Negotiation - A dreaded word for Sales people

Negotiation is one of the most critical steps of a Sales cycle. You need to make your company happy by maintaining decent margins at the same time make your customer happy by making him feel he got the best value for money.

Most of the salespeople believe that their product is overpriced. The moment the buyer says your prices are too high, immediate internal dialogue is “I always Knew it”. Now let me pass on the buck to my boss let him handle the situation. So, I was handed over a situation by my Salesperson at Delhi where we had quoted 12 lakhs for a product and our competitor had quoted 9 lakhs for a similar product. The buyer is not willing to close the deal till we match those prices. The usual pressure of achieving the target looms large on the Salesperson. I must get this order somehow, come what may.  So, we visited the buyer’s office. The buyer is a leading architectural firm in Delhi, and he has evaluated both the products and was ready for a Negotiation. The one good news, (What we term as buying signal) the buyer is yet to place the order on the competitor despite a 3-lakh price difference, indicating that he is still willing to give us an opportunity to deal with him.

“Good afternoon, Mr. Chaudary!” I greeted him with a warm smile, and he welcomed us in his conference hall. I observed that he had a comparison table in his front ready to attack me and pull down the prices based on that. My strategy was clear “Differentiate, don’t compete”. So, I started off with my personal introduction followed by company’s introduction, buyer quickly interrupted and said I already know about your company. I still insisted that I would like to take him through our journey and how we evolved as a company with the objective of solving engineering problems and recently introduced 3D printing. The moment I talked about 3D printing, he got excited and called his design head and we gave a presentation on 3D printing. You may wonder how this is relevant to the current context. Well, my objective was to divert him from current criteria of price and make him look at bigger picture. So, I asked him at the end of presentation “How did you like it?” he responded stating it’s great. Then I asked, “Would you like to deal with company like ours who thinks about the future and customer needs or a vendor who pushes their product based on price?” He reluctantly accepted that he wants to deal with us however price is a big barrier. Then I asked, “What car does your Managing Director use?” he was surprised by my question but answered that with “Mercedes E class”. “So, Do I understand that your company values brand, quality and class?” He accepted my argument unwillingly. I followed it up with “Would you want your customers to know that you have got a Mercedes equivalent in your design department? Will it make an impact on them if they find that you have got the best in class technology to serve them?”

Now Mr. Chaudary had to accept that good quality and brand costs money and it has more value. Still he came up with “I am OK with this, but my MD may not accept this price” Now I clearly understood it’s a mere negotiation he is trying to do. “I am sure he will accept your recommendations, Won’t he?” Well “sometimes he may accept and sometimes he will reject.” “Can you share with me the last time you bought something at a higher price and your MD approved the same?” He quickly responded with “Last year we bought a CISCO network at almost 40% premium and I was clear with my choice”. “Can we have the order tomorrow?” He said, “My MD is travelling, and he will be back on Monday”. “So, can we collect the order on Monday?” he smiled and said “Yes”. With a broad smile in my face I thanked him for his time and the order. Yes, we got the order at the price we had quoted.

My Sales executive was totally surprised. I just told him that its important to focus on key criteria for decision, so I just shifted the decision criteria from Price to Brand image. Lesson: Always remember there are other more important criteria in a high value sale than Price.