From the Buyer’s Perspective: Getting the “Best Deal”

Have you ever thought you had a agreement, then ran into a negotiating buzz saw? You probably ran into a strategic purchasing professional or someone they trained. In this economy, more and more organizations are engaging strategic purchasing professionals to:

1. help evaluate and recommend the best products and services to satisfy their needs
2. ensure their clients pay as little as possible on each purchase
3. minimize short and long term risks

Just like the sales person has incentives to hit revenue targets, strategic purchasing professionals are likely to have MBOs for cost savings with bonuses tied to them. How do they create these huge cost savings? Initially, by doing extensive research, cost benefit analysis and networking to determine which vendors they should talk with in the first place. Second, by being the best negotiator in the room. When negotiating, they leverage power where ever possible. Here are a few examples of the types of power they leverage:

• Creativity
• Vested Interest (the ability to get you to invest in them and their company)
• Legal
• Relationship
• Endurance
• Expertise

In addition to leveraging power, strategic purchasing professionals may use tactics to test their counterpart’s (the sales person’s) negotiation skills. Negotiation tactics are defined as games or tricks used to expose weaknesses within the sales person and his/her organization. For example, some of the most common tactics include:

• competition
• violins
• intimidating language or tone of voice
• foggy memory
• ultimatum
• inside information

Strategic purchasing professionals always do their homework. As a business to business salesperson you may walk away from the agreement with your commission and then you’re off to the next opportunity. The strategic purchasing professional has to live with your product for years. They never want to make a mistake.

My advise to business to business sales professionals. Take the time to become a skilled negotiator and prepare for each negotiation. The idea that anyone is a “natural negotiator” is a contradiction in terms. The skilled and prepared negotiator gets the best deals on average. Recently, a sales managers told me “I have a really good sales person, unfortunately he’s a poor negotiator. As a result of the discounts his customers get away with, he has to close twice as many deals as his colleagues.”

I recently interviewed a group of strategic purchasing professionals to get their opinion on two topics: what would they list as fatal flaws for a sales person and what’s a compelling approach a sales person can make to be more effective?

Fatal flaws included:

1. arrogance
2. poor presentations/demonstrations that aren’t tailored to the audience
3. poor follow up
4. trying to go around the strategic purchasing professional

What approach works with strategic purchasing professions? They need to believe, at the very least, they are paying no more than anyone else for your product or service. By letting the purchaser know that you need to be and are fair to the market you are serving by keeping pricing consistent for like products and service offerings you’re likely to have a smoother and productive negotiation.

→ No Comments
Categories: Differentiating You, Major Account Selling, Negotiation, Sales Management, Sales Skills, Tactical Selling Skills, Uncategorized

When Buyer’s Use Negotiation Tactics

How many times have your heard a customer sing the sad song of an “erratic economy” or “unstable financial times” as a way to get deep discounts. This tactic, or negotiation trick, is known as “violins.” While some companies are experiencing very trying times, this isn’t true of all corporations. Borrowing from Charles Dickens, I’d say it’s been the best of times for some corporations and the worst of times for others. Even the companies who are experiencing the “best of times” are using “violins” to get amazing prices. These “well off” companies have told me, “just because we’re not suffering financially does’t mean we shouldn’t be able to get in on the great deals.” The best sales professionals have learned to approach the negotiation process as a game.

So, how does the effective sales person deal with buyer tactics and avoid becoming a victim? The first step is recognizing a tactic. A negotiation tactic can come in many forms and by definition is a gambit or probe used by the buyer to expose and/or weaken the sales person’s position. The important thing to remember is that negotiation tactics are not demands, they are bluffs made up by a buyer to get “unreasonable” deals from the seller.

Once you’ve recognized the tactic, the best way to deal with the tactic is to neutralize it by countering the buyer’s tactic with a seller tactic. It may seem counterintuitive to some, but it is essential that the buyer understands that the sales person is on to the buyer’s games and that the sales person can play this win/lose game too, and perhaps even better. Once the buyer believes he or she can’t beat you at this type of  ”game” you may have a chance to raise the negotiation from the win/lose level to the balanced level. The balanced level deals with real demands and is typified by “quid pro quo.”

