Managers often complain that the margins from their orders are getting thinner. Most of us would assume that it is due to the competition. No doubt competition will get keener by the day but companies are also spending a lot more in building relationships with their customers. That being the case, why isn’t they able to get a fair profit out of these customers? Unknown to them many good salespeople whether consciously or unconsciously become customer pleasers and fall under the bidding of their customers. Their ability to build strong relationships with their customers has become their biggest weakness. These “close customers” in fact have all the power in their hands, the power to say “yes” or “no”. They overextend their goodwill because they are taught that customer pays their salary. As a result salespeople become powerless to demand for a reasonable return for their companies. All the training they received on satisfying customers, meeting their needs and wants, and putting them first every time are working against them.
The real problem lies in their inability to negotiate a fair deal with some of their best customers. Most think that negotiation takes place only at the end of a deal after they have answered all the customers’ objections. In the meantime they leave precious money on the table the moment they meet with the customer. This leaves them with little room to negotiate at the end of the process.
So how do we deal with this problem that salespeople and their companies are facing? Here are 8 strategies that one can keep in mind when dealing with customers that are very important to you.
1. Negotiate Now!
Most sales people are not aware that the moment they face a potential customer, they have to consciously put themselves in the “negotiation mode”. This is not “mentally bargaining” with the customer but to be aware of the answers, promises and undertakings given and the implications that they will bring about in the course of completing the sale. Remember that negotiation is an ongoing process and not something you do at the end of a sale.
2. Company’s Need?
Most sales people are very good at focusing on their customers’ needs and interests without considering that of their company’s. Too much empathy and focus on the buyers’ needs and wants can work against salespeople. Instead they should concentrate on problem solving that satisfies both the customer and their own company.
3. Subservient Mentality
Some salespeople are unaware of their personal power and therefore sell themselves short. Salespeople must first believe that the potential customer needs what they are selling at least as much as you need the sale. By checking their body language such as tone of their voice and the choice of words will make an impact on the customer.
4. Walk Away and VariablesIn any negotiation situation, one needs to know the point at which they will have to walk away from the deal. Secondly, try to include as many variables as possible in the form of price, terms or other deliverables (valuable and attractive to your customer) to your walk away point. The more variables the better for you to win that deal and help you avoid a “the-deal-is-off-then” situation. Also this keeps the negotiation going for as long as it takes to come to a solution. Do not let your negotiable be focused only on price alone. After all, price and margins are what you and your customer want and this will be the root of a lot of contention.
5. High to Low and Reciprocity
Studies have shown that sales people who ask for a higher margins usually gets it. High expectations produce best results while low expectations produce the poorest. By lowering their expectations, salespeople have made the first concession in their own minds even before the negotiation gets underway. The customer than gets this premature concessions along with the normal allotment that follows. Always get something in return for concessions made and to know their economic value. Something that does not cost a lot to you may be valuable to your customer. Things like credit terms, convenience, timing of delivery, service, customization, assurance of quality, special treatment in times of scarcity are valuable to customers. Finally, if you have to concede, concede in small increments and get something in return ever mindful of the value of this concession’s to you and the customer.
6. Tracking Issues
Negotiations can get confusing. Everyone gets frustrated when there is no progress made. Secondly, customer sometimes back track on agreements made earlier or worst still come up with new issues haphazardly. The way out of this is to keep track of issues already covered and understand what is still outstanding. Objections may not be all bad, good negotiators will convert these objections into issues so that it can be addressed.
7. Workable Solutions For Both Parties
Once a concession is given it is very difficult to take it back. Often sales people make the mistake of agreeing indefinitely to an issue without considering if the whole deal still makes sense. In the process they play into the hands of the customer trying to take the whole part by part. The solution is to close those issues when it becomes ready to be closed.
8. Hardest For Last
In a negotiation situation, sales people naturally would want to negotiate the hardest issues first. After all why spend time on the small side issues when the thorniest ones are still outstanding. But resolving relatively easy ones can help build up the momentum for more difficult ones. Secondly, new variables may be uncovered in the process to help in the negotiation process.
Article Contributed by Mr Pat Mun Fai, Senior Consultant of Training Edge International and is a Management and Marketing Practitioner with more than 26 years of Sales, Marketing and Business Management experience.
Email : pat@trainingedgeasia.com
Website : www.trainingedgeasia.com
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