For many years, we have been asking our global clients for the most common and most difficult verbal negotiation tactics they face every day. Their buyer's comments many sound different, but they all have one thing in common. Whether buyers are asking for a price discount, an extended warranty or some other concession, the message is loud and clear: they want something, they want it now and they want it for free... or less! From our research and from what we have observed, they are very likely to get it!
Here is just a small sample from our surveys of the thousands of tactics buyers have used to ask for some concession from sellers:
- tendency to compartmentalize around one aspect (like price) and not look at the big picture of contract benefits
- refusal to recognize our value add, even though they use it, and the focus on price
- asking and assuming this is just the start: what's the discount? what's the real price?
- the price is too high
- I have no money right now
- your share requirements are too high
- your amenity values are inflated
- no budget
- our goal is to cut our costs by 10% over the previous contract
- we have some major problems with meeting service level agreements, etc.
- budget limitations
- our business model does not allow us to pay that type of premium
- this decision will be made based solely on price
- we cannot close these deals at these price points
- lead time are long; let's get these prices locked in so we can stock your items and avoid lead times
- this is what we want
- the most important thing is price
- we are looking for the best price
- how much can you bring the price down?
- is that the final price?
- need to do better with the price
- if you can't reduce the price, you will be kicked out of the bid
- if you do not lower the price then we are going elsewhere with our business
- customer wants a price up front, even before we have had the opportunity to create value
- certain percentage off last price paid
- lowest price wins
Was that painful enough? Do any of these sound like comments you've heard lately? In fact, about half of all global tactics were similar in that the buyer attempted to force a concession by picking one aspect and focusing on it out of context.
Business deals are to be evaluated by both sides based on all the data for both sides. We can't take one piece out of context; it just doesn't make sense.
The good news is that there is an simple way to counter all these buyer tactics once you recognize them for what they are. Trading. That is, asking for something in return when a buyer makes a demand of you. It is the key, now more than ever, to bring the price of what you are offering back into context.
If we, as negotiators, made this simple but highly effective change to our negotiation strategy, profit margins in our companies would skyrocket while actually providing some benefit to our customers. Just as we have to change the way we're negotiating, buyers also have to recognize that, for most of us, margins are down. Demanding that we give away more margin simply does not fly anymore.