When I started my sales career, it was an uphill battle. I struggled with pretty much every aspect of the job, but in particular, I had a hard time figuring out what price to quote to a prospect and how to overcome price objections. This left me in a no-win situation. When I lost a sale, I had a lingering feeling that I had priced myself out of the market. And on those rare occasions when I made a sale, I was frustrated because I felt I had left money on the table.
To be sure, being part of a family business had its advantages, but there was also a tremendous amount of pressure to perform. One day, when I was ready to throw in the towel and go back into purchasing, my father was with me on a ride-along. He, like his father before him, was an extremely successful businessman and terrific salesman. At one point, he said something, almost in passing, that made everything fall into place. From that point on, I never had another problem with pricing and negotiating. Starting then and there, my close rate increased – along with my prices. This is what he told me:
If a buyer likes you, he will make sure your price is right. If a buyer doesn’t like you, your price will never be right.
Let’s unpack this idea a little bit and see if you can get as much out of it as I did.
First, having spent many years in purchasing, I can assure you that this statement is true. As a buyer, I followed this dictum myself, to the letter, even though I wasn’t always fully aware of it.
Why is this normal buyer behavior? Because in a free market, there’s no reason to do business with someone you don’t like. Unless you’re selling something nobody else has – in which case you don’t need to be reading sales tips – it always boils down to relationships. My biggest selling problem was thinking that an attractive price would lay the foundation for a relationship, when, in reality, it is the relationship that lays the foundation for a mutually acceptable price.
An important corollary to this is the importance of viewing buyers as equals, not superiors from whom one must curry favor. Sustainable and mutually beneficial business relationships are based on the recognition that buyers deserve a reasonable price and sellers deserve a reasonable profit. It’s especially difficult for younger sales reps to have this mindset when calling on older, more seasoned buyers. However, if a young rep succeeds in this, he will seriously outperform competitors.
If, after a reasonable amount of time, you are unable to establish a relationship that sets you on equal footing with the buyer, it’s probably time to move on. While it’s true that a sales rep shouldn’t give up too quickly, being overly persistent in pursuit of a reluctant prospect can be just as damaging if not more so. A seller’s most valuable asset is time, and wasting it on prospects who don’t want to do business with you can leave you with nothing but a dry pipeline of leads.
Once you realize that the relationship drives pricing, the negotiating process becomes more a matter of cooperation than confrontation. This is excellent for sellers and buyers, as it takes much of the stress out of a normally tense point in the selling process. Some ways to approach pricing in the spirit of cooperation:
What price do you need to make it easy for you to sell your decision within your organization?
Would it be helpful to start with a trial order, to enable people within your organization to see the value of this product before making a full commitment?
Can we negotiate payment terms or order quantity as a workaround to a purchase price that slightly exceeds your budget?
Discussions centered on these kinds of issues tend to produce sales – sales that are agreeable to buyers and sellers alike. In my experience, when a buyer likes you, he will be happy to engage in such discussions. If the buyer doesn’t like you, you’ll get evasions or a total shut down.
Either way, you know where you stand and what to do next – and for a sales person, that’s as much as you can ask for.
Brad Shorr is the Director of B2B Marketing for Straight North, an Internet marketing agency headquartered in Chicago. With many years of entrepreneurial experience, he writes frequently on business strategy and content marketing topics.