Straight Sales Talk | Feature
Avoiding the Negotiation Trap
As you know, once buyers believe that two solutions are commodity products with equal capabilities, the only differentiator is price, and you've fallen into the negotiation trap. If this is your situation, you'd better have the best price. But it's far better to differentiate your product, a process that begins early in the sales cycle in the all-important "solution development" phase.
We salespeople sometimes have a tendency to rush through the process of identifying the prospect's challenges and digging into the reasons why. Instead of encouraging the prospect to analyze his or her situation, we want to explain how our product "has been proven to improve test scores." But once we start down this path, we finish up answering a lot of questions about features and trying to explain why our product, which is being viewed as a commodity, is more cost-effective than the other product that's less expensive. In other words, we fall into the negotiation trap.
Here are some tips on how to avoid this situation and increase your chances of winning:
- Avoid the commodity discussion by identify the unique features and capabilities of your product or service from the beginning. Look hard and be brutally honest. Your unique features may be small -- most products have only two or three truly unique capabilities -- but they're yours. They are your diamonds. Find them and hold on to them.
- Think hard about why they're there. What problems were they designed to address? Why would your prospect need them?
- Early in the discussion, encourage the prospect to work with you to analyze the reasons behind his or her unresolved challenges. Get down into the weeds. If the problems that can be solved by your unique features don't come up, say, "Do you think your problem might also be caused by [insert the problem related to your diamond here]?"
- Once you've identified all the reasons behind the prospect's challenges, summarize them, including the ones you've suggested. Make a list.
- As you and the prospect discuss the needed features and capabilities, get his or her ideas first, and then suggest your diamond, showing how it would contribute to the solution. Don't name it. Just describe what it does. Confirm that the prospect understands it, and make sure he or she can describe in detail why it is integral to solving the problem.
- At this point you have a differentiated solution. Because you've embedded your diamond in the solution, it can no longer be considered a commodity. This process takes time and discipline, but if you apply it consistently, you will significantly reduce the need to defend your price or negotiate on price.
In last month's column, we talked about the negotiators -- the prospects who feel it's their job to negotiate with vendors. They believe that we sales people are just out to gouge them. To deal with them successfully, it's essential to establish credibility early in the sales cycle. The question of price almost always comes up in the beginning, and it's never appropriate to answer this question since, as discussed in previous columns, it's never about price. So here's what you can say to negotiators:
"I'm sorry, but I can't give you an accurate price at this time because I'm not sure what problems we're trying to address, whether I have the right tools to help you, or what those tools might be. However, I do promise a couple of things. You'll never buy anything from me where the value does not equal or exceed the cost. We'll explore your challenges together and evaluate the value of resolving them. If at any time I see that the value may not exceed the cost, I'll let you know, and we can decide whether to continue. Secondly, I give you my word that, when I can determine the price, it will be the very best price I can offer for the products you've selected, and it will not change."
An honest, straightforward conversation like this early in the sales cycle will help you avoid negotiation at the end, since you've committed to giving the best price the first time. Then, live up to your promises and have the courage to stand by them. Good selling!