V = WIG/P
Value equals What I Get divided by Price.
There are two simple ways to look at it. If I can get more of something for the same price, that’s a better value. If I can get the same amount but pay less, again, that’s a better value.
When it comes to value, getting a good deal, everyone would like to get more for less. We might not get as much as we want, or pay as little as we’d like, but believing the old adage – everything is negotiable – we’ll try our best to get more and/or pay less. And so will your prospects.
Negotiating isn’t simply about lowering your price or giving away more stuff to make someone happy and close the sale. It’s about knowing when to deviate from traditional pricing or when to make concessions that will make both parties better off in the long run. It’s fair to say all the principles of influence and the contrast phenomenon might come into play as you negotiate but a few will stand out a little more.
Liking remains very important because the more the prospect likes you and really wants to do business with you, the better your chance of getting to yes as you go through negotiation points. Continue to remain friendly, bond over things you have in common and offer compliments when warranted because those simple acts will grease the wheel. One study I regularly share in my influence workshops clearly shows people put in a negotiation scenario had a much better chance of avoiding a deadlock if they take the time to get to know each other on a personal level.
The principle of reciprocity describes the reality that when you give, quite often people feel they should give in return. This is very important in negotiations because your act of conceding on some point might cause the other person to make a concession too and you’re now closer to agreement. A concession might be sweetening the deal with something that may not mean much to you but might mean a lot to the prospect. Again, your act of giving is met with something in return. That’s the basis for bartering. The key here is to be the first to take the step to the middle.
Consistency allows you to fall back on what the prospect said earlier in the sales process. If they wanted certain features and those features have a price tag then the reason for the price being what it is might be due to their choices. Reminding them of what they said they wanted is powerful because most people won’t come back with, “I know what I said but I’ve changed my mind.”
Scarcity is closely aligned with consistency because you can always offer to remove certain features to get the price more in line with customers’ expectations or budget. If you recall in the post I wrote on qualifying the prospect, I shared a conversation between an insurance agent and prospective customer. The agent shared a little about business income coverage and the prospect asked to have the price included in the insurance quote. The new coverage will cause the premium to be higher but could be modified in some way or removed as a concession if the prospect feels the price is too high. With a new understanding about the coverage and their exposure, prospects might just find a way to keep it because no one wants to think about an exposure they clearly know is not covered.
Contrast is used to help the prospect see what is being offered is in fact a good deal. If they believe your price is too high you need to figure out what their comparison point is. Whatever they have currently might not be a valid comparison point because the features may have changed. If that’s the case you need to move away from the old price and get them to see the value in what you’re offering.
For example, how does being $1,000 higher than a competitor breakdown over the life of a product with a five-year lifespan? Over five years, there are 260 weeks so your product will cost the prospect less than $4 a week. Can you show the prospect how your product is worth much more than the extra $4 a week you’re asking them to pay?
Bottom line – Don’t be offended that the prospect wants more for less. We’d all love to have a Cadillac but it’s not reasonable to think we can get it for the price of a Volkswagen, is it? And so it is quite often in your negotiations during a sale. You need to work with the prospect to come up with a solution that makes them feel their needs were met and they got a good deal.
Next time we’ll look at the part of the sales cycle I’ve seen salespeople struggle with the most – closing the sale, i.e., asking for the business. This doesn’t have to be difficult if you’ve set the expectations early on. Using the principles of influence effectively can make closing a natural part of the sales conversation.