Learning & Skills Council

1. Learning & Skills Council

2. Obtaining Commitment Session aim: To move customers to a point of commitment through negotiation and objection handling Learning Objectives The aims and principles of negotiating Negotiating on Price Identifying and preparing for objections Moving towards a close Account Management

3. Negotiating

4. Obtaining Commitment Once we have influenced the customer’s DMP as much as possible we may still be short of securing a sale Now instead of influencing the customer’s basis of sale we need to consider how we can alter our own offer This is called NEGOTIATION

5. Obtaining Commitment • Read the handout • Participate in the negotiation activity • See who wins

6. Obtaining Commitment Questions When was the last time a customer wanted to negotiate with you? When you are selling, do you expect to have to negotiate at some point in the sale? When you are the customer, how often do you negotiate a sale?

7. Obtaining Commitment Team questions – What do sales people negotiate on? Why do sales people need to negotiate? What is the aim of a negotiation?

8. Obtaining Commitment Negotiations have to be planned As a sales person you need to know What customers want to negotiate about What are the parameters for negotiation What are your RED LINES How do your competitors feature You also need to know what your customer is looking for.

9. Obtaining Commitment Preparation for Negotiation Golden rule – WIN-WIN Not a battle of wits Not a game of one-upmanship Do a STREAK analysis Determine your negotiating position Be assertive!

10. Obtaining Commitment

11. Obtaining Commitment Excuse me old boy, we’d like your parking space It is very important to establish the relative strength or weakness of your negotiating position before you begin negotiating

12. Obtaining Commitment You need your customer to finish somewhere between here When you know your position. What exactly are you negotiating on. What room for movement is there. Customer Position Seller Position Area for negotiation

13. Obtaining Commitment Step 1 – What does the customer want? Allow the customer to move first They will tell you want they want Saves you guessing Sets the parameter for negotiation Are you wasting each other’s time? Don’t discuss detail yet Listen and ask questions

14. Obtaining Commitment Step 2 – What is the proposition? Clarify the position first Consider STREAK Communicate in terms of benefits Put out feelers Make an appropriate proposition

15. Obtaining Commitment Step 3 – Bargain What can you offer That is high value to the customer and low cost to you? Interpret benefits into positive implications Do not slag off the competition Always trade off, never give concessions ‘If I do this then can you do that?’

16. Obtaining Commitment Step 3 – Bargain continued Do not respond to a customer idea with another proposition Encourage movement in negotiations Talk through each proposition, explain what it means IS there a nibble available? Bargain upwards – don’t split the difference

17. Obtaining Commitment Example 1 Helen is a car sales person and Peter is a customer. Peter is very interested in a Ford KA and the sale is at an advanced stage. Negotiation starts on TAX and MOT. Peter wants 12 months road tax and a new MOT Helen can’t afford this. Suggestions for Helen?

18. Obtaining Commitment

19. Obtaining Commitment Areas for negotiation Delivery time Specifications Payment terms & conditions Location Colour Quantity Extras THE LAST THING YOU EVER NEGOTIATE ON IS PRICE!!!!

20. Obtaining Commitment • Car price £6000 • Sales overheads £1000 • Negotiation Premium £1500 • Advertised price £8500 Anyone can win a sale by reducing prices Price negotiation is common Prices are deliberately inflated Your company may assume the need to negotiate Deliberately build this into price This only encourages sales people to concede

21. Obtaining Commitment • Car price £8500 • If customer negotiates • Add value with car mats, mud flaps, new radio, free servicing A real skill is to negotiate on other items Add value to the sale So the customer feels the price is good value However, negotiating on price may be essential How do sales people protect their profit margins?

22. Obtaining Commitment Be careful, you are training a customer to buy at a certain price The secret of successful business is ADDING VALUE Successful sales people add value to their offer to help justify the price and thus protect the profit margin. Example – A pig bought at market may be worth £30. However, TESCO will sell that meat for a total ticket price e.g. £300 – by adding value

23. Commitment

24. Obtaining Commitment • When is the best time to close? • How can we identify that time? • How can we move the customer towards a ‘closing’ point? • If that point does not arrive…..why??

25. Obtaining Commitment • Remember that we are looking for EXPLICIT NEEDS • Explicit needs are the stage at which we match benefits • If we match benefits successfully, the customer will exhibit strong buying signals • These buying signals present a good time to gain commitment

26. Obtaining Commitment • In high value sales, closing occurs naturally if we have built a really strong need for our solution • Customers will generate more objections if the need has not been developed • In high value sales, the more objections you experience the less successful you will be.

27. Obtaining Commitment • It takes time to recognise • Buying signals • Closing signals • Sales people need to recognise • Verbal clues • Body language • Work through the handout

28. Obtaining Commitment • All sales people hate rejection • This can scare inexperienced sales people from asking for commitment • A close in made from lots of small commitments gained during the sales process Let us Discuss the terms • Advance • Continuation

29. Obtaining Commitment • Low value sales require less need development • Customers can be persuaded to give commitment • Objections can be used as a focal point • We can use traditional closing techniques

30. Obtaining Commitment • Remember the concept of a short sales cycle • Obtaining a close becomes very important • There tend to be fewer obstacles • There may be more objection handling • However, winning the sale requires focus

31. Obtaining Commitment Why might we fail to gain commitment • The value of our solution has not been developed enough • We have not matched our product benefits effectively • Our product has disadvantages that we can not overcome • We try to close too soon • A professional buyer resents our closing techniques • There are too many objections for us to deal with • Our communication style does not match the customer • We use too many features and make the customer price sensitive • We do not ask for the business

32. Objections

33. Obtaining Commitment Every product or service has a disadvantage These disadvantages may prevent sales Competitors will make customers aware of your weaknesses How do we deal with disadvantages How can we make disadvantages into advantages? (eg WBTC) What are the weaknesses in your products or services?

34. Obtaining Commitment Look at the sales cycle Objections usually occur when we have failed to fully explore our customers needs They occur when we focus upon our product or service too much Avoiding objections through detailed and intelligent questioning will help us sell more

35. Obtaining Commitment Objections can occur at any part of the sales cycle Do not rush into talking about your product Customers are wary of sales people They expect to find faults The best method of handling objections is Objection Avoidance!

36. Obtaining Commitment What objections do you face when selling? Objections on cost Objections on time Objections on value Objections on delivery How do objections make you feel? Miserable Frustrated A sense of challenger How do you deal with objections?

37. Obtaining Commitment Step 1 – Clarify the objection Step 2 – Show you understand Step 3 – Qualify the explanation Often, objections are either expressed in a group or in a difficult way to understand Dealing with objections individually ‘Peel back objections’ and you will find out more about what is holding up the sale.

38. Obtaining Commitment You should know the main objections to your service. Have prepared answers Use evidence, testimonials and scenarios to explain your answers Don’t assume that these answers will satisfy the customer Ask them ‘how does that sound?’ Follow up with ‘are there any other questions on your mind?’

39. Obtaining Commitment Customers may raise objections when they are interested in your product/service They help focus the sales person on benefits They keep the ‘solution focus’ They provide opportunities for you to establish credibility and capability Objections help you understand the driving concerns that customers have

40. Obtaining CommitmentSummary • Be prepared to negotiate terms and conditions • Get the employer to move towards your position • Through questions ‘avoid’ objections • Understand how objections lead to negotiation • Plan for the closing stage • Ask for the business

41. Account Management Winning behaviour What successful people exhibit 3 key ingredients • Skills and Knowledge • Self motivation • Environment & market Are you a winner or a victim? SALES IQ SALES EN SALES EQ

42. Comfort Break

43. Account Management • Many individuals are ‘driven’ by a dominant characteristic • These ‘drivers’ come with • Symptoms • Advantages • Problems • The next activity helps you identify your ‘driver’

44. 20% 20% 40% 20% Account Management Category A = Your most loyal and profitable customers. They choose you for quality and value the relationship Category B = Important customers who may choose you among several providers based upon quality and price Category C = Usually the bulk of customers who are price sensitive, ‘break even’ and shop around Category D = Pain in the neck customers who exploit, use you, steal time and resources

45. 20% 20% 40% 20% Account Management Strong relationship usually at a high level. These companies value your contribution (WHY?) and are reluctant to change. Threats = change in personal, major business change or failure of quality Good relationship at high/medium level. Price is important but not as much as other benefits. Threats from change in personnel, significant price increases Weak relationship and usually at lower level. Price sensitive so a good business case is required. High turnover of these customers mean lots of contact is required Poor relationship at low level, these organisations cost you money, are high maintenance and have no loyalty.

46. Usually the easiest to deal with in terms of repeat business because they value your organisation and understand the value you add 20% Relatively comfortable with spending more time/money with you providing that you can demonstrate sound benefits in return 20% Will respond negatively to cost increases so you need to quantify business benefits and demonstrate a return on investment. As with category B – awareness of your competitors is key 40% Will probably leave you in response to cost increases. However, you should be identifying these customers and easing them out anyway 20% Account Management

47. Account Management to Change Solution Realise Changes to business needs Need Buying thought process Consider choices Finalise options Decide to change

48. Account Management • CIM suggests that only 3% of your suspects are ever in the market at one time • A possible 7% are ‘moving’ into the market • At least 90% have no ‘need’ • Your sales approach should • FIND the 3% • PERSUADE the 7% • REMIND the 90%

49. Account Management • Decision making occurs at 3 levels • Rational – price, delivery, risk • Outcome – potential benefits • Emotional – relationship, feel Rational Emotional Outcome

50. Rational Outcomes Emotional Account Management • Relationships are of greatest importance in • HIGH VALUE SALES • ENCOURAGING REPEAT BUSINESS • WBL is a high value service • WBL customers are/should be purchasing over and over again • Therefore the relationship between the company/sales person and customer is critical • WHAT FACTORS DO YOU THINK ARE MOST IMPORTANT IN A SALES RELATIONSHIP?