The Psychology of the Sales Cycle – Negotiations

If you’re like the vast majority of people,
when you make a purchase you want to believe you got a good, or great, deal. What’s
your definition of a good deal? The deal is really the value you get from the
transaction and when I talk about value I use the following equation:

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.

Brian Ahearn, CMCT®
Chief Influence Officer
influencePEOPLE 
Helping You Learn to Hear “Yes”.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.