Buying a Sale – The High Cost of Poor Negotiating
Making a sale – it sounds simple enough. But if you bargain badly, you may end up “buying” that sale.
The real art of negotiating is to complete a satisfactory exchange without giving away more than necessary. The challenge is to identify all the components of the exchange and to realize how much value you and your customers place on each of them.
Too often, companies fall victim to their own bad negotiating. An oversimplified barter of an increasingly expensive package of concessions means that eventually they have not made the sale but have bought the sale!
As the marketplace becomes increasingly complex and competitive, salespeople often don’t have the necessary skills, or they neglect to apply the proper art of negotiating and resort to the more common and less challenging “concession sale.”
Picture this familiar scenario: A salesperson makes what he thinks are gratuitous concessions, believing he is closing in on a deal. But as he nears closing, he realizes that all the concessions made so far are seen by the other party as merely the starting point for final negotiation. He is then trapped into making additional concessions to get the business, having already committed his company to everything he has “thrown in” along the way.
Not only has the real cost of the transaction gone up, but also the salesperson can’t be certain that the initial concessions were required at all. One thing is clear, though: Reclaiming spent concessions is not possible – and they now have become part of the base package that the customer expects.
Because negotiating skills are not adequately refined on the supply side, corporations throughout North America have seen gradual erosion of their profit margins. On the buying side, sophisticated customers are increasing not only their profitability but also their power base. This dynamic has generated a growing number of vulnerable suppliers prepared to give greater concessions at each transaction to maintain their business volume in the face of collapsing margins.
Here are some suggestions to help you avoid “buying the sale” when negotiating:
- Follow a disciplined process in order to achieve desired results.
- Carefully determine the wants and needs of the customer before making concessions.
- Avoid making concessions early in the sales process.
- Identify all concessions you are prepared to make and know the cost of each.
- Don’t assume there is value in a concession just because there is cost.
- Invest in the appropriate training to become a better negotiator.
- Reinforce your training annually to stay one step ahead of your customers.
Remember: Nothing affects the bottom line of your company more, or your personal income more, than good negotiating skills. You can’t make money faster than when you’re negotiating well!