May/100
Sales and Negotiation
Last week, I wrote about the difference between sales and marketing. The point of the article was to take these two ideas that often get mixed together, and draw a clear line where one activity stops and the other starts.
These kinds of definitions are important for the same reason that a sales process is important: If you want to be effective, then it is helpful to have a clear idea of where you are in any given situation, to know where you should be going and to know how to best get there. Taking the time to get your bearings and doing so within well defined frameworks will make these endeavors more efficient and effective.
One other set of words that often gets mixed together is sales and negotiation. Let’s take a look at these two activities, shed some light on the differences between them, and look at when and how to consider each one. Let’s start with some definitions:
Definition of Sales: I think of sales as an endeavor of persuasive communication, executed one-on-one or in a relatively small group
Sales Key Concept: Generally speaking, salespeople are successful when they successfully seek to understand the compelling reasons for which a prospect will take action toward buying the product or service offered by the salesperson
Definition of Negotiation: I think of negotiation as a conversation between two or more parties about the details of working together. It takes place after a general agreement about all of the sides wanting to work together. Negotiations can derail that idea, but this is where the details of working together are fleshed out and agreed to (or not)
Negotiation Key Factor: A negotiation is likely to be successful for a given party in the negotiation if the interests of their side are well understood and the walk-away point (BATNA) is both clearly defined and adhered to
In the sales process as defined in my book Mastering Your Sales Process, Negotiation is half of step 6 out of 7 (“Objections and Negotiations” is the single step before the last step of “Securing the Deal”). This placement in the process is critical to a proper understanding of what negotiation really is, and when it is appropriate. It is also indicative of where most people fail with negotiation.
If we look back at the definition of negotiation, there is an implication that negotiation happens when two parties have already decided to work together in general principle. The negotiation is about working out the details. Deals can certainly fall apart in negotiations, and the details are important, often hugely significant. What is important to remember is that the negotiations can’t start until a basic agreement to work together has been established.
Let’s look at an example of how NOT recognizing the proper place of a negotiation within the context of a sales process can derail the negotiation and the sales process itself. See if this sounds familiar:
You walk into the office of a prospect to initiate a complex sales discussion. You have never met this prospect before, or anyone from their company. As you sit down and begin your work of getting to know the prospect, their needs and their ability to buy, the client interrupts you and says:
“Listen, let’s just save some time here – how much does it cost.”
Now price is a certainly component of negotiation, but it is based on value. In this example, there has been no opportunity to establish value. Value is a function of needs. There has been no chance to establish needs. So what can you do?
If you offer a price at this time, you are attempting to negotiate before both sides have a chance to decide that there is an interest in working together, and you are likely to lose. To be successful in sales, negotiation skills are important. However, of equal or perhaps even greater importance is knowing when to negotiate, or even if you should negotiate.
You will improve your likelihood of success if you can help the customer understand that you offer different solutions for different problems, and each solution has a different pricing model. Based on this, what makes sense, then, is to understand the needs of the client (part of selling) before getting into negotiations about price (part of negotiation).
For a simple example, imagine waling into an auto repair shop and saying “my car won’t start, how much will it cost to fix it?”. The ONLY possible answer is some variation on the theme that the price can’t be determined until there is more information about the nature of the problem and the solution required to fix it.
It is much easier to get to your destination if you know where you are, know where the destination is, and know the steps to get there.
So to be successful in your sales negotiations, map your sales process, know where negotiation fits, and don’t go there too early. If you have not established value by uncovering needs, and you have not set your own limits about what makes sense for you as a walk-away point, then you’ll be hard pressed to get to a good solution, and to a successful conclusion of your negotiation.
Mar/102
Where is the spotlight? If it is on you, you are not selling!
I was sitting in the best burrito place in Budapest one afternoon. At a table near me, I couldn’t help but overhear a conversation in English, My Hungarian is still pretty weak, so the familiar language caught my attention.
In this conversation, an older guy in a business suit was sitting with a young, fresh faced 20-something guy in jeans and a t-shirt. The older guy was peppering with younger one with questions:
- So how long have you known her?
- Where did you guys meet?
- Do you speak any Slovakian?
- What is your current status?
- What does she do for a living?
- Etc.
The kid didn’t seem to mind, but it was eminently clear that the older guy was COMPLETELY controlling the conversation. I am not making any value judgement here, just an observation.
It reminded me of a talk show. Where Johnny or Jay or Connan or Larry fires off well informed questions, directing the celebrity of the moment through the interview until the key moment when the hot issue is approached, exposed and explored – with or without the consent and/or comfort of the interviewee .
What does this have to do with sales and selling? The key concept here is all about what we can call “the spotlight”.
Some non-salespeople (and some salespeople) have the misguided idea that salespeople love the spotlight. They believe that selling is an opportunity to get up on a kind of stage and present the wonders of a product or service in such a dazzling way that prospective customers can’t help but throw money at them, like bras at a Beatles concert in days of old.
These people have it all wrong. If these people are salespeople, then it is probably a hard job for them. The image of the snake oil salesman on his wagon in the old west town is an old story, and it no longer plays in Peoria or anywhere else.
