As a sales professional, do you make it a point to identify when your customers are using veiled threats as opposed to serious threats? Are you aware of the limitations of these veiled threats and how they are simply a customer’s ploy to get you to give in on concessions? Understanding the difference between these threats is essential to properly managing the negotiation process. In the end, it's up to you to understand the difference and spot when your customer is simply trying to use fear and intimidation to get you to capitulate to their demands.
Understanding Veiled Customer Threats
Customers use threats as a means to get you to give in on concessions. However, serious threats are ones that are considered show-stoppers. The customer won't proceed until their issues are addressed. Their tone changes. Their demeanor changes. Their approach changes and they express real concern about your inability to meet their needs.
A veiled threat is entirely different. It is nowhere near as serious and in many cases, it isn't a threat at all. It's simply the customer's main approach to negotiation. In fact, some customers don't know how to negotiate. They simply rely upon one veiled threat after another, continually trying to use fear and intimidation to get you to give in.
Simply put, a non-serious threat is one where the customer uses a threat, doesn't get the response they wanted, and yet still continues on with the negotiation. In many instances, they forget the threat completely. For the customer, it's just a series of repeated threats, each one no more serious than the last.
Don't be Confrontational
The purpose here isn't to be confrontational or to essentially push customers to the “brink” – so to speak. However, every sales professional understands that some customers use fear, intimidation and threats to secure what they want. The best sales professionals dial into those threats customers can’t back up.
Gradually, salespeople take these threats less and less seriously. Over time, the customer loses credibility and the salesperson no longer capitulates to these demands. Some salespeople understand this, but unfortunately, others do not. So, are there any tips sales professionals can use to better handle customers who use threats in negotiation?
The above is taken from the post: Sales Negotiation: Defend Price, Customer Scare Tactics & Managing Concessions
1. Identifying Veiled Customer Threats
One of the big misconceptions with customer threats is that it’s simply too costly to call the customer’s bluff. The idea most salespeople have is that the customer’s threat can only be proven after the negotiation. This simply isn’t true. When you pay close attention, you’ll begin to notice that certain customers use these threats throughout the negotiation. In most cases, these customers easily forget they've used them. In fact, it’s not uncommon for some customers to use them over and over again during the same call or visit. By the end of the negotiation, they’ve completely forgotten those threats – but you shouldn’t!
Insight: When a customer uses a threat as a precursor to continuing the negotiation, but still continues nonetheless, then this is a prime example of a veiled customer threat. Consider it a bluff and watch for those customers who use them repeatedly throughout the negotiation and subsequent discussions. The perfect example is the price threat - which is nothing more than your customer needing to reduce their costs. In this case, there are multiple ways to save your customer money without having to lower your price. You can use this to move the negotiation forward by appearing as someone willing to help your customer by reducing their costs.
2. Match Customer Threats to Concessions
None of this is terribly difficult. It’s easy to recognize customer threats, but it takes a little extra effort to match those threats to the customer’s most important concessions. Some are able to do this innately, while others must work at it. However, it simply involves being more cognizant of those concessions the customer deems to be important. It’s not a question of placating the customer, but rather linking those customer threats to the concessions they need or want. In this case, match customer threats to their most important concessions.
Insight: When you show apprehension to grant a customer’s concession, or outright refuse it, some customers will immediately follow through with a threat. Your job is to measure the size or impact of that threat and to gauge its impact. For instance, some customers may threaten to stop the negotiation process altogether, pull their business, or choose another vendor for a specific product. These are more serious threats than say a customer who says they’ll have to reduce their volume, or split their purchase order. When confronted with a customer that claims to want to go with the competitor, be sure to help your customer understand the costs of switching suppliers. The video below provides some insight on how to do just that.
Learn how to defend your position against overseas competitors.
3. Understand the Customer’s “Motivation"
This is one aspect of sales negotiation that a number of companies and their sales teams simply don’t understand. It’s essential to understand the customer’s motivation behind their requests. Again, when a customer demands lower pricing, what they really need is to save money. There are a myriad of ways to save customers money without having to lower your product or service’s price. Make sure you understand the underlying motivation behind the customer’s request for a specific concession. It’s not always what you think.
Insight: To gain a greater perspective of your customer’s motivation, take the time to come up with a list of common requests made within your market. What do most of your customers want? Lower pricing means lower costs, and when you identify ways to lower your customer’s costs, without lowering price, then you’re that much closer to finding a solution that allows you to protect your gross profit, close the sale and improve your relationship with your customer.
4. Match Concessions for Concessions
Within every negotiation, there comes a time when both sides must compromise. Now, contrary to popular opinion, compromise is not a bad thing. It simply means that you must match a concession for a concession. It’s the ultimate “I’ll give you something, if you give me something in return”. If you are able to grant that customer concession, make sure to receive a concession of your own in return. Most importantly, match the level of importance of that customer concession to an important concession or request that you need. If the customer has requested something they deem to be extremely important, then you are well within your right to come back with an important concession that your company needs.
Insight: When thinking of concessions, think of the ultimate “what if?” scenario. "If the customer asks for this, what should I ask for in return?" Concessions form the basic steps by which a negotiation flows to its eventual conclusion. Each side must come prepared with a list of concessions they view as important to their cause. Taking this a step further, each side’s list should include their own concessions and what they believe the other party will request.
One of the biggest things to remember during a negotiation is that customers have priorities and objectives to attain. The fact that they are willing to negotiate with you means they are ultimately interested in making a deal. Threats are a part of their negotiation strategy. However, veiled customer threats do little to advance their cause. When you understand why they use veiled threats, you are always in a better position to handle them. Take the time to properly identify these non-serious customer threats. Once you do, you’ll be able to move the negotiation to a successful conclusion.
To read more about how to sell without lowering your product's price, please read: Sales Negotiation Training: Cost-Per-Use Product Sales Strategies
To increase customer retention, start your own reward program.
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