Define Value, Win Credibility and Respect at the Negotiation Table

Posted on December 21, 2011 | Filed Under Negotiation SkillsTactics | View the Print Version

Define Value, Win Credibility and Respect at the Negotiation Table with a Few Simple Questions

Have you ever heard this from a customer during a discussion? "We’d like an additional 10% discount. If you give this discount to me, we can close the deal." Sellers hear this all the time. More often than not, sellers concede immediately in the interest of getting the fast close. But is this the correct response? Let’s consider the advantages. As a seller, if the deal really closes after you give the quick discount, you can count the revenue and move on to the next deal. And maybe the client likes you for that moment.

But how do you know it will close? Your customer might start thinking, "This was too easy. I should have squeezed them for more." All-too-common scenarios like this are the reason that "Concessions easily given appear of little value" is one of our foundational six principles for successful negotiations is As a result, they may stop the process and look for more. This delays the deal, and probably further erodes your price and terms.

Even if it closes after you give the quick concession, what is the customer thinking? Do they like you for that moment, and then have "buyer’s remorse": "They made that concession so quickly, maybe I should have asked for more." Or, "That was too easy. I guess they were just trying to rip me off with the original proposal."

And what about next time? Will they believe you when you give them a "good" proposal?

Consider this: What would have happened if you answered differently when the customer made their discount request? You might have said:

  • "I understand that you would like a 10% discount, but let me take a moment to explain how our solution really satisfies your business need."

Or

  • "I have to apologize if I have not articulated the value of our solution adequately; can you explain to me why you feel a 10% discount is justified?"

Ultimately, the customer may have an answer – in fact it could go something like, "Well, we feel that your competitor is offering better pricing for substantially the same solution." You should welcome this response because it triggers a meaningful value conversation.

You can then offer a response like:

  • "May I point out some differences in our solution that help your business?"

Or

  • "Well, what differences do you see that make you interested in dealing with us?"

In either case there is a potential that you will focus the customer back on the value-based justification to sustain a higher price and better terms.

But even if you don’t succeed in differentiating the value of your solution, it is much more likely that the questions about your credibility that arise by giving the "instant" discount will not arise. The customer will be satisfied and respectful of your principled approach. And you will have integrity with your next proposal. In a relationship, the expectations of the customer are built over time, as is customer satisfaction and, ultimately, business respect that means a more profitable relationship over time.

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