By John Holland, Chief Content Officer of CustomerCentric Selling® – The Sales Training Company
Sellers manage sales cycles in different ways, but execute a sequence of similar steps (initiate opportunities, discovery, need development, etc.). The last two steps of sales cycles are usually close and negotiate. Blurring them into a single step is a mistake that gets sellers into trouble. Close and negotiate are two critical steps that should be kept separate and distinct.
Simply stated, closing is asking for an order. Issuing a proposal or submitting an RFP response can be viewed as closing, but the preferred way is asking a person to move forward with your proposal. Closing decision makers yields a high probability of getting orders. In many cases, only the vendor of choice is given this opportunity. Other vendors were invited to compete late in the process to provide pricing leverage to negotiate with the pre-determined vendor of choice.
A more challenging situation is closing non-decision makers. When asked to move forward, a common response from these buyers is: “I need your best price.” How the seller responds will determine if close and negotiate morph into a single step.
In my opinion, life is too short to negotiate before buyers indicate they want to buy. To keep closing as a separate step, when pressured for better pricing ask the following question:
“Are we the vendor of choice and is price the only obstacle?”
If the answer is anything but yes, my suggested response is: “It appears you have to further evaluate your options. If you reach a point where we are the vendor of choice, at that time I’d like to see if we can reach agreement.”
If you are the vendor of choice, you‘ll be given an opportunity to finalize the transaction. If you’re not and you discount you leave a low price on the street that can be used to negotiate with their vendor of choice. In the event you are invited back in and they want to do business, if you discounted when asked, smart buyers make that the starting point for further negotiations.
If the buyer indicates you are the vendor of choice and you’re talking to the decision maker, you can begin to negotiate. If you’re with a lower level person that may say yes just to get a better price, respond with something like: “I’d like to see if we can reach agreement. Can we schedule a meeting or conference call with (the decision maker), my manager, you and me?” This question should smoke out requests for discounts when you aren’t the vendor of choice and will get you where you want to be: negotiating with the decision maker.
You won’t always be able to execute this approach but I hope you agree when you can make closing and negotiating separate activities the likely outcome will be a higher price.