If you aspire to be an effective professional salesperson, then you should remember the concept of “the spotlight”. To help you remember it, perhaps I should tell you what it is:
When you are in a sales conversation, imagine that you and your prospect are on a stage with two chairs. You sit in one, the prospect in the other. The stage is dark, except for a single spotlight. The spotlight shines not on the person talking, but on the person who is the subject of the conversation.
You are selling most effectively when the spotlight is on the other person – the prospect.
How can this be? Don’t you need to tell the prospect all about your great stuff so that they know that they need to buy it? Not necessarily.
In the sales process that I map out in blow-by-blow detail in my book Mastering Your Sales Process, the first four steps (leads, prospecting, qualifying and needs analysis) are designed to allow the salesperson to demonstrate professionalism which generates trust and to gather client information interactively, in such a way that what feels to the client like the gathering of information (spotlight on them) simultaneously and proactively addresses potential objections and informs parameters for the solution option.
In this way, the second half of the sales process (solution, objections and close) can be brief, spot-on, and totally effective without the need for presentations, lengthy proposals, extended negotiation sessions, or any of those other “spotlight on the salespeople” activities that usually do more damage to the opportunity to close than they do help it.
Proposals and presentations have their place, but if you want to be effective, the skills you need to focus on revolve around understanding the compelling reasons that the prospect has for wanting your product or service, and fleshing them out in a dialogue that highlights your understanding of the issue, your ability to fix it, and your character as the kind of person the prospect wants to partner with towards a solution.
Keeping the spotlight on the prospect with great questions, trial solutions, thorough needs analysis, properly timed and complete proposals will help. A lot. When you do it all right, your closing technique can be as simple as something like “well OK then”. It is true that to close, you do need to say or do something, By keeping the spotlight on the prospect the right way as you work towards the close, you can keep it short, and help make it more effective than your best uninformed, spotlight-on-you monologue or power point presentation ever will.
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Mar/102
Objection Series – “Your Price is Too High!”
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Early in my sales career, I worked for a promotional products importing company in California that was very entrepreneurial. The president of the company would often get distracted from his core business and pursue a good idea, just because he thought it had potential in the market. Because of this, I had the opportunity to work side-by-side with a golf pro, who had a very direct way of handling price objections.
The president of the company had fallen in love with a golf training product, and hired Rod, a golf pro, to help promote it. Rod worked in the office next to mine (this was in the days before cubicles were the norm).
One day, I heard Rod say something into the phone that I later learned was a response to a price objection (i.e. “your price is to high”). In a very direct, almost sarcastic voice, Rod said:
“Compared to what?!?”
I was pretty new to sales, and still a bit on the nervous side when dealing with customers. His approach absolutely stunned me. I asked him about it, and he was very convinced that his approach was correct:
“Listen”, he said, “people pay me 20 times the price of this simple training tool for an hours worth of private golf lessons, and after the hour is gone, I leave. This training tool, on the other hand, is something that people can use anywhere they can swing a club, and they get instant feedback on their swing that is even more accurate than watching how the ball flies or hearing what a golf pro has to say. To object to the low price of this product is to not understand the value it offers. Anyone who objects on price is an idiot, and needs to be told how to value what they get from this thing”.
Now Rod was a pretty crusty old guy, and I am not a big fan of the style with which he delivered this objection response. However, with respect to his logic, he couldn’t be more right!
Too many salespeople hear a price objection from their prospect and agree with it. Then they run back to their company and demand a discount so that they can make a sale. The problem with this behavior, is that the salesperson is functioning as a semi-automated price tag. It is as if there is a basket of apples with a sensor and a digital price display. If a prospects walks up, sees the price and starts walking away, the display emits a signal, and drops the price 10%. This process repeats until the price is just above cost, or the prospect buys – whichever comes first.
In this case, the salesperson has not established sufficient value in the mind of the prospect. This salesperson is not acting as an expert, as we discussed in the blog series about the importance of expertise. This salesperson is not serving himself, his company OR his prospect well. This salesperson can also be easily replaced by another message runner, or when the technology allows, and someone actually builds it, our automated display!
Only the most Neanderthal of prospects shop on price alone. There are fewer of them than you think. The truth is, almost nothing is bought on price alone. No-one in their right mind would buy on price at the expense of quality, reliability, in some cases warranty, packaging, delivery time, etc.
Do you, for example, buy on price? You might think you do, but you probably don’t:
- Do you buy the cheapest shirt in the store, regardless of style, fit and color?
- Do you drive the cheapest car available, or did you pay a bit more for a car you like?
- Do you use the cheapest mobile phone?
- Do you eat at the cheapest restaurant?
- Have you ever had a coffee at Starbucks?
If you said yes to any of the questions, there is something other than price at work here. It is true for your prospects as well. There is some kind of value that is driving your decision. It needs to be in alignment with price, but is not subservient to it!
What prospects typically want from a salesperson – without even knowing that they do – is an EMOTIONAL assurance that their decision to buy from the salesperson is a good decision. They don’t want to make a mistake. They want to make sure that the product they buy matches up with their values (which may include organizational values from their work place). They want to be sure that your product or service comes at a fair price relative to other options, AND to this value that it provides.