Some of the most common tactics I see are “competition,” “hoops” and the “fritz.” And let’s not forgot the all time classic, “your price is too high.” As the name implies, “competition” is when a buyer says something like, “I may have to look and see if your competition is willing to meet my needs.”

Hoops

You might be experiencing “hoops” if a customer asks you to do a series of worthless tasks without a clear end in sight.

Although “hoops” may be one of the most frustrating tactics to get caught up in, it can also be one of the easiest tactics to counter, by asking the customer, “if I fulfill your request, do we have a deal?”

Fritz

The “fritz” tactic can be the most intimidating to experience and usually comes across as loud and abrasive language in response to something you’ve said, usually immediately after you’ve shared your price.

In summary, the first step in dealing with buyer tactics is awareness. The second step is to neutralize the buyer’s tactic by countering or exposing their tactics. For example, if a customer uses “fritz” on you, you may counter with your own “fritz” or any other tactic. Any tactic can counter a tactic.

Balanced Agreements

Warning! When you engage in win/lose negotiation, typified by either or both sides using tactics, there is always a chance your negotiation could end is lose/lose. If you are adept at countering or exposing tactics, you may be able to raise the level of negotiation to balanced or possibly win/win.

Buyer’s negotiation tactics are not demands, they are games. Tactics are designed to fool or trick you into caving and lowering your price. A customer demand, by definition, is a deal maker or deal breaker. The wise sales person can tell the difference. When a customer makes a demand, you are in prime position to make own your demand of equal or greater value. Recently, one of my clients experienced a negotiation that went like this… The seller requested 50% payment up front and 50% upon delivery of services, with payment terms of net 10 days. The buyer stated that their policy is to pay in net 30 days. In response, the seller said he could go along with the “net 30″ if the buyer allowed the seller to submit the invoice at 100% immediately. The buyer agreed. In the end, the seller was delayed the initial 1/2 payment up front, but received the full payment earlier than originally expected.

→ No Comments
Categories: Creating Ideal Customers, Executive Selling, Sales Management, Sales Skills, Sales Stories, Selling in Difficult Times, Tactical Selling Skills, Uncategorized, negotiation skills, professional development

How Would Peter Drucker Sell?

When I review a sales team’s questioning guide, I typically find thoughtful questions. However, the questions are often in no coherent order. Or at least no natural order that would help the customer feel comfortable and confident to open up and engage in a truly productive and insightful conversation.

My main goal with any customer conversation is to add value to the customer’s thinking and decision making while uncovering and satisfying their critical success factors. When we ask good questions, we have a much better chance of getting good answers (no guarantee, it’s still sales). Furthermore, when we ask good questions in an optimal flow, we have an even better chance of getting really good answers.

The SPIN® Selling model provides one way of organizing your questions. Personally, I prefer an approach that helps me uncover BINGO information. Uncovering BINGO Information offers a slight, but important twist to the SPIN® Selling model. Here’s a brief overview:

• Background
• Issues/Impact
• Need/Benefit
• GO for the close

I was once told that Peter Drucker (1909-2005) said every business should be asking themselves two questions. The first is “what are we doing?” and the second is “what should we be doing?” Background questions are similar to “what are we doing?” Background questions deal with the general facts, goals, vision and what is working in your customer’s world. Furthermore, background questions help you warm up the conversation and are always safe, neutral or positive in nature. Issue questions are similar to Drucker’s second question, “what should we be doing?” Issue questions are far more interesting as they help uncover the difference (or gap) between what the customer is doing today verses what the customer could be doing. However, issues alone are rarely, if ever enough to propel a customer to take action. This is why we need to follow issue questions with powerful impact question. The purpose of the impact question is to help quantify the cost of not resolving the issue.

