True / False When the customer wins, the salesperson loses. When the salesperson wins, the customer loses.

Unhappy buyerwill seek other sellerslost relationship for the current seller

Unhappy sellerfewer service provisions & poor qualitycustomer bears the cost

Negotiations should aim at making all the parties involved satisfied.

Do I need the product?

Do I need your product? Change is always hard to manage.

Do I trust your company?

If the seller’s company is smallWill they be able to deliver what we need?

If the seller’s company is bigWill they value us as a customer?

·  Is this your best price?

·  Price is the consistently most cited point of conflict in

negotiations

·  Professional buyers (B2B) are responsible for buying the

lowest-cost product

Is this your best price? What would you respond to “ Your price is too high ”? = “ The value I perceive for buying your product is not

greater than the price your are currently charging .”

Is this your best price? Reference price: The perception of a fair price

Internal: By referring to what we remember External: By referring to what is posted (e.g.,

manufacturer suggested retail price (MSRP))

Plan & Prepare Have an excellent knowledge of your customer Anticipate the objections A carefully developed sales presentation can help to

resolve customer objections Do not get to price before discussing the value

proposition

Say What you Mean and Mean What you Say Be honest Do not conceal facts (it is as bad a lying) Deliver on your promises

If you promise to follow up in the afternoon, make sure you do it

When you do not know the answer, just admit it; do not try to bluff or trick the customer

Customers do not expect you to know all the answers, but they expect you to find out

Say What you Mean and Mean What you Say When customers trust you and your company, they are less likely to be concerned about price, ability to deliver

products on time, product quality, and customer service.

Negativity Destroys Negotiation Control your emotions, especially anger!

Be a good listener Validate customer concerns

Question Turn the customers concern into a question and refocus on

one or more strengths of your value proposition.

Buyer: Your product is 10% more expensive than company A’s.

Seller: Yes, it is. But do you agree that the higher quality of our product means fewer returns and lower service costs for your company in the long run?

Question

Buyer: Your tuition is too high. Seller: Yes, it is. But, won’t you learn better in smaller

classrooms where faculty can pay more attention to individual students?

·  Direct Denial

·  Confrontational strategy for dealing with customer

objections.

·  Customers may react negatively.

·  Use this strategy when the customer states a clearly false

and damaging statement about you, the company, or your

product.

·  Avoid being offensive, insulting, or condescending.

Direct Denial Buyer: I was told recently that you had to recall all of your

production for the last two months because of a faulty relay in your switch mechanism.

Seller: I’m not sure where you could have heard that. We have not had a recall on any of our products for over 10 years. If you like, I can provide the data for you.

Is this method appropriate for direct customers?

Type A

DIRECT

STATUS QUO

INTERPERSONAL

CONTEMPLATIVE

Type B

Direct Denial Buyer: I hear that your products are expensive for no good

reason. You are not offering a better product than Company B.

Seller: Well, sir, I think I beg to differ. Our product has been the J.D. Power number one in quality for the past 5 years.

Compensating for Deficiencies This moves the customer from focusing on a feature your

product performs poorly to one in which it excels.

The key for this strategy is that the feature must be important to the customer.

Compensating for Deficiencies Buyer: The response time on your product is slow.

Company C’s response time is two-tenths of a second faster.

Seller: I agree with you. Our product is two-tenths of a second slower. However, please note that it also costs 25% less per unit. You indicated that price was an issue in your decision. I would also add that our product has 10% fewer returns than Company C’s. I have the numbers right here if you would like to take a look at them.

Compensating for Deficiencies Buyer: Most of the competing products come with a

radar-controlled cruise control. Yours does not!

Seller: I agree with you. But, at the same time, we are more cautious than our competitors about introducing new features. Our other features, like out backup camera and sensors are number one in quality. I have the KBB rankings right here.

Feel-Felt-Found Look for clues such as “in my opinion”, “I believe”, and the

like Acknowledge the customer’s feeling: I can see how you

feel... Extend the same feelings to a larger audience: Other

customers have felt the same way ...

Counter with a legitimate argument: However, I have found that our products ...

Feel-Felt-Found Buyer: In my opinion, your products are overpriced and

not worth the extra cost.

Seller: Our products are slightly more expensive than the competition and I can certainly see why you feel that way. Other customers have felt that way at first. However, when they take the time to examine the product quality, they have found the overall value to be worth the investment.

Feel-Felt-Found Buyer: Why should I pay more for a phone. After all, I

believe a phone is a phone.

Seller: Our phones cost more and I can certainly see why you feel that way. Other customers have felt that way at first. However, I have found that upon spending some time comparing our phones’ performance with the competitors, our better performance will justify the price.

Bounce-Back Turns a customer’s concern into a reason for action. Often very effective with objections about needing more

time or a lower price. Buyer: I’ve listened to your presentation but need more

time to consider your proposal.

Seller: I can appreciate that this is a big decision for your company. However, delaying this commitment only costs your company money. As we agreed earlier, my products will save you nearly 40%.

Trial Offer Allows the customer to try out the product without the

commitment to purchase. Clearly define the terms of the trial offer beforehand. Make sure the customer is fully educated on the product.

Trial Offer Buyer: I’m not willing to make a commitment to your

copier today. It seems complicated and hard to use.

Seller: I can appreciate your concerns. How about I have our service department install one for you and let you try it for one week. I will come by and demonstrate it for you. You are welcome to use it for one week without any obligation. If at the end of the week you do not believe this copier satisfies your needs, call me and I will come and pick it up.

Trial Offer Buyer: I am kinda in the middle of something and do not

have time for a demonstration. How about I call you later with a decision?

Seller: I certainly can appreciate that. How about I give you the access code to the machine real quick and you use it for the next week. Then, I will call you to see whether you are satisfied and would like to buy the machine.

CLASS ASSIGNMENT

1. Get together in your chosen groups.

2. Perform three rounds of negotiations. The buyer decides at the end of round 3.

3. The choice of the selling object is up to you.