COMPANIES are spending a lot of time and money to build relationships with their customers in the face of keener competition.
But why do managers then complain that margins are getting thinner?
The strong relationship their customers has become companies' biggest weakness. These "close customers", in fact, have all the power in their hands - the power to say "yes" or "no". As a result, salesmen become powerless to demand a reasonable return for their companies.
Why aren't they able to get a fair profit out of these customers? The real problem lies in their inability to negotiate a fair deal with some of their best customers.
Most think that negotiation takes place only at the end of a deal after they have answered all the customers' objections.
So how do you deal with this problem? Here are eight strategies to keep in mind when dealing with customers.
1. Negotiate now
Most salesmen are not aware that the moment they face a potential customer, they have to consciously put themselves in the "negotiation mode".
This is not "mentally bargaining" with the customer but to be aware of the answers, promises and undertakings given and the implications that they will bring about in the course of completing the sale.
Negotiation is an ongoing process and not something you do only at the end of a sale.
2. Company's needs
Most salesmen are very good at focusing on their customers' needs and interests without considering that of their company's.
Too much empathy and focus on the buyers' needs and wants can work against salesmen. Instead, they should concentrate on problem solving that satisfies both the customer and their own company.
3. Subservient mentality
Some salesmen are unaware of their personal power and therefore sell themselves short.
They must first believe that the potential customer needs what they are selling at least as much as they need the sale.
Positive body language, an authoritative tone and the right choice of words will make an impact on the customer.
4. Multiple variables
In any negotiation situation, you need to know the point at which you will have to walk away from the deal.
Try to include as many variables as possible in the form of price, terms or other deliverables (valuable and attractive to your customer) to your walk-away point.
Do not focus only on the price. The more the variables, the easier it is for you to close the deal. These also keep the negotiation going for as long as it takes to reach a solution.
5. Bide your time
Studies have shown that salesmen who ask for a higher margin usually get it. By lowering their expectations, salesmen have made the first concession in their own minds even before the negotiation gets underway.
The customer then gets premature concessions along with the normal allotment that follows. Always get something in return for concessions made and know their economic value.
Something that does not cost you much may be valuable to your customer, such as credit terms, convenience, timing of delivery, service, customisation, assurance of quality and special treatment in times of scarcity. Finally, if you have to concede, concede in small increments.
6. Tracking issues
Negotiations can get confusing. Everyone gets frustrated when there is no progress. Customers sometimes go back on agreements made earlier or raise new issues. Make sure you keep track of issues that have already been covered and take note of what is still outstanding.
7. Workable solutions
Once a concession is given, it is very difficult to take it back. Often, salesmen make the mistake of agreeing indefinitely to an issue without considering if the whole deal still makes sense. In the process, they play into the hands of the customer.
8. Hardest for last
Salesmen naturally want to negotiate the hardest issues first. After all, why spend time on the small side issues when the thorniest ones are still outstanding.
But resolving relatively easy ones can help build up the momentum for more difficult ones. In addition, new variables may be uncovered in the process to help in the negotiation process.