→ No Comments
Categories: Creating Ideal Customers, Engaging Your Customers, Questioning Skills, Sales Management, Sales Skills, Selling Process, Tactical Selling Skills, Trust and Credibility, Uncategorized

Know When to Walk Away from the Sale

As a sales person, how hard is it to walk away from a deal?

You’ve worked hard to get as close as possible, but in your heart you know the customer is not a good fit, is unlikely to be a good referral and will probably take an inordinate amount of time along the way. The wise sales organization and sales person knows when to cut their losses and move on to better opportunities.

What steps can you take to improve you ability to better qualify and sell more efficiently? First, define your ideal customer. What do they look like? What are identifiable characteristics you can learn in advance or can quickly uncover through effective questioning. Your list may include topics like:

• culture
• current processes
• other products they use today
• geography
• industry
• competitors
• employee count
• revenue
• profit
• type of organization (i.e. public, private or government)
• types of products they sell (ie. software, hardware, professional services, etc.)
• other (i.e. they love what makes your solution unique)

After you’ve defined your ideal customer, begin to rank your customer’s on a scale of 1-10, “10″ being ideal. As a result, you’ll purposely spend more time with your ideal customers, help some customer’s become or behave more like ideal customers and minimize time with customers who drain your time, energy and resources. In the end you’ll win.

→ No Comments
Categories: Creating Ideal Customers, Executive Selling, Sales Management, Sales Skills, Tactical Selling Skills, Uncategorized, selling

Effective Negotiation Skills

How important is your ability to negotiate, your ability to get what you want and/or need from others? My friend’s daughter wanted to play volleyball in college after a successful high school career. She was accepted into Seattle Pacific University for her academics and the volley ball coach welcomed her onto the team, but didn’t offer her a scholarship. My friend suggested that his daughter specifically ask for a scholarship. After a little more prompting and motivation, my friend’s daughter did ask, and she did receive… a half scholarship! A huge value!

In the book, Women Don’t Ask, by Linda Babcock and Sara Laschever, they note that “By neglecting to negotiate her starting salary for her first job, a women may sacrifice over half a million dollars in lost earnings by the end of her career…” Imagine what effective negotiation skills might mean to you in your personal life, professional career and your ability to make a major impact for your company.

I’d love to hear about the biggest negotiated win you’ve achieved and how you did it! Please share in the space below.

→ No Comments
Categories: Differentiating You, Sales Management, Sales Stories, Tactical Selling Skills, career development, negotiation skills

Just the Right Amount of Customer Contact

I’m often asked about the best ways to follow up with prospects and customers. I find most sales people are concerned about following up too much and coming across as aggressive, while sales managers have a fear that their sales people may be too passive and not following up quick enough or on a consistent basis.

Based on a McKinsey Quarterly article, The basics of business-to-business sales success, there is good reason to pay attention to how you do follow up. This article is based on a study that shows the “most destructive” sales activity in the eyes of the decision maker is “too much contact (in person, by phone, or via email)”.

I’ve found the best way to ensure the appropriate amount/timing of follow up is to take the guess work out by asking the prospect. At the end of each conversation, agree together how you can best track with and support the customer’s decision making process and when you should talk next. This simple idea saves sales people a tremendous amount of wondering, grief and head ache as to when to follow up. Some of my clients have tripled their weekly productivity by becoming better at closing each phone call with an agreed upon clear next action step with their customer.

“When” you follow up is important, but perhaps the bigger question is, “are you adding value every time you make contact with your prospect or customer?” Here are some simple common sense ways that may help ensure your conversations are relevant and meaningful to your prospect:

1. be brief and to the point
2. open with a quick summary of relevant info from your previous conversation
3. confirm/establish the objectives, then the agenda of the meeting
4. summarize the key take aways from the conversation
5. confirm next action steps and who is responsible for what, including the date/time/objectives of the next conversation

Running effective meetings or facilitating effective conversations is more science than art. One of my clients, an SVP of a very large technology company, shared with me that the most valuable training he had ever participated in was a week long course on how to run effective meetings.

