This is probably one of the most overused negotiation tactics by buyers and purchasing professionals in history. I call it the Wimpy Syndrome. You all remember “Popeye the Sailor man” and his friend Wimpy. Wimpy always wanted the immediate satisfaction of a hamburger today, with the promise of payment in the future. I see this played out over and over again in industrial sales. We see purchasing agents continued promises for bigger and better things, only if you give them their hamburger (price reduction) today.
How do you get around this?
What are your immediate responses to these questions?
We hear things like; strategic partnerships, