Friday, 8 July 2011

Price negotation- Cost benefit is not just about the cheapest price

An email 29th June 2011 came into my inbox from a past delegate

Hi Hugh

I attended your TACK Pro Payback Selling in Action course at Warwickshire Uni on 11 April 2011 - 12 April 2011.

I would just like to thank you for a great 2 days, your knowledge and advice has really helped me develop my sales techniques and as a result I have seen a great improvement in my relationships with clients and overall sales figures!

I feel that your tips and guidance answered many questions for me, but I have one issue that I am not sure about and was hoping that you could shed some light on the matter…

In the majority of the appointments I have, the customer will ask for a price list. This is fine but on one occasion the customer took the prices we negotiated over a few days and showed them to their current supplier, and of course their current supplier matched our prices and the customer decided to keep their existing supplier, despite they were paying higher prices than necessary for a number of years.

How do I get around this? And more importantly do you have any advice to prevent this happening again in the future?


(It is great to receive such an email of thanks for a training course. Of course 50% of training effectiveness comes from the application of the skills by Neil in the field but is great to know that the course helped Neil on his road to the fruits of his success.)

I guess the first response to Neil's problem is "experience is a great teacher" in selling also. What the buyer did was legal but not particularly ethical. His trimming of his incumbent supplier's prices will make him look like a skillful buyer in the eyes of his company and possibly his purchasing peers.

It also emphasises that Price is not the only motivator for this buyer see the Research results from the Buyers' Survey of Supplier Salespeople.(left)
Neil's experience is proof that cheaper prices he offered was not enough to unseat the incumbent.

Of course much of business has to be based on trust.

"Caveat emptor" buyer beware is often quoted but there is also a balancing phrase of 'caveat venditor' which translates as seller beware!

Perhaps one option Neil may care to try is rather than give a discounted price try to trade it.

i.e. " If you place your business with me today then we will offer you this discounted price" followed by a trial close " Do we have a deal?"
Remember " If you don't try and close - you are working for the competition!"
Neil's experience is the uncomfortable truth of this old saying. Maybe revisit the article on closing skills on this site - scroll down for link.

Now that inflation looks on the return it may be a good idea to ensure any offer has a contract end date so you are not held to a fixed price which may prove increasingly unprofitable over time.

So far as preventing it ever happening again that is not possible but one can try to protect oneself a little better.

Finding out more about the buyer's priorities on matters such as quality, service, brand, track record, references important. Be better prepared next time. Take a look at the questioning skills article - scroll down to link below.

Remember also that although the incumbent supplier has held onto the account he must have gone down in the buyer's estimation.

From my experience sometimes a short gain loss such as this can act like a shot below the waterline which takes a little while for the ship to sink.

So don't give up on this buyer entirely but be better prepared next time.

Fortune favours the brave - Good luck.

* For reasons of confidentiality Neil is not my delegate's real name. The case details are genuine.

Click for free executive summary of the Buyers Views of salespeople research study

Other related links

Link on Questioning Skills

Link on Closing skills

For details of the TACK courses Neil was referring to:
PRO-PAYBACK SELLING – The Sales Training Course

1 comment:

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