“I Want a Lower Price” – Part 2
Who doesn’t want a lower price? We would all like to get a lower price on everything thing we buy (brain surgery and parachutes being two obvious exceptions!). As a salesperson, that simple demand is probably the one you dread hearing the most. But, when you do hear it, what do you do? Simply lower your price?
The AGREE methodology has eight simple and effective strategies for dealing with this simple demand. The strategies are presented in order of increasing risk. Under each strategy are some sample statements, in quotes, you could say to put the strategy into action. Last month, we examined four strategies; what follows are the final four.
Strategy #5: Get them to help you sell the new deal inside your company. By carefully helping them step you through this process they may discover that selling the deal will not be easy, and that they might already have a good deal.
- “I’m willing to present your proposed deal back to my management. Given what I know at this point, I’m fairly certain they will say no to further price reductions. Would you mind spending a few minutes with me helping to develop the message you’d like me to carry back to them, and how we can make it more persuasive to them? “
- “It would be very helpful to me if you can share more detail about any aspects of our competitor’s deal that you find attractive, other than simple price”
Strategy #6: If some of the requests they are making seem out of line, consider asking them if their company would agree to the deal they are proposing. Hint: Make sure you know the answer to these types of questions BEFORE you ask them! DON’T ask the question if the answer will not be favorable to your case.
- “You are asking for 120 day credit terms. Would your company agree to 120 day credit terms with your own customers?”
- “You are asking us to offer our product at the same price in all 50 states. Does your own company have a flat price when you sell in different states?” “Why not?”
Strategy #6a: A variant of the above strategy is to reference industry practices or past precedents. This can sometimes persuade them that their requests are unreasonable.
- “The industry standard has always been 60 days for credit terms. You are asking for 120 day credit terms. Can you help me to understand why you are requesting this change?”
- “All of our recent agreements with your company have specified free shipments on orders over $5,000. You are now asking for free shipping on all orders over $100. Can you help me understand the basis for this new, precedent setting, request?”
Strategy #7: Carefully explore their alternatives to the deal that’s on the table. This can be a risky move, and if not done gently, it can result in the customer either bluffing or telling you to “take it or leave it”:
- “I’m confident that we are offering you a competitive deal. I want to make sure that we’ve examined everything that I can possibly use to give you the best deal. May I ask you a few questions about other deals you are considering from our competitors?”
- “Are they offering to deliver the same quantities at the same times?”
- “Tell me about the features of the other offers you are considering. Are there specific features of their deals that are particularly appealing to you?”
- “Will they be offering exactly the same terms and conditions?
- “If we cannot offer a better deal than the competitor, are you prepared to move forward with them immediately (or does their deal have a specific time limit)?”
Strategy #8: Encourage them to escalate the final decision process inside of your company to get the better price they want. Most companies limit the price discounts a field rep can give, and most buyers know this. Warning: This strategy has risks! Consider doing the following before proposing this strategy to the customer:
- You should first identify and talk to whomever you intend for them to escalate to. You should jointly agree internally as to what will happen if and when the customer does escalate.
- Consider the precedent you are setting. If the buyer does get a better price by escalating, they will likely use escalation in the future to “get the best deal”
- Consider asking your contact within your company to tell the customer that you have the full authority to do the deal and that they cannot offer them a better price for the deal that is on the table.
If the escalation becomes necessary, make the escalation process clear to the buyer, and give them parameters that protect your power in future negotiations. For example, you could say:
- “As you probably know, all companies in my industry limit the discounts that can be offered by a field sales person at my level. I have given you the best price that I can. I would suggest, given the size and scope of this particular deal, that you call Mr. X at the following phone number. He is familiar with the details of our deal. I cannot predict what he will do, as he has greater knowledge of our company’s overall pricing strategies than I do.”
- “Whatever the outcome of your conversation with Mr. X, I hope that I will be able to consult with you on future deals that may be of value to both of our companies. I’d like to follow up with you on the results of your conversation with Mr. X. May I call you next (day, week, etc.)?”
Remember, any effort you make to avoid a simple price discount as a first step will likely result in a more profitable deal for your company. It will also set a good precedent for further dealings with this customer, and will build a higher level of respect and trustworthiness for you as a salesperson!