Relationship Selling Mark W. Johnston Greg W. Marshall McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Negotiating for Win-Win Solutions Chapter 7

7-3

Learning Objectives Understand the process of negotiating win- win solutions Know the common objections most salespeople encounter working with customers Know the basic points to consider in negotiating with customers Understand the specific negotiating strategies Understand the sales manager’s role in negotiating win-win solutions 7-4

Exhibit Summary of Customer Concerns 7.1 Do I need your product? Product need Your product need Do I trust your company? Unease about your company Loyalty to an existing supplier 7-5

Exhibit Summary of Customer Concerns 7.1 I don’t really know you I need more time to consider your product Is this your best price? Add value to the total package Price should never be the main issue Price is your friend, not your enemy 7-6

Do I Need Your Product? Companies try very hard to help customers understand the need for their products. Sony provides a “Learning Center” to educate consumers about their different TVs. Sony They hope to maximize the customer’s satisfaction by helping them select the product that best fits their needs. 7-7

Innovation Tips for Negotiating Price 7.1 Understand buyer’s biggest value Understand buyer’s fear Focus on lowest total cost Utilize questions to uncover what buyer values 7-8

Is This Your Best Price? Some companies focus a great deal on offering the lowest price Others have been successful by focusing on value 7-9

Exhibit Guidelines for Negotiating Win-Win Solutions 7.2 Plan and prepare Anticipation enhances negotiations Say what you mean and mean what you say Negativity destroys negotiations Listen and validate customer concerns Always value the value proposition 7-10

Exhibit Negotiation Strategies 7.3 Question Direct denial Indirect denial Compensating for deficiencies Feel-felt-found Question Direct denial 7-11

Exhibit Negotiation Strategies 7.3 Indirect denial Compensating for deficiencies Feel-felt-found Third-party endorsements Bounce-back Defer Trial offer 7-12

Question Turn the customer’s concern into a question and refocus on one or more strengths of your value proposition Get the customer thinking in a new way and contrast his/her concern against an advantage 7-13

Question Your product is 10% more than your competitor’s! Yes, it is slightly more expensive, but do you agree that the higher quality means fewer returns and lower service costs for your company in the long run? 7-14

Direct Denial Confrontational strategy for dealing with customer objections Customers may react negatively Use this strategy when the customer states a clearly false and damaging statement about you, the company, or your product Avoid being offensive, insulting, or condescending 7-15

Direct Denial I was told recently that you had to recall all of your production for the last two months because of a faulty relay in your switch mechanism. I’m not sure where you could have heard that. We have not had a recall on any of our products for over 10 years. If you like, I can provide the data for you. 7-16

Indirect Denial Less threatening than direct denial Begins by agreeing with the customer, validating the objection, then explaining why it is untrue 7-17

Indirect Denial Demand for your products is strong. I’m not convinced you will be able to meet my order on time. You are correct. My company has enjoyed tremendous success and we are thankful… However, we pride ourselves on not missing order deadlines, and our customers will verify that… 7-18

Compensating for Deficiencies Moves the customer from focusing on a feature your product performs poorly to one in which it excels The new feature must be important to the customer 7-19

Compensating for Deficiencies The response time on your product is too slow. Your competition’s response time is two-tenths of a second faster. I agree with you. My product is two-tenths of a second slower. However, please note that it also costs 25% less per unit… and has 10% fewer returns… 7-20

Feel-Felt-Found Acknowledge the customer’s feeling Extend the same feelings to a larger audience Counter with a legitimate argument Caution: this technique has been around for a long time. 7-21

Feel-Felt-Found In my opinion, your products are overpriced and not worth the extra cost. Our products are slightly more that the competition’s and I can certainly see why you feel that way. Other customers have felt that way at first. However, when they take the time to examine the product quality, they have found the overall value to be worth the investment. 7-22

Third-Party Endorsements Use of outside parties to bolster your arguments in the presentation Adds credibility Can be combined with other strategies 7-23

Third-Party Endorsements Your customer service has been questionable, and it is important I have tech support 24/7. I agree with you that our customer service was not what it should be several years ago. However, we made the investment to improve customer service, and now it is among the best in the industry. Gracie Electronics felt as you did but was willing to try us and is now one of our best customers. 7-24

Bounce-Back More aggressive than some other strategies Turns a customer concern into a reason for action Often very effective with objections about needing more time or a lower price 7-25

Bounce-Back I’ve listened to your presentation but need more time to consider your proposal. I can appreciate that this is a big decision for your company. However, delaying this commitment only costs your company money. As we agreed earlier, my products will save nearly 40%

Defer Most common when the customer raises a concern about price early in the presentation before the value proposition has been defined 7-27

Defer (before the full value of the product has been explained): What is the cost of your product? I can appreciate your interest in knowing the price of the product, but I would ask you to hold off just a minute until I know a little more about your product requirements… 7-28

Trial Offer One of the best strategies to calm customer objections Does not take the place of a good sales presentation Clearly define the terms of the trial offer beforehand Make sure the customer is fully checked out on the product 7-29

Trial Offer I’m not willing to make a commitment to your copier today. It seems complicated and hard to use. I can appreciate your concerns. How about I have our service department install one for you and let you try it for one week. I will come by and demonstrate it for you

Sales Manager’s Role in Negotiating Win-Win Solutions Salespeople need to know they have the authority to negotiate with customers and resolve their concerns Salespeople need to have the confidence that they can negotiate whatever is necessary Company personnel must also know the salesperson speaks for the company 7-31

Sales Manager’s Role in Negotiating Win-Win Solutions Manager is there to step in and continue the negotiations Manager’s support is critical to the salesperson’s success 7-32

Role Play

7-34