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Formal Sales Negotiation

How skilled are you at dealing with the natural imbalance of power that exists between buyers and sellers?

The reality is that buyers have all the power when negotiating with sales professionals. How effective would you be as a salesperson if you told a customer: “You have hassled me long enough. You either become more flexible, or I’m going to go sell someplace else!” Our customers would start laughing if we made that statement in a meeting. But look at the power that statement has when it is reversed and the buyer informs you they will start looking at others if you don’t become more flexible in your selling and pricing efforts. How are you overcoming this significant imbalance of power between you and your prospects/customers?

A basic concept of successful sales negotiations can help you increase your ability to negotiate more positive outcomes with your customers. How aware are you as a salesperson of the difference between “formal” and “informal” negotiations?

Formal negotiations take place when both sides are aware they are negotiating. If a customer schedules an appointment with you to work out the details and final pricing of your proposal, then you are both aware that you are in a formal negotiations environment.

An informal negotiations environment exists when only one side realizes they are negotiating. In the majority of cases, it is the salesperson who does not realize that negotiations are taking place until it is too late.

Have you ever been trapped in this type of problem? In the middle of a detailed sales presentation, your prospect interrupts you and asks, “Does this include free delivery?” You answer, “Of course it can.” What does the phrase “of course it can” mean to you as the salesperson? To the majority of salespeople, it means things like “it might” or “sure it can if you don’t ask for any other discounts or concessions.” Because the customer has not yet said yes, you did not see this presentation time as part of your formal negotiations. You took your prospect’s question to be only an indication of interest, not a point of negotiation.

However, hear how different the phrase “of course it can” sounds to your customer. Most customers would take your answer as a definite promise that free delivery has now been included in your offer to them. Later, when you deliver your final proposal and price, the customer acknowledges that he loves your quoted price, signs the agreement giving you the order, but then takes a pen and draws a line through your delivery charge reminding you that you already promised free delivery during your last meeting.

The solution? As a salesperson, you are always negotiating with a buyer, whether you realize it or not. Be aware that every statement you make to your prospects or customers can be construed or assumed to be a response to a negotiated question. Otherwise, you might be unpleasantly surprised when you deliver your final proposal to your next client.

Material Handling Equipment Distributors Association
Meet the Author
Jim Pancero is president of Jim Pancero, Inc. in Loveland, Ohio.


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