Is it fair to assume that sales is simply finding out what the customer wants, providing a price, and then asking for a decision? Seems relatively easy doesn’t it? Unfortunately, far too often that salesperson calls and calls and calls. If they do get an answer, it’s often not in their favor. When they actually do win business, it’s at a price point that simply isn't attractive.
So, is this the salesperson’s fault? Or, is it the company’s fault for not giving the salesperson every tool they need to succeed? While business-to-business (B2B) sales negotiation might be second nature for some, others have to work at it. Therefore, it’s incumbent upon your company to make sure every salesperson has the tools to become a stronger negotiator.
Business-to-Business Sales Negotiation
Again, not every salesperson will be a natural at negotiation. Some will have to work very hard to nail down the intricacies of properly closing business. To help, we'll review four points that are critical to improving your sales team's skill-set. In the end, it's about understanding the role your salespeople play and how to empower them to close business.
1. Understand the Salesperson's Role
Many companies confuse the role of their salespeople. They assume the salesperson’s job is to ensure the customer is always happy. While important, it shouldn't be your salesperson's number one priority. After all, the easiest way to please a customer is to always say "yes" - and saying "yes" to everything is incredibly costly.
Simply put, your salespeople are there to close business. This doesn't mean they should use strong-arm tactics to close deals. It doesn't mean they should push for an order when the customer isn't ready. It simply means that if they decide that an order doesn't meet your company's gross profit objectives, they should be able to walk away from the order without repercussions. Again, make sure you let your team know what their priorities are; closing sales with solid gross profit margins is their number one priority - not giving in to every customer requests.
2. Excellent Negotiators Win the Best Orders
The most successful companies have salespeople that service the client well, but who are first and foremost shrewd negotiators. In fact, this is their number one priority. Become strong at negotiation and get the best possible deal for the company. If there’s one horrible falsehood of business, it most certainly has to be the ridiculous premise of the win-win negotiator.
There’s no win-win negotiating. In reality, there’s the perception of win-win, but there’s always one side that gets more than the other. The question for businesses is which side prevails? Is it the salesperson who maximizes pricing, and meets gross profit objectives, or is it the customer who forces the salesperson to capitulate and give in on pricing and other concessions?
Part of negotiation means to successfully defend price and handle customer threats. To learn more about the topics covered in the above video, please go to: Sales Negotiation: Defend Price, Customer Scare Tactics & Managing Concessions
3. Successful Negotiators Never Sell on Price: They Negotiate it
For the salesperson that doesn’t have the necessary negotiation skills, there’s always the price to fall back on. It’s a crutch and an excuse, but one that’s easily accepted by businesses and managers alike. It’s very easy for a salesperson to say that the customer demanded a price, or stated that they wouldn't buy without getting a specific price. Sometimes the salesperson is right, but on a number of occasions, they’re wrong. When they are wrong, they aren’t maximizing gross profit.
However, for the company, what difference does it make? After all, how can a company know what the customer would have bought at? Well, they can, and that’s why market-based knowledge is so essential to defending your prices. Your company must have solid market knowledge on real-time pricing information. Otherwise, you’ll continue to leave money on the table. The most successful negotiators don't sell on price, they negotiate the price and protect the company's profit margins.
4. Constantly Upgrade Your Team's Skill-Set
Sales should always think in terms of gross profit. In fact, your sales team should be paid commission on gross profit. Now, upgrading your sales team's skill-set is nowhere near as difficult as it might seem. Role-playing helps, as do training courses. However, the key is in understanding the role and purpose of concessions in negotiation.
When thinking of concessions, think in terms of "what-if". Concessions are give and take situations where each side offers something in return for a concession of equal value. It’s a way to manage customer requests by making one of your own. Examples include.....
“...we’ll give you a lower price provided you agree to a higher volume,” or
“....we’ll offer net-10 day terms, but only at 1%, not 2% off the invoice’s value”
One of the best ways to improve your team's skill-set is by having them go through the process of defending business against overseas competitors.
For a number of sales professionals, negotiation is second nature. However, others have to work at it. Improving negotiation starts with your company understanding that it must provide its salespeople with all the tools they need to close business.
Clarify their roles and responsibilities. Make it known that their priorities are to maintain healthy gross profit margins. Use negotiation role-playing to improve your team's skill-set and be aware of the importance of concessions in negotiation. Again, concessions are simply "what-if" scenarios. If you keep that in mind, you'll always be able to manage the back and forth that comes from managing concessions in the negotiation process.
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