Last week we bought a new Honda SUV, and the dealership was willing to negotiate.
Does this mean that price negotiating is coming back in style?
It seems the answer is YES from what I am seeing. Here is how to be prepared.
The Honda dealer gave a great deal
We brought in our ten year old Honda Pilot for an oil change, and then walked the lot looking at new ones. We came ready to buy.
The sales manager cornered us and said, “because it is the final day of the month, I can give you a great deal.”
He shared that because of the Mardi Gras holidays in New Orleans, they had completely missed their sales targets in February.
He swore we would love the deal.
The dealer got my wife’s 2013 car evaluated, and then sat her down to discuss price (I had to leave early).
When he made his final offer including the trade in value, my wife responded, “Sorry, that’s 3k more than I have to spend”
He capitulated and she bought the new car.
Negotiating Errors
The sales manager made a couple errors in my opinion
1. Sharing all the messy details: about how poorly he had done in February. He went overboard talking about his misery and a price discount!
It is one thing to be vulnerable, but quite another to position yourself as weak.
2. Not pushing back when my wife asked for a better deal. We had already decided to buy (which he would have known by now if he asked us more questions). It was late at night, and she would have taken his counteroffer to get the deal done. But apparently the sales manager was more tired than she was.
As a buyer, always ask for a better deal.
As a salesperson, be prepared for deal seakers:
- Never let them see you sweat.
- Don’t take your clients negotiating tactic as their final offer. It’s just an opening salvo.
- Have patience when talking price; and be willing to walk away, it makes you stronger.
Don’t give your prospect the upper hand
I spoke to a landscape contractor in DC recently, and he told me that his newest prospect, a lawyer, was red lining his contract verbiage.
My suggestion to my client was to not play along.
Tell the prospect “We are just humble landscapers. We need to come to terms based on mutual trust, not contract language. Do we trust each other? Are we a good fit for each other? Yada yada yada.”
Don’t let a client change your contract terms willy nilly.
If you can’t build a relationship and an agreement based on trust, the contract won’t help.
More Keys to Negotiating
Don’t negotiate against yourself. Never assume the client won’t pay your price. Don’t go in lower because you “think” they will push back. Let them push back first, so you are negotiating with them, and not yourself.
Don’t just capitulate. If you give in too much, they will grow suspect, thinking you were over charging them to begin with.
Explain your numbers. My good friend Mark Hutten told me about how his saleswoman handled a tough negotiator: She simply opened the estimating sheet to explain how she got to the price, and the hard charging prospect said “oh, ok, I get it”. She even showed the mark ups on the project (some low, some very high).
Honesty and your own knowledge work in your favor when defending your price.
Give something. Some prospects want to know that they got something, especially buyers from certain cultures. it doesn’t have to be what they asked for, and in fact it can be a “high value, low cost” concession.
Giving something extra always makes you more money than offering a discount.
Remain confident. In your product, your pricing, your company’s added-value, and in your solution. (Companies need to train around all four of these.)
Your challenge – Be Ready To Pivot.
It’s time to start training your staff on the dance of negotiation and pushback.
Do role plays. Re-educate your team on your pricing systems, your company’s unique added value, and how you compare in the marketplace.
Use social proof: Connect prospects with satisfied clients.
I did this recently; the prospect was super detailed, so I let him talk to a couple clients. I thought he decided to go elsewhere, but he was still talking to my clients.
He emailed me last week “we are excited and ready to go”.
Green Light Selling®. The key is to know who is a red light prospect that will never buy from you, and who is a Yellow (a maybe) or Green Light Client®.
Spend the most of your time on the Green Lights (and some time on the Yellows) but stay away from Orange and Red lights!
Regards, Jeffrey!
P.S. Do you ever wonder how the country’s largest residential firm (Mariani Landscape) became so successful in the crowded Chicago market?
They were savvy with their pricing tactics, but always came out ahead.
Join us this August and learn how all their departments handle negotiation in a tight marketplace like Chicago. Details below.
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