Home | Client Comments | Programs | Presentations | Library | Contact Us
  Business Development Resource Library

Complete Business Wisdom

How Effectively Are You "Negotiating the Sale"?
By Harvy Simkovits, CMC, Mr. Business Wisdom

Is a fence only a fence? What if it can make you wealthy?

After a period of soul searching and marketplace research, one fence manufacturer realized that its best marketplace value proposition was to help its customers (independent business dealers) to become wealthy. So it developed a campaign and program that would assist its dealers to "become successful millionaires" via selling and installing that manufacturer's fences. That company also effectively trained its sales force to introduce that program to those dealer owners.

At its next industry trade show, a long-time customer came into the manufacturer's booth and asked for the company's price list. The retrained sales person said that they no longer give out price lists but that the dealer could sign up for a one-hour presentation on how to become a millionaire by selling this manufacturer's fence program and system. The dealer then said that they had no time for that, and just wanted the company's price list. The sales man tried again to interest the dealer in the manufacturer's program, yet to no avail. The dealer again requested a price list so that they could move on. The sales person then respectfully turned the dealer around and said that fence price lists could be obtained from the adjacent competitors, but that his company no longer worked that way.

Becoming miffed, the dealer grumbled goodbye and walked away towards the edge of the company's booth, heading for the competition. Then, suddenly sensing that he was not going to be stopped from leaving, he abruptly froze at the booth's edge. Now, truly knowing that the sales person was serious about the manufacturer's position, the dealer slowly turned around and said, "Okay, okay. Where do I sign up for your presentation?" It was a successful "moment of truth" for this manufacturer and its sales force.

Businesses are constantly fighting the forces of commoditization that naturally exist in the marketplace. Even if your company designs custom- engineered solutions for your customer's specific needs, as time passes, your customer will be exposed to competing vendors that try to take that business away from you. The customer invariably will come back to you saying he can get similar services elsewhere for a cheaper price, or they will just ask you to lower your price because of competitive pressures. This often leads to a no-win game for your business where you are forced either to cut your price or to provide more services for the same price, thus risking your profitability.

Methods by which you can deal effectively with this "commoditization game" are:

  • Continue to re-engineer your products and services so that you are continually evolving them to your target marketplace's changing needs. To do this, you need to be good at 1) digging deep into your customer's psyche (like the fence manufacturer did) and come up with important hot-button issues for them that your business can serve, and 2) designing your products and services that effectively address your target customers' deepest needs.
  • Respectfully be able to say "whoa" to customers (again, like this sales man did) that do not understand your value proposition, and focus your efforts only on those that do get it and value your uniqueness. Also, it takes a bit of chutzpah and a strong belief in your program to carry out this approach.
  • Have a deep and powerful relationship with each customer that serves what is truly important to them, both for the buyer in front of you and for their whole organization. Train your sales force to be able to build rapport, ask the right strategic questions and to position your offerings to what is most important to each customer and their various constituencies.
  • Focus on value first (again, as this fence company did) before revealing price. Coming out with price too early, before the customer understands your full value package, can cause them to run away or move on prematurely.
  • Build unique capabilities (like UPS does in being able to totally run its customer's warehousing and distribution operations) that bond the customer to you and make it hard for them to switch to the competition.

If you do need to go along with the commoditization game, here are tricks for you to minimize its impact on your business:

  • Provide lower-cost options so that your customer has choices on the level of involvement they want in your products and services.
  • Continually seek efficiencies in your business, and then pass some of those savings onto your customers as your costs to do business decrease.
  • Never lower price without concurrently taking away value. Focus in on the most important pieces for your customer (and know how and when to ask the right questions to determine what those pieces are) and then remove those parts of your package that are less important to them.

By more effectively "negotiating the sale" with your customers, you can work to generate better results for your customer and increased profitability for your business.

Harvy Simkovits, CMC, President of Business Wisdom, works with owner managed companies to help them grow, prosper and continue on by offering innovative approaches to business development, company management, organization leadership and learning, and management education. He can be reached at 781-862-3983 or .

Business Wisdom
4 Angier Road, Lexington, MA 02420 – (781) 862-3983 – www.Business-Wisdom.com