You don’t have a choice about whether you will negotiate or not. The choice is about whether you negotiate well or not.
Idea #1 Have plenty of prospects
The best negotiators in the business are usually the DSRs with more prospects than they can handle. It stands to reason, if the salesperson is desperate to take an order, he or she will be more susceptible to pricing pressures. When the DSR knows that other orders will be written from many other customers this week, he or she is more likely to maintain price and gross profit integrity.
Here’s how this works; you are working on five active and three new prospects. Among the five active accounts are two who should close within 2 weeks to a month. Your experience with these prospects indicates they will be buying $2,000 to $2,500 drops each week. While taking an order, one of your customers says, “I can get that Applewood Smoked Bacon for four cents a pound less from your competitor.” How will you respond?
Now, let’s change the situation: You haven’t had much luck with your prospecting. You’ve been busy trying to maintain your existing customers. You had a couple of prospects, one closed and another one told you he was very busy the last time you dropped in last month. Again, one of your customers says, “I can get that Applewood Smoked Bacon for four cents a pound less from your competitor.” How will you respond?
Knowing you will have new business to replace any potential lost business will change your negotiation position.
Idea #2 Prepare
Do your homework. The more you know, the more effectively you can negotiate. It should be no surprise when a customer asks for a better price. Know what you plan to do when the customer asks for a price concession. Think about your options before you need to do anything. For instance, if you know the customer has the storage space, you could agree to a price concession if the customer will agree to take three cases of 5.3 oz. seasoned beef patties instead of the normal order of just one.
Think of options you can negotiate, before seeing the customer. You may not need them on this call…but maybe the next.
Idea #3 Know your “Walk Away” Position
The DSR must know his or her bottom line limits to price concessions or “deals.” Regardless of the potential sales revenue, at some point the “deal” is not worth the price of the requested concessions.
In some negotiations, the DSR will be faced with the customer who is just asking too much. The challenge is to know when you have reached that point and before every negotiation, the professional should know the limits…the “walk away positions.” Again, having plenty of prospects makes this strategy much easier. This not only strengthens your position, it will also win you some respect.
Idea #4 Use concessions to get what you want
Professional negotiators know what they can and what they want to bargain with. Predetermined concessions allow the negotiator to find solutions to setbacks and avoid impasses.
Example #1
Customer: How much is your dumpster cleaner?
DSR: $37.50 per case of 4 bottles @ 32oz each equals 128 oz of product
Customer: I only pay $35.00.
DSR: I guess we could match that.
OK, the DSR kept the business. That’s good right? Not so fast, Sparky. What did the customer learn from this experience? He or she learned that the DSR’s prices are subject to negotiation…all of the DSRs prices are subject to negotiation. So, he has an “obligation” to challenge (perhaps all) prices from this DSR. He further learned not to trust the DSR because if he could be charging $35.00 now, why wasn’t he charging that price all along.
What would happen if the DSR was prepared to use a concession technique?
Example #2
Customer: How much is your dumpster cleaner?
DSR: $37.50 per case of 4 bottles @ 32oz each equals 128 oz of product
Customer: I only pay $35.00.
Consultant: I might be able to get my price reduced, if you would give me the table top sanitizer and degreaser business.
What did the customer learn from this experience? He or she learned that the DSR’s prices are not easily negotiated, that the DSRs prices are firm unless the customer was willing to make some concession. In this example, the DSR did not offer to lower the price to $35.00. The commitment was to try to lower the price if more business was added to the chemical order. The DSR also implied that he “might” be able to do something, indicating that someone else would have to give approval.
Idea #5 Practice
Like anything else, getting good at negotiating requires practice. Develop your confidence by practicing whenever you have the chance, whether it’s at a flea market, or at home when one of the kids wants the newest version of some computer game. Now, that can backfire on you. I asked one of the grand kids to come over and sweep pine needles and leafs off the roof recently. He acknowledged that he could certainly take care of that for me if I could take him to a music store in a neighboring community. Good for him.
Get used to negotiating in your daily life; then when you have to, in an important business situation, you can negotiate comfortably and confidently.
The other important issue here is majors vs. minors. Baseball players spend time in the minor leagues before reaching the majors. You and I should do the same thing to gain confidence. Practice negotiation skills with smaller customers on minor issues before dealing with major customers on major issues
Idea #6 The Details Count
In food service sales, we all understand the importance of details. It’s the difference between the customer getting six cases of four-ounce portions or four cases of six-ounce portions.
During negotiations, the DSR who relates a detailed offering is usually in the strongest position. Think about this, we sell cases of product but our customers are buying and selling servings of product. It’s an important detail. The customer is buying cases of head lettuce by the pound but serves portions. When we look at how many servings he gets out of the case, we can discover his real portion cost. That’s a critical detail if you are asking him to start using pre-cut salad mix.
