Salespeople go into negotiations with professional buyers on a daily basis, most without real negotiation training. Further, many sellers and their managers don’t really believe negotiations play a role in their world. But they do. The following article discusses why Distributors need to revisit the lost art of negotiation.
Excerpts of the article authored by Frank E. Hurtte Jr. who has 28 years of distribution industry experience and a lifetime in sales follow.
“As companies worked to reduce their costs, I saw classes full of purchasing and procurement guys.”
Have you ever called on a person with the CPP credential behind their name? This stands for Certified Purchasing Professional. In order to maintain the accreditation, the individual must meet the following minimum continuing education requirements as listed on their website.
For those still wondering, let me throw in another detail. I asked well-known negotiation trainer Tony Perzow of SPASigma, an organization dedicated to improving sales negotiation, to elaborate on the issue. Tony said, “During the years of the Great Recession we saw a change in the mix of our classes. As companies worked to reduce their costs, I saw classes full of purchasing and procurement guys. These companies realized the easiest way to drive cost out of their system was to apply pressure to their suppliers.” Putting ourselves back in the time, sellers were desperate to get sales; at almost any cost. My experience with distributor sales organizations shows many companies are still trying to work some of these poorly negotiated deals back to profitability.
Our customers don’t believe negotiation is a bad word. As a matter of fact, they have made good use of the process. Our sellers were ill equipped to even begin playing the game.
“It is time to even the playing field”
For the past couple of decades, distributors have been focused on “Value Adds” as their differentiator. Extra service, extra work, extra product and other free stuff became the lexicon of the field sales team. In an environment like that, any thought of real give and take negotiation was pushed to the side. Is it any wonder distributors struggle with margin squeeze?
Distributors need to revisit the lost art of negotiation. Finding the right deal for both buyer and seller is the game we have elected to play. Further, negotiating allows distributors to push their margins forward. With this in mind, allow me to share another valuable point from my conversation with Tony Perzow, it simultaneously has everything and nothing to do with negotiating.
“Salespeople want the power to negotiate the whole deal”
Salespeople want the power to negotiate the whole deal. But, this power works against them. Distributors who limit the negotiating power of their sales teams score better in profitability and margin. Why? Selling is an emotional sport and even experienced sales guys can find themselves in that “make a sale at all costs” mentality.
Saying “I don’t have the power to commit to that price” slows the process. It gives the seller time to develop strategies, time to understand all of the costs associated with the concessions, time to understand the value the distributor provides and time to think about what commitments the customer needs to make in return.
“In interactions with very successful distributor sellers, I have seem pushback on the topic of negotiation”
Finally, allow me one final point. The very thought of negotiating may be a turn off to some of your salespeople. In interactions with very successful distributor sellers, I have seem pushback on the topic of negotiation, and almost every type of skills based training. Expect to hear one or more of the following:
- Negotiating is for sleazy used car guys. People hate car guys for this exact reason. I will not bring myself to this level.
- I have worked hard to build a trust-based relationship with my customers. Using cheap tricks to squeeze out a few more dollars will ruin everything I have worked hard to develop.
- Customers in my territory are upstanding honest people. They tell it like it is. They don’t lie to me and I don’t lie to them. This negotiation hocus-pocus is unnecessary.
- I have been doing this for years. I get paid on gross margin. I know how to get the best deals. If anything, I should be teaching the class on negotiating.
- I sell solutions. This is for commodity salespeople.
I don’t believe any of these issues reflect the real world. But perception is reality. Some of your salespeople actually believe that negotiations are not part of their job. Explore the situation with them. Review previous instances of “deals” gone wrong. Look for areas where just a bit of negotiation would have provided extra profits, better defined projects and real win-win opportunities for everyone involved.
Click here to read the complete article.
Click here to learn more about SPA’s upcoming negotiation workshop and pricing seminar to be held on February 4 – 5, 2016.
Everyday, your organization faces tough negotiation challenges. Outside sales, inside sales, product managers, buyers, application engineers – throughout the organization, your profits are determined by the negotiating skills of your employees.
SPASIGMA is a new program to build, expand, and retain world-class negotiation skills throughout your organization. Using a unique combination of in-person seminars and an online academy with reinforcement activities, videos, and quizzes, SPASigma will set your team on the path to mastery of the art and science of negotiation.
Negotiation Workshop Topics
- Introduction and Overview of Program, Main Themes, and Format
- Limo Negotiation Case (One-on-One Negotiation)
- Tactics to Uncover Pressure
- Buyer Tactics and Countermeasures
- Concessions Making Strategy (Comic Video and Examples)
- Surf Case (One-on-One Negotiation)
- Fuzzy Money (Video Skit and Discussion)
- Aristotle’s 3 Pillars of Persuasion (Video Sketch)
- Satisfaction (Video and Excercise)
- Stud Case (Team Negotiation)
Watch the SPASIGMA trailer to get a quick, hard-hitting introduction to todays challenges, and the opportunity for Outside and Inside Sales organizations.
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