In order to realize potential profit you sometimes need to be open to negotiations or haggling with clients and customers. Just because you’re open to negotiation, however, doesn’t mean you need to be resigned to being low balled or forced into giving unreasonable discounts.
“But many sellers—especially inexperienced ones—say yes to even the most outrageous customer demands. Shrewd buyers can lure even seasoned salespeople into deals based on emotion rather than on solid business sense,” Thomas Keiser from Harvard Business Review pointed out.
To avoid getting talked into giving away your goods and services at low discounts that make a customer happy but put a dent on your profit margin, you need to know how to negotiate with clients during haggling situations. Negotiations should be a fair and square compromise between two parties meeting halfway. Here are seven principles of negotiation that you must grasp wholly by heart.
1. You need to probe your client.
Either you or your client will make the first move and that should draw a counterproposal. “It keeps the two of you on opposite sides of the negotiating table. The second invites the customer to help shape the proposal”, explained Keiser. “Customers who participate in the search for solutions are much more likely to wind up with a deal they like.”
2. Practice assertive pacifism.
Customers instinctively want to get more outright, but don’t be pressured. Giving up easily and agreeing to an extremely low discount will not only reduce your businesses margin, it will also encourage the client to have no further expectation in future negotiations.
Draw your clients into a partnership where both parties work towards a creative solution. “Let the customer talk herself out. Keep in mind the needier her behavior, the more power the salesperson has since neediness comes from weakness,” according to Entrepreneur.com. Listening to the needs of a client is “the opportunity to build trust, empathy, and rapport and it calms down the difficult person.”
3. Make a standard discount and price match.
Make precise computations and prepare a studied percentage discount to give before entering into any negotiation scenario. This will be your make or break point, you cannot and should not go any lower. Or, instead of getting caught in an endless loop of haggling, make a price match. Tell customers that if they find a lower price somewhere else, bring it to you and you will match it.
4. What’s in it for you?
The general rule is, you need to make transactions customer-centric. However, if customers want something from you, realize that you should get something in return as well. For example, in exchange for lower prices, maybe you can bargain for faster payment, bigger volumes of orders, lighter delivery time, customized packaging – or vice versa.
Learn to find value in other elements and not just the money. “Consider giving a little by offering things your customer values highly, but that have a low incremental cost for your business. Perhaps there is a service or follow-up you can provide that will make the customer feel they are getting a longer-term commitment and more value,” CEO of Invoice2go Greg Waldorf shared.
5. Don’t let emotions take over.
Be professional and establish credibility by making calculated decisions and avoid getting defensive or being offended during a haggling scenario. Detach any emotions whatsoever, such as agreeing to last-minute demands just because you don’t want to lose a client.
Remember that “anger is an unintelligent emotion”. When you have emotional control over your decisions, it is an indicator that you have the upper hand as “angry people typically do not feel their fear because they’re lost in their anger. Fear uses anger to gain control,” according to Entrepreneur contributor Sherrie Campbell.
6. Hold your horses.
If you’ve already have 90% of your demands met, seal the deal and quit badgering your client for more. Remember that every deal is an opportunity to develop client retention. Most importantly, do not sabotage your pricing tactic to cater to your potential customer’s demand. However, keep each other in the loop until a contract is signed.
“Don’t relax once there’s a meeting of the minds because until the contract is actually signed by both parties, it’s just so much moonshine,” according to the research of Geoffrey James of Inc.com.