Sellers who focus negotiating to price only, limit themselves and lose the opportunity to show value-especially with new business.
“Give us a discount. We are giving you 500 salespeople to train.” Contrary to popular belief, this is not an open and shut case of obvious discount from bulk business. Instead, it’s an opportunity to negotiate. If you see it as the traditional bulk discount, (or, get scared of losing it especially in a dry spell) you are likely to acquiesce and immediately say, “Yes. We shall give you a 10% discount.” And the buyer, smelling panic, lunges for more, and a price war ensues.
Succumbing to give us a discount
So acute is this ‘give us a discount’ dilemma that some institutions already have tiered segments for price discounts that they share in their training. “If customers buy up to this much, they are entitled to this discount. And from this segment the discount moves to this much more.” And so on. Usually, this is as a result of a continual push by their salespeople for reduced prices. “They are getting this same pump at half the price.”; “They say installing the software is cheaper if they do it with our competitor.”; “We are losing sales because of price.” This could be true. It could also be true that these sellers struggle with negotiation skills; and, if unchecked, this tiered system could energize, rather than challenge, this weakness.
I’m not blind to genuine bulk discounts, or discounts from repeat business; that’s not the point here. What is, is that sellers who focus negotiating to price only limit themselves and lose the opportunity to show value-especially with new business.
Responding to give us a discount
Which brings us to the other approach to, “Give us a discount. We are giving you 500 salespeople to train”. The progressive seller may have the tiered system in his kit but he knows it’s a tool of last resort- to be used if at all it must. So, informed by the 7Ps of marketing he brings other matters to the surface. “We can look at that. To do so we can change the venue (Place); (or, mix them with our other students, or, increase the student population per class to have fewer classes.”) (Process) The buyer is taken aback. “But we agreed that we would train them at one go exclusively; and we even blocked the whole of June for this.”
“That is true. We also blocked June out for you too. This program was booked through August and continues to be booked because of its effectiveness (Physical Evidence). We deferred the students who had booked in June and customised the program to accommodate you. This is the discount we had extended because ideally we should have charged more.”(Price and Product). Sorry, if this had not been raised before.” And just like that the buyer is looking at the problem differently and very likely the quest for discount is weakened.
What did the seller do? He did not see the word ‘price’ in, “Give us a discount. We are giving you 500 salespeople to train.” Do you?
Read: Negotiations key to securing value for buyer, seller
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