SALESFORCE
A Quarterly Update from
Porter Henry & Company, Inc.

HELP YOURSELF NEGOTIATE THE SALE

Negotiating. The word is bandied about frequently in this age of acquisitions and mergers, and cut-throat competition. It's vital to business-to-business selling, which depends heavily on establishing and maintaining long-term relationships with customers.

Companies that offer the products or services best suited to the customer's needs will make it to the negotiating stage. The company that can negotiate the best overall package will close the sale.

Our research indicates some common negotiating pitfalls that can be remedied with the right planning, knowledge and skills. Here are three of the most common pitfalls.

Not knowing what's negotiable. A young woman selling computer systems tries every means she can to get her company to provide a nine-person, on-site installation team for one of her hottest prospects. The account told her that nothing short of this is acceptable. Unable to provide the on-site team to install the equipment by the deadline, she loses the bid to a competitor.

In the parking lot, she sees the salesman for the winning company and asks how he was able to promise placing a large installation team on-site at such short notice. He replies, "We negotiated with the account to change the installation schedule. Instead of one phase, which would have required nine people all at once, they agreed to let us do it in several phrases. This means we had to provide a start-up team of only four people."

Lesson: Determine throughout the sales process, as well as the negotiating process, what the issues are. Identify which ones are most important and which can be modified.

Not knowing the true value of what you're offering - and what the customer is offering you. The account executive from a financial services consulting firm is negotiating with a client. The client, with whom the consulting firm has worked in the past and has enjoyed many successes, is entertaining several bids for this job.

In an effort to close the sale, the account executive lowers his price, first by 10%, then by another 5%. What he doesn't realize is that the true value of his services to this client lies not with price but with the security of working with a firm that knows the company and has a track record that's recognized within the organization.Right or wrong, the client feels that the consulting firm will provide accurate results faster because of its prior experience with the company. Thus there's no need to drop the price so much. The real value of this relationship is confidence, not dollars.

Lesson: Be sure you know what's of real value to the customer, and don't consider value only in dollars. Sure, price is an issue in any sales negotiation, but so are such things as convenience, recognition, security, and "saving face."

Not recognizing your own strength in negotiating. Most salespeople understandably feel that when it comes to negotiating, the customer has the upper hand. After all, he or she has the power to say yes or no to your offers, right?
Right! But, while the customer has the ultimate power to accept or reject an offering, it's wise to keep in mind that he has certain restraints that may limit his power in negotiating with you, restraints that may build your power. Some examples:

The customer has a limited budget, which gives you power by eliminating some of your higher-priced competitors.

The customer has had problems with one of your competitors, so you're in an enhanced power position.

The customer faces a tight deadline, limiting his time to negotiate or to get a shipment in.Lesson: You can achieve a better balance of power in negotiations by bearing in mind the customer's limitations, his interests, and the value of all negotiable issues. This will help you take calculated risks and let you walk away from a deal that's going nowhere.

To obtain a free copy of our "10 Commandments For Effective Sales Negotiating" tool, e-mail or call us at (212) 953-5544.

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