If you are attempting to introduce a new product, you need to know the details.
“Here’s the facts Mr. Customer, it’s $38.25 case. Portion cost is.56. Now if you sell 100 orders a week at a your food cost, you will have a gross profit of $315 or $1,260 per month.”
If the customer is asking for a concession, you may offer a discount for multiple case purchases. In that situation the cost would drop. We explain that in terms of portion cost, “Mr. Customer, that discount would lower your food cost by.035 per serving, saving you almost $4.00 a month.”
Bottom line, take charge of the details or loose to generalities like “It sounds too expensive to me.”
Idea #7 Don’t appear needy.
My neighbor has a ferocious dog in his back yard. No matter how many times I’ve told that dog, I’m not intimidated by him, the dog knows better and keeps barking and attacking the fence People are like that, they can smell desperation and fear. They can read your poker face and many will try to get you to make a large a concession or give a discount that’s too deep.
We are vulnerable to this when sales artillery rounds are slamming you from all directions. The trucks are running late, they delivered the fish to the steak house and the steaks to the seafood caf and the credit department wants to talk to you about a bad check from your biggest customer.
You walk in looking and feeling weak and vulnerable. Some customers will want to take advantage of your misfortunes and open up negotiations on the 40 cases of fries they buy each week.
One answer is to, walk in feeling better, change your state of mind. I have certain music that will consistently put me in a better mood. Some DSRs I know have visualization exercises they use. Others will briefly drop in on favorite clients, the people who always love to see you. These are the places with the waitresses who think the DSR hung the moon. Find a way to change your mood before you make the next call
But remember, the first key to keep yourself from appearing desperate and vulnerable, is to maintain plenty of prospects.
Idea #8 Don’t take it personally.
The sales ego is actually a pretty thin veneer for most of us. We like to please people and we like being liked. Therefore, when our proposals and negations are rebuffed, we often take it personally. Once your emotions are involved your ability to perform, to think quickly with sound judgment will be impaired. In these situations it’s all too easy to say something that can fracture a relationship or damage your credibility.
It’s one thing to talk about keeping emotions out of the equation but it’s actually easier to plan for the negative scenario and remove the negative upfront.
I learned one classic technique while working with Susan Perry, a DSR in St Louis. She was making a major proposal to a customer she had served for sometime. The negotiation reached a conclusive impasse and we rose to leave. Susan turned to the owners of the five-location chain and said, “Guys, I’m really sorry I failed to do enough preparation for this meeting. You know I wouldn’t make a proposal like this unless I was absolutely confident it was the right thing for you to do. So, I’m really sorry I let you down.” The customer stopped her from leaving.
Twenty minutes later we left with the entire order. I remarked that her emotional commitment showed real dedication to her customer. She replied, “Yeah, it works most of the time.”.
Idea #9 Don’t force it.
Buyers wounded by twisted arms seldom forget. Aggressive negotiations and “pushy” tactics rarely produce anything but fractured relationships, mistrust and frustration. I have seen situations where a DSR gained a short-term sale but in the end it seldom works out well. Most often, the customer that feels he or she was pressured into “buying” will spend a lot of future energy finding reasons why the product does not work.
Some customers, sensitive to pressure, will not buy even after they recognize the negotiation is in their best interest. They may even buy the same product from a competitor once the offending DSR has left.
Finally, we recognize that there are some buyers who put off decisions or who resist change for the sake of the living with the familiar. The well-prepared DSR will anticipate the reluctant buyer. It is the DSRs responsibility to be ready with alternatives and concessions that move the customer off of the fence and help him or her make the right decision.
Idea #10 Just Ask for the Order.
For many DSRs, negotiation and closing are particularly stressful. They feel uncomfortable asking for things they want. But if you don’t ask, you don’t get!
First, let’s face it, negotiations is not really a life or death situation. Win or loose nothing much will change, the sun will go down and come up and you will pay taxes even if it doesn’t. Of course, you want to win them all but it’s amazing how much better you will get when you recognize that it can be fun.
Second, we can look at negotiations as a sport or a game. The more you play the better you will get. Do you remember when you first started learning how to drive the family car? At first, it was intimidating but the more you practiced the easier it became. You had to remember all the rules of the road and learn how the car responded to your commands, but soon you became comfortable with the whole experience. Using negotiations skills can become just as natural after you have played the game for a while.
Finally, recognize that your job is to help the customer grow and become more profitable using your company’s products.
As you incorporate negotiation skills into your daily selling efforts, you will build the client relationship and win terms, prices and deals that are advantageous for you, your business and the customer.