Please share your approach to ensuring the right timing and ways you facilitate relevant and meaningful conversations with your prospects and customers.

→ No Comments
Categories: Closing Skills, Engaging Your Customers, Executive Selling, Major Account Selling, Prospecting, Sales Management, Sales Skills, Tactical Selling Skills, Uncategorized, sell, selling

Negotiating for What You Want

What you don’t negotiate can cost you.
You’ll never know what you can get unless you negotiate for it. The following story is a reminder to me that “negotiation” is a skill that has to be learned, developed, and thoughtfully put into action to work.

Do you ever wonder how much you are paying for your airline seat compared to what the person paid for the seat next to yours? How about what the person at your athletic club is paying to use the same equipment as you each month? And finally, how about the office space next to your office? Well, one of my career development clients just learned the hard way. She was paying $1300/month for a one person interior space with no windows. She was told that the one person office across the hall with the beautiful windows with the forest view was $1800/month. When she asked if their was any room to negotiate, the response was “no.”  A few months go by and she starts to talk with person who ended up leasing the window space across the hall and learned that he was paying $1300/month. After she got over her frustration that she was paying the same as him without the window…, she asked how he got that rate? He replied he asked the management firm to match another (less desirable) space across town or he would walk. He used the “competition” tactic like a pro and it worked!

→ No Comments
Categories: Negotiation, Sales Stories, Tactical Selling Skills

Don’t Give Up!

You have a solid sales process that used to produce lots of money per sales rep, but now is producing next to nothing. What went wrong?
The answer is that the clients started answering your questions with vague answers.  When the person asked for clarification, the client would stall the sales rep with things like we have a few things to check, budget, time lines, etc. The truth: they just were too scared to be honest with us!
Salespeople are numb to the fact that people are not buying.  When you make your follow up calls, they tell you that it’s tied up in budget…but to check back again.  So you wait to follow up, with answers to their questions, but you get stalled again. It’s not until you dig further that you are made aware of the true problem: they aren’t buying and have no idea when that will change.  So as any good salesperson, you dive into your list and start the process again. But the changes are apparent at all companies…there just not telling you!

So we present our sales leaders with some difficult choices. What do we do? Do we just give up? Offer them free terms?

You just need to ask tougher questions. Instead of asking questions about budget, ask questions about their intent to buy. Do you intend to buy this? What will cause this situation to change? Why are they looking to make a change? Where else are they looking? If they have to decide today, will we win or lose? Why? Is anything going on in the company that we need to know about? If you get the answers to these questions, at least you’ll know the status of the deals and now your pipeline becomes real.

Just try it today and let me know if it works.

→ 4 Comments
Categories: Executive Selling, Major Account Selling, Questioning Skills, Sales Skills, Sales Stories, Tactical Selling Skills

The Olsen Group Blog

• Blog Home

Archives

• January 2012
• March 2011
• January 2011
• December 2010
• June 2010
• May 2010
• January 2010
• July 2009
• June 2009
• April 2009
• March 2009
• December 2008
• August 2008
• July 2008

Categories

• branding yourself (1)
• career development (3)
• Closing Skills (2)
• Creating Ideal Customers (3)
• Differentiating You (7)
• Engaging Your Customers (6)
• Executive Selling (8)
• Listening Skills (1)
• Major Account Selling (5)
• Negotiation (4)
• negotiation skills (5)
• Presentation Skills (1)
• professional development (5)
• professional growth (2)
• Prospect database (1)
• Prospecting (4)
• Questioning Skills (4)
• Sales Management (9)
• Sales Proposals (1)
• Sales Skills (15)
• Sales Stories (9)
• Sales Training (1)
• sell (5)
• selling (10)
• Selling in Difficult Times (3)
• Selling Process (2)
• Selling Strategies (1)
• Tactical Selling Skills (8)
• Team Building (1)
• Trust and Credibility (3)
• Uncategorized (10)