Negotiating is bad. And here's why.
In selling, if you have to negotiate, it means you screwed up.
Somewhere in the process, you lost your prospect.
They don't see you as different.
They don't see how you could be different.
They are looking for the lowest price or best deal.
You might respond, "Aren't they always?" and you'd be incorrect.
Buyers are often looking for the best provider of whatever it is they're looking for, not the best deal or lowest price. A buyer who has stopped looking for the best provider is one who no longer believes there is a "best", and is now forced to treat their purchase as a commodity.
That's when they start trying to negotiate. When they view you as just another commodity.
Can you see how something has gone wrong when this is the case?
And since we, as the salespeople, are responsible for managing the sales process, it's our fault that our sales process has broken down.
Like Trans Fats, Negotiating Is Bad for You
Trainer Terry Hockenhull has some good points to make about negotiation in a recent post.
First, he quickly points out that companies wanting negotiation training for their salespeople are only asking for trouble. When the negotiation skills are used, they will actually cost the company money and not provide expected benefits.
Having to provide the customer a discount to get the order is not win-win.
Competing on price is clearly not a good strategy.
Yet as Hockenhull says, many salespeople seem to think that negotiation and providing discounts are a viable ongoing method of winning orders.
If you are forced to use negotiation as a selling tool, you know your prospect has spoken with other service providers who do what you do. They have gotten detailed quotes from them. You likely provided your own. This was a mistake. Now the prospect has lined all those quotations up. They've created a table, with vendors across the top. Features down the side. Prices along the bottom. What do I get for what price? Because the vendors are all the same anyway.
And that's when the prospect comes back to you.
"Company J is giving us X, Y and Z," they announce. "What are you going to do to make up for it?"
Oh no! panic the salespeople. What will we do? We have to give them something!
Not only did the salesperson commoditize themselves, but now they are ready to start throwing discounts, mock-ups, free plans and who knows what else that costs the company real dollars at the prospect in the hopes of getting the order. This is why negotiating is bad.
Even Though You Know Negotiating Is Bad, Here's What To Do If You Have To
Hockenhull makes a great point in his article: never, ever get into negotiation with a prospect unless they have made "a clear statement...that they actually want to buy my product."
Do NOT negotiate simply to negotiate! Just because someone asks you to dance doesn't mean you have to. Otherwise, you may just find your negotiated concessions have been taken back over to your competitor, whereupon the prospect presents your Christmas gift list to them and says, "Here's what Company K is offering...what can you do?"
Follow Hockenhull's lead and train yourself and your sales staff not to give knee-jerk discounts.
Negotiating is bad. Win-Win is very unlikely in this event: maybe, if you can recover the situation by clamping down some serious Up Front Contract expectations like Terry suggests...higher volume or increased frequency of orders in return for your concessions, for instance.
If you find yourself negotiating, remember you have done something wrong. Debrief the sales conversation afterwards to find out where the error(s) were made.
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