Easiest negotiation hack ever? Postpone!
Imagine you're talking with a prospect that loves your product, and they would be willing to buy if only [insert objection X]. Objection X can be anything, but most commonly in sales, it's pricing. So let's use that as an example. How can you negotiate your way around [obection X] and close the deal if you can't actually deliver on objection X?
The prospect wants to buy, but only at a steep discount. What usually happens at this point is a long back and forth between seller and prospect. Sometimes that negotiation leads to a deal, sometimes it doesn't.
How to frame price negotiations
You, as the seller, want to frame this negotiation around the value your product is creating.
The prospect, however, will most often frame it around the price. They'll tell you that competitor ABC only charges half of what you charge, or that your product really only costs you $50 to deliver, so how dare you charge them $100? If you sell it to them at $55, you're still making a profit, right?
If your product provides thousands of dollars of value to them, it's totally worth for them to pay a couple hundred dollars for it.
Always sell based on value, not on cost or market.
Customers cherry-picking features?
Sometimes customers will tell you, "We really don't need all these features you have, we just want feature number 3 and number 12 and 18." And because they don't use your other 30 features, they'll argue, "Hey, we're only going to use three of your 33 features, so we really shouldn't be paying the full price."
Well, yes, they should. Because these three features they want to use are worth more to them than what you charge. And if not, then they're probably not a good customer.
Negotiation not going anywhere?
But what if your your customer doesn't buy into your value-based pricing and insists on a discount? How can you avoid getting stuck in a endless negotation where you're just running in circles, not making progress?
Most sales people will do one of two things:
- Just keep on pushing and be totally unrelenting. Either win them at your current price point, or lose them as customer. Apply brute force and coerce them to buy.
- Just accept their discount requests. "Oh, you want a 30% discount? Well, ok, we don't really do this, and I'm actually not earning any commission on this deal, but if that's what it takes to win you as a customer, then I'm willing to do it." (And keep in mind: if you give them the discount they asked for, most of them will think: "Hey, if he can give me 30% off, he can probably give me a 50% discount as well." And they'll ask you for another discount and put pressure on you again.)
Both of these extremes aren't elegant. Negotation is often about creating new options, and this is one of these examples. What you want to do instead is to make them experience the value your product delivers to them.
Propose to postpone
Just propose to postpone the negotiation for a month.
"Mr. Prospect, I think we both agree that our product is perfect for your needs. And I want to get you guys to realize the value of our solution as quickly as possible. It seems like right now, it's hard for us to figure out what the reality is, because we're dealing with hypotheticals.
You haven't used our product in a full-fledged, real environment for a month or two. We can't really know what the value is, how it streamlines your workflow, what it truly delivers for you. And this is why this discussion is so difficult. Our negotiation is based on assumptions, and we don't have any real data to back them up.
So here's what we'll do: Buy our product today. Full price. Use it for one month. In full range, in a real environment, all the features and functions, no limits. And in a month, we jump on another call.
Once you've realized how valuable it is, once you know what it can and can not do, once you've really actually used it full-fledged, with the entire team, then we'll figure out what the best price is for you. And I'll guarantee you I'll make you a good deal. But let's have a month full of data before we actually decide what the right pricing is."
Nine out of ten times, the other side will accept this reasonable proposal. You process their payment and do nothing but wait.
Why is this better for you?
If your product delivers more value than what you charge, you're going to be in a much better position at the end of the month than you are today.
After a month of using your product the customer has:
- Now experienced all the value of your product.
- Invested a full month on getting their entire team on board. They are using it day in and day out, they rely more on it.
- Stored more data in your application, and connected it to more parts of their business.
They've invested all this time into it, and got real value out of it. It's now much harder for them to walk away.
It's now actually harder for them to churn and cancel than it is to buy and just stay a customer, because they're already using your solution, you're already their default modus operandi.
How many people ask for a discount after a month?
Almost nobody. I've had customer tell me, "You know what, I don't want a discount anymore. We love your sales CRM so much, we're happy to pay full price."
But most customers simply won't say anything at all. They just forget about trying to negotiate, or they just don't care anymore. Oftentimes they just asked for a discount because that's how they buy: they always ask for a discount. But once they already bought, they're over it.
Whenever you encounter a seemingly unmanagable objection, see if you can simply hack the negotiation by postponing it.