(Sales Rep) … isn’t that awesome? Can we go ahead and move
forward with an opening order?
(Customer) How much will the total be?
(Sales Rep) We can get everything that you saw in here for
only $XXXXX.00, fair enough?
(Customer) How about $XXXX.00, can you do it for that?
What should our Sales Rep say next? This is a question that
just about every Sales Rep finds himself or herself facing. Sometimes it
happens daily and sometimes rarely, but it happens to all of us. How we reply
to the customer’s offer can affect every future sale made to the customer.
Before I get into the reply I like to use and the reasons
for the reply let’s discuss the “WHY’S” behind the request from the customer.
When a sales rep makes a presentation to a prospective buyer
a couple of things need to happen;
First, the buyer needs to understand how your product or
service will benefit them. The term “them” is plural because the buyer has to
be clear on how it will benefit him or her personally and how it will benefit
the company. If you satisfy one without the other you can still make a sale,
but the path to the sale becomes much harder to follow.
Second, the buyer needs to understand what exactly your
product or service does and how it fits into their business. You may have the
greatest green widget in the world but if the buyer only uses pink widgets you are
not fulfilling their needs.
Third, the buyer needs to understand the ROI (Return On Investment)
of your product or service. If your product or service will cost $100.00 and
the buyer can’t see how to recoup the investment in a reasonable time your ROI
is not going to make a pretty picture.
If all three of the listed things happen, in most cases the
question will never come up, however some buyers will ask for a price reduction
regardless of the value you presented. For these customers you need to think
and evaluate the situation before committing either way.
You need to realize some buyers are instructed by their
companies to demand a price cut, and if the sales rep doesn’t give them a cut
in price they are told to pass on the sale no matter the value or ROI. This
doesn’t happen often but it does happen. More often the buyers ask for a price
cut because many times they get a bonus on YOY (Year Over Year) budget savings.
The more they save the bigger their bonus, you would ask too. And finally some
buyers just enjoy the negotiations and it has nothing to do with the final cost
at all.
Every sales rep knows what they can and can’t do with their
prices. Some reps have no flexibility on price, some need to get permission
from a manager to change a price, and some have full control over pricing.
If you are a rep that can negotiate price on your own you
always need one thing before you ever lower your price… A GOOD REASON FOR
LOWERING THE PRICE!
Let’s go back to our buyer, he made you an offer for your
product or service, if you say OK without any reason for saying yes the buyer
will never know how deep your well is. The next time you quote a price the
buyer will want more of a reduction and every time you say yes without a good
rationalization you will be fueling the buyer’s fire to ask for deeper and
deeper price cuts.
On the other hand if you give a good reason that the buyer
can understand you can make the sale and you will set yourself up to control
all future negotiations. Let me give you an example. You quote your price and
the buyer offers you 10% less than you asked. Saying that you can meet their
price however it will take a larger order or a longer contract is something the
buyer hears all the time. It is logical to the buyer and will satisfy whichever
reason they asked for the price cut.
You can accomplish the same result by tying additional
products to the sale or shorter payment terms. No matter what your reason, the
important thing is to have a reason. Without a good reason for a price cut the
buyer will never be sure how deep your well is!
Lorin
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