Negotiating tips: Competition and discounting

Negotiating tips: Competition and discounting

Most people's main fear when negotiating is that they will lose the job to the competition. I often hear reps complain that they can't gamble in a negotiation because the prospect will buy from the competition, or the competition are cheaper so I have to discount, or I can't risk losing the sale because my Sales Manager will go mental.

I get the objections, really I do. But you're not going to win every sale. And frankly, you shouldn't want to as some of those sales are so anaemic and poorly put together that they're more trouble than they're worth. 

I get that there's pressure. But it's that pressure that makes you bad at your job. If you negotiate for a living and do so from a place of fear, you'll never be any good. A fearful seller is the just about the biggest power a buyer can have. The more pressure on the seller the easier it is for the buyer to request unreasonable concessions. The very strongest bargaining position is to be a seller who doesn't need the sale. It's unlikely that this is the truth of the matter, so this is definitely one of those times in your like where you need to fake it until you make it. I've said over and over that negotiating is a game. This is just one more example of that, and is no less a part of negotiating than a buyer pretending they don't want what you're selling. That's not the truth - just the part they're playing to try and get a better deal.

Competition can be an asset.
We all have competition. Marketplaces are getting more crowded, not less. But everyone has to deal with it. The issue isn't the competition, it's how we view it. If you're fearful of it, you'll get less. However if you have a good product, and you're a good salesperson, why should you be fearful? They should be scared of you, not the other way around. After all people buy from people they like, and no matter what the competition does, they can't match you. That's right, you're a significant asset to the company you work for - one that the opposition can't duplicate. So stop worrying so much about the opposition and focus on your own game. I guarantee you it'll lead to better outcomes.

One of my favourite stories about turning a negative into a position is about the barber from a small mid-western American town. He was the only barber in town and ran a good business cutting hair for $25. One day a competitor sets up shop two doors down from the barber and promptly put a sign in the window that says ‘$15 haircuts’.

When most people hear this story they think that the barber will drop his price to match the newcomer. The natural human instinct is that to be competitive you must match price. But it's not true - price isn’t everything (in some situations it doesn’t even rate in the buyers top 5).

Just to make this point our small town barber proceeded to put a sign in his shop window that said “we fix $15 haircuts”. The barber had cleverly ‘differentiated’ his service from that of the newcomers and enjoyed continued success for many years to come.

The moral of this story is ‘price isn’t everything’. I mentioned in a previous post that one of my favourite comebacks when someone says the opposition is cheaper, is "That's because they should be". The sign that the barber put up was saying just that. "I know other barbers are cheaper, but that's because they should be". It also illustrates that despite buyers continually saying price is critical, it seldom is.  

Your powers
As per above, the competition can actually be a source of power when negotiating. Here's just a few of the common ways this plays out.
They’re not you. There’s no doubt that one of the biggest factors determining where a client spends their money is how much they like the rep. For all you know, the buyer might hate the opposition rep. 
They don’t have your concept/product/service. Not all products/concepts/services are the same. The buyer might try to fool you into thinking they are, but it's just not true. Unless you stick to your guns, you'll never find out just how different.
They’re uninformed. Salespeople often moan about training, but the reality is that if you’re  better informed/trained than the opposition it's a significant strength. And this isn't just 'how to sell' training. It's training on industry trends, interpersonal skills, technical skills etc etc.

The bottom line is that competition is everywhere, but not all things are created equal. Buyers will try and convince you that you're like everyone else, or run you down to make you think you're worth less than you are. But those are just buyer tactics - don't believe them. Yes, listening is a critical sales skill - but 'listening' doesn't mean you blindly accept every premise the buyer throws at you.  

Free to drop me a line at rohan@kingfishercreative.com.au if you'd like to know more about this subject or any of the previous articles I've written. If you're in business and would like to discuss any aspect of marketing or sales please get in touch. If you're interested in digital marketing you can also take advantage of our current promotion - we're offering a Free Google Health Report so that you can find out where your site currently ranks, which keywords your prospects are searching for and how effective your website is. Check it out here.

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