When you are chasing sales, do you feel under time pressure to close the sale quickly – this week or this month?
Are you always trying to move your prospects along the buying cycle and constantly feel they are procrastinating and dragging their heels?
Have you noticed in contract negotiations that progress is made on the big issues near the end of the negotiation, close to any deadlines that exist?
Do you always seem to make a concession to keep the sale alive and on track?
If you answered ‘yes’ to these questions, you are negotiating with experts. Expert negotiators don’t rush negotiations. They know that they will gain more frequent and greater concessions when their supplier is facing time pressures. All they have to do is prolong the discussions and eventually the supplier will feel the need to close the deal.
Expert negotiators will wait for this point and then hint that it is unlikely they can reach agreement based on the supplier’s current offer. If this happens to you, never, ever give out signals you are anxious to reach a deal. Of course, the best response is to call the buyer’s bluff and start packing up your papers. How many small business owners can do this after investing significant amounts of time in the sale?
One of the most common responses, though, is to ask a dumb question that gives everything away. One dumb question that I’ve heard on many occasions is “Oh, I’m very keen to close this out today, what would we have to do to get your order today?”
Bingo. The buyer now knows you are desperate for the business, under time pressure and in a weak negotiating position. The deal typically gets done – with the supplier making many more concessions than planned.
Suppliers of all sizes get caught up in this “game”, especially at year-end and quarter-ends when sales are needed to hit targets. Expert negotiators work this out and simply wait until the time is right and then threaten to pull out. The salesperson reacts at the risk of missing out on a key sale, perhaps missing their target and bonus.
Small companies get caught out because, in reality, they have too few real prospects on the go at any one time, so they simply can’t walk away. The prospect knows this. Also, small companies tend to assume the order is won far too early. It gets built into financial projections and becomes mentally tagged as a “must-win” sale.
Small business owners need to develop a different mindset from the outset. As you qualify each new prospect, it is likely you will ask when they intend to place an order. Take whatever answer they give and triple it. If they say in the next 2 – 3 months, put it into your sales forecasts for 6 – 9 months away. Likewise, when you estimate the likely cost of selling to this prospect (to judge if it makes financial sense to carry on), double whatever figure you arrive at.
With the revised costs and timescale, reassess how relevant the prospect looks and what level of profitability is attached to the sale. You may find it is no longer profitable to pursue the sale any further. Drop the prospect and move on.
- Look at how you can improve your lead generation process. If you can produce a healthy flow of prospects you can afford to qualify each one against more stringent criteria. You only want to sell to those prospects with the most potential.
- With more good quality prospects you will avoid becoming desperate for an order. If the prospect wants to proceed slowly, match your selling activities to their buying cycle. Eventually, the purchase will become time critical for the buyer and this leaves you in a stronger negotiating position.