Chapter 13: Negotiating buyer concerns

Question 1

1. Describe the principles of formal negotiations as part of the win-win stately.

Answer 1

*Negotiation: Working to reach an agreement that is mutually satisfactory to buyer and seller.
By definition negotiations seek to move polarized parties into the realm of common interests. Most important negotiations will take place during the 3 stage of the buying process.

• Planning for formal negotiations:
  1. Gather information before the negotiation.
  2. Decide team versus individual negotiations for both seller and buyer.
  3. Understand the value of what you are offering.
  4. Determine your goals and financial objectives. BATNA=Best Alternative to Negotiated agreement, ZOPA=Zone of Possible Agreement.
  5. Prepare an agenda.
  6. Review adaptive selling techniques.
  7. Prepare a negotiations worksheet.

*Conducting the negotiation session:
1. Understand the problem.
Misunderstanding: failure to accurately understand the other person’s point.
Disagreement: Failure to agree that would persist despite the most accurate understanding
2. Create alternative solutions that can add value. Use confirmation questions.
Logrolling: Offering an alternative solution.
3. Periodically review acknowledged points of agreement.
4. Do not make concessions too quickly. Give away concessions methodically and reluctantly, and always try to get something in return.
5. Timing and the Pareto law. 80% of results are agreed upon the last 20% of the time.

• Know when to walk away: If budget doesn’t allow purchase, customer’s best offer is not favourable, if customer only wants lowest possible price and you represent an adding-value strategy, if customer is dishonest and and fails to keep his word. When appropriate document settlements in writing.

Question 2

2. Describe common types of buyer concerns.

Answer 2

• 5 Categories of buyer concerns: Need, Product, Source, Time, Price.
  1. Concerns related to need for the product. Need resistance is one of the greatest challenges that a salesperson faces during the early part of the sales process. The best way to overcome need resistance is to prove that the product is a good investment by demonstrating how the product/service contributes to making a profit.
  2. Concerns about product/service. Consultative process buyers lack needs awareness or need help evaluating possible solutions. The product (solution) often becomes the focal point of buyer resistance. When this happens, try to discover specific reasons why the prospect has doubts about the product/service.
  Factors that influence buyer’s attitude: 1. Product/Service not well established (new or relatively new product, people don’t like to take risks). 2. The present product/service is satisfactory (build greater amount of desire in the prospect’s mind, focus on values that outweigh the current product’s.)
  3. Concerns related to source. The buyer may have well-established partnerships with other companies, in this case is better to avoid direct criticism of the competition. Keep sales presentation focused on customer’s problems and your solutions.
  Dealing with loyalty concerns (1. Identify problems you can solve with your products/services, 2. Point out superior benefits of your product/company, 3. Work on recruiting internal champions to build more support for your message, 4. Try to stay visible and connected.
  4. Concerns related to time. Stall= Resistance related to time. A stall usually means the customer does not yet perceive the benefits of buying now (prospect has both positive and negative feelings about product/service).
  5. Concerns related to price. There are 2 important points to keep in mind regarding price resistance: 1. Is one of the most common forms of resistance (learn how to negotiate skillfully). 2. It may be nothing more than an excuse.

Question 3

3. Discuss specific methods of negotiating buyer concerns.

Answer 3

1. Direct denial: Refuting the prospect’s opinion or belief. The direct denial of a problem is considered high-risk method of negotiating buyer concerns.
2. Indirect denial: Used when the prospect’s concern is completely valid, or at leaf accurate to a large degree. The salesperson bends a little and acknowledges that the prospect is at least partly correct.
   * Feel-Felt-Found: Strategy used to empathize with client’s concerns that salespeople use to pick clues that indicate that the client feels something is wrong.
3. Questions: Probing or confirmation questions can enhance the negotiation process, also need-satisfaction questions (designed to move the negotiation process forward toward commitment and action).
4. Superior benefit: A benefit that will, in most cases outweigh the customer’s specific concern.
5. Demonstration.
6. Trial offer: Involves giving the prospect an opportunity to try the product without making a purchase commitment.
7. Third party testimony: Studies indicate that a favourable testimony of a neutral third party can be an effective method of responding to buyer resistance.
8. Postpone method: A method salespeople use to delay a response when a customer raises a concern that would be better handled later in sales presentation.

Question 4

4. Outline methods for creating value in formal negotiations.

Answer 4

• How to deal with price concerns:
  1. Do clarify price concerns with questions. Specific survey questions encourage the customer to give you more details.
  2. Do add value with a cluster of satisfactions. Customers seek a cluster of satisfactions that includes a good product, a salesperson who is a partner, and a company that stands behind its products.
  3. Do not make price the focal point of your sales presentation. The best time to deal with price is after reviewing product features and discussed benefits.
  4. Do not apologize for the price. Do not have a hint of apology in your voice. Convey to the prospect that you believe your price is fair and make every effort to relate price to value.
  5. Do point out relationship between price and quality. When selling quality price is most likely secondary to the prospect. Always point out the value-added features that create difference in price. Cheap products are built down to a price not to a standard.
  6. Do explain and demonstrate the difference between price and cost.

Question 5

5. Work with buyers who are trained in negotiation.

Answer 5

• Budget Limitation Tactic: Take a budget limitation seriously and use appropriate negotiation strategies.
• > Unbundling: Eliminating features or items that contribute to a higher selling price.
• Take it or leave it tactic: A price concession is an option to a final offer from a customer, but it is likely to reduce profits/commissions. An alternative strategy is to review superior benefits of the product and make another closing attempt. Appealing to the other person’s sense of fairness also may move the discussion forward. If the final offer is totally without merit, consider calling a halt to the negotiation to allow other party to back down from his/her position without losing face.