Andrew Penny, September 18 2017

6 - Negotiation

Who's in charge .... your resellers or their clients?

 Negotiation and the pursuit of happiness…  It turns out that just two things are required for happiness: a feeling of control and a sense of connection with other people. And, if you can make people happy and feel connected they tend to buy more.   In the sales process, the opportunity for both exists. When it comes to buying, we like to feel in control of the situation and not coerced into accepting a deal.  We really, really want to discuss options; we call this negotiating.  Sometimes we negotiate with the seller and sometimes we actually negotiate with ourselves: if I skip lunch I can afford this; I could have bought the deluxe version but this one is less expensive; this one comes with free wi-fi; if I rent this apartment I can reduce my mortgage costs and so on.  When we negotiate we feel in control. And if the seller is competent, we feel a connection to them. Of course, handled badly we feel no control and no connection - crappy and alone and unhappy and really not interested in buying... 

Why this matters to you

Because negotiation is a factor in every transaction, it makes sense to ensure that your channel partners accommodate this step in their sales process. Rushing to the close without allowing for this often kills the sale or, even if the sale goes through, may lead to that nasty condition known as post-purchase dissonance where they may feel cheated and bullied.  The negotiation process uncovers un-spoken needs or desires that allow the reseller to tailor the proposal and finalize the sale. It is so often overlooked that it can become your secret weapon in closing higher value sales - and a bunch more of them. As a channel owner, you really should provide guidance on the most appropriate negotiation processes for your product or service. 

Do I have a problem?

The most obvious sign of this is lower closing ratios and lower revenue per unit – of course you’ll need to have the benchmarking data to see this. In an on-line environment it often shows up in a higher number of abandoned shopping carts. In a live environment, it shows up in unclosed proposals, retail walk-outs and lower customer happiness.  

What causes this?

Very few sales people (or websites for that matter) allow space for negotiation in their processes and even fewer provide a thoughtful structure to manage it. Negotiation is usually seen as a barrier to overcome rather than an essential part of every buyer’s process that actually facilitates the sale if handled properly. Most rely on the old ‘Overcoming Objections’ approach which is really about proving the client is wrong and you right - not much chance of client happiness there!  

Here’s what to do:

Make sure your resellers know what your target type of client will be thinking about before they agree to buy; your customer profiling and persona work will give you this information. Wherever possible, build ‘negotiation’ into your resellers’ processes. Some examples are here:

Provide Comparators - Buyers will automatically look for comparators to make sure the price is appropriate. Your resellers should provide alternatives for them to consider – of course you can artfully select these comparators such that your offering is the superior choice.  The comparators you provide should frame your offering and allow the buyer to see yours as the logical middle “Goldilocks’ choice.

Build Choices into your Proposals - An extension of the comparator approach is for the reseller to actually build in three or four options to their proposals. These proposals don’t have to be three different products they can be the same product bundled three different ways. This allows the client negotiating space within a closely defined set of options. By doing this the client doesn’t have a “take it or leave it” option; they have three options to chose from – and all of them have a sale at the end of it. For example if you are selling the 2000K Giga Banger you could sell it:           

A - Fully installed, tested with 6 months support for $9,750           

B - Uncrated, delivered on site with an installation kit for $6500           

C - As is, FOB resellers warehouse for $5,000 This provides a pre-configured negotiation matrix to let the dealer reduce the price to $5000 or to provide an extended service (for $9000) if that is what the client wants – without having to cut prices.  While the majority will take the middle option, it is surprising how many clients will take option A (which also provides the greatest marginsJ) and how few will take option C. 

The other benefit of creating a set of choices is that it provides an ‘Anchor Price’ at the high end. Anchors tend to stick in the buyer’s mind as the main comparator and the subsequent options then appear to be even more compelling in value. 

What will be different?

Increase in customer satisfaction:Clients feel listened to and not hurried.Clients are better able to understand the options available to them.There is greater chance for connection.Improved closing ratios (more units sold):By embracing customer negotiation, rather than avoiding it, you are letting the customer pull the vale rather than trying to push it on them.Increased dealer margins:Offering different priced solutions to the client’s problems, your resellers are able to move the price and margins up to provide even greater value to your clients. 

Negotiation is the sixth in a series of posts on improving sales channel efficiency and flow.  It follows The Ask.

Written by

Andrew Penny

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