A salesperson can help make this happen with a thorough needs analysis to make sure that the problem that the prospect needs to solve is solvable by the product or service that the salesperson offers. Once this assurance has been made, value has been established, and assuming that the price of the product or service is in alignment with the value that has been established, a price objection should not be a major hurdle.
This is not to say that some prospects won’t play the pricing game with you – some people just like the feel of a good haggle. Even in this case, the salesperson who has established value based on a thorough needs analysis and the presentation of a solution that meets as many facets of the prospects needs as possible has more leverage in the negotiation than one who simply offers the lowest price.
Don’t be the low price provider! Before you know it, someone else will have a slightly lower price, and your choices at that stage are limited, and undesirable.
When a prospect argues that the price is too high, it is because the value has not yet been adequately established. Period. Establish value before offering a price, and put yourself and your prospect in the best position to make a deal that everyone will be happy with.
Feb/100
Objection series – “I need to think about it”
Thinking things over seems like a perfectly reasonable thing to do. That is why so many poor performing salespeople accept this objection at face value when they hear if from their clients. The “I need to think about it” objection can be a hard one to get past, until you know how and why you should. This is a long post, but we’ll tackle this often thorny issue, so if it is one that gives you trouble, please read on.
First of all, you need to realize that “I need to think about it” is indeed an objection. In my book, Mastering Your Sales Process, I define objections as “questions that must be addressed after the proposal has been presented.” For the sake of contrast, questions asked BEFORE the proposal is presented are a normal part of the needs analysis process. I mention this now, because the best way to avoid objections is to get the questions answered during Needs Analysis before they even become objections, and they are still just questions.
However, if you have proposed a solution and there are questions outstanding, you will get objections. Sometimes they are very specific and relate to facts and figures in your proposal. Sometimes, they are not very specific, and reflect a general unease or uncertainly in the prospect about moving forward. For example, “I need to think it over”.
From the clients perspective, this usually means that they are not ready to make a decision. They may or may not know why.
They may know (and may or may not have told you) that they need to talk to someone else in the organization. They may know that they need three proposals before making a decision, and yours is not number three. Or it may be something else that they are able to articulate.
On the other hand, they may not know why, but they just are not ready.
In any case, what should you do when your client hits you with the “I need to think about it?” objection.
By realizing that it is an objection, and accepting my definition of an objection, the answer becomes clear. As a sales professional, you need react to this objection by realizing that you need to understand what still needs to be thought about. It would be best if you could be involved in that process of discovery.
So how do we get there?
Most people who work in a professional environment accept the chaotic nature of their own work schedule. Based on this premise, you can reply to the objection by saying something like:
“You know, that is entirely reasonable. We went over a lot of information, and it makes sense to consider it all thoroughly. However, as soon as we leave this meeting, we’ll both be hit with 1000 other things to distract us. So, since we are both (all) here now, and the information is fresh, perhaps you can help me understand what specific issues you still need to think about so that I can provide you with any additional information you might need in order to consider the problem more thoroughly.”
The logic here is clear. If there are unresolved issues, it makes sense to go over them while all are present and the information is fresh. This is especially true if there are multiply buyers in the room.
In using this approach, you have not rejected the prospects need to consider the problem, you only suggested that you do it together, and now. If you are successful, you are effectively back into the sales conversation, and if you can identify and resolve a few specific outstanding issues, you can put yourself back into position to set up the close.
But what if the tactic is just a stall? What if the prospect has no intention to buy or to buy from you? In this case, your approach will flush this out as well. When the answer to your suggestion is non-specific, you may want to say something like:
“You know, lots of times people tell me that they need to think it over when they have already decided not to move forward. If that is the case, can you just tell me now so that we can both save some time in the future?”
Any answer to this questions is good. If they say “yes”, then you know that you don’t have to waste time following up in the future. If they say “no”, then you can try again to flesh out the issues, or at least to agree on next steps. Either way you set yourself up to be efficient, and you demonstrate confident professionalism to the prospect.
Whatever you do, don’t just accept the “I need to think about it” objection”. Addressing it correctly offers opportunities to remain engaged in the sales process, or to learn that you should disengage. Either is better than accepting the objection, and the corresponding fate of the (usually) pointless follow up calls that come with it.
Sep/090
Avoiding Objections
A funny thing happens when you make an offer to a prospective client; the whole dynamic of the conversation changes. Before the offer, you are just having a conversation. After the offer, it is time to close, and to overcome objections and attempts at negotiation. Things CAN get a bit more intense…. or not!
What you do in the pre-offer conversation can have a lot to do with how successful you are after the offer is presented. What should you do before presenting your offer? Answer the objections now, before they are objections!
In the pre-offer dynamic, you client may have some questions. Especially if you direct the conversation to flesh out all of the potential needs, concerns, costs, etc. All of the stuff you are supposed to be doing in needs analysis. If you do, then by the time you present the offer, you’ve answered all of the questions, and there are very few left that can morph into objections.
In other words, you can avoid objections by addressing them before they become objections, before the offer is presented. Be thorough, and ask the tough questions early, and save yourself from being on the other side of those tough questions later!
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