4 Steps to Mastering In-Home Negotiation
When you get asked to discount, what’s your response?
Do you stand firm behind your pricing or have you already worked in a little extra so that you can play the hero and offer a discount?
Believe it or not, discounting may be hurting you in more ways than just your bottom line.
This week, let’s take a look at the 4 Steps to Mastering In-Home Negotiation.
Getting in the Right Frame of Mind
Do you believe that your products or services are worth the price your charging?
If your answer is no, then you won’t be able to negotiate successfully. Period. But if you follow these very simple steps and truly believe that your work is worth the price you charge, you will walk away with more deals at full price.
Experts say that the top 20% of salespeople don’t provide a discount on the first round of negotiating. In fact, nothing frustrates homeowners who are looking to score a deal than if the sales person caves in and drops their price immediately. If a prospect asks for a 20% discount and you immediately say yes, then they walk away with two nagging thoughts. The first is that you must have inflated the price to begin with, and second, they should have asked for a bigger discount!
Neither of these thoughts are good for you.
The next time your customer asks for a price reduction, instead of just giving in, try responding with one of the following:
“I can appreciate you’re looking for the best deal, but I can tell you that we’ve already given you the best price.”
“You’re smart to be looking for the best deal, but our pricing is always competitive and I just can’t go any lower.”
This is the stage of negotiation where your belief system is challenged. In order to be successful, you really need to believe that you are already giving your customer a great price. You’ll find that 40% of people respond to a refusal to discount with “I had to ask…” or “I just thought I’d try!”
Unfortunately, 50% of salespeople will cave in on the first try. This is a lose-lose situation. Your company reduces its profit, your sales person reduces their commission and the customer is dissatisfied because you didn’t play the game.
Some prospects will press ahead with their request for a discount even after you’ve politely declined. The vast majority of them, however, are just looking for assurance that you really are giving them the best possible price, and there is no room to move. In other words, they want to make it a little uncomfortable for you – they want you to sweat.
Work to reassure your customer that they’re getting the best price and remind them of all the hard work you’ve both put into the deal. Try something like:
“I knew you’d be tough, so we provided aggressive pricing up front. I would hate to see this not go ahead because we haven’t been able to meet your budget.”
An additional 20% of all business is closed at this stage. If you do the math, that’s 60% of all business closed without ever having to reduce your price. Unfortunately, by this point, 80% of all sales people have already caved.
If after all this, your prospect is still pushing for a discount, then find something else to give them that doesn’t reduce your price.
Provide them a “bonus” upgrade on something that you’ve already talked about, like a higher MERV rated filter on their new furnace.
Finally, if your prospect is still asking for a discount, you may have to give it to them in order to close the deal. But before you do, always ask them this question:
“What is important to you about a (discount amount)?”
This will help to flush out any of the last details that could help you find a different way to structure the terms and pricing, which will allow you to keep your price while letting the customer walk away feeling like their needs have been met.
If, however, you ultimately do have to reduce your price, make sure to follow these rules:
- Never reduce your price without getting something in return (such as a referral!)
- Get a firm verbal agreement from the customer that this discount is all they will need to get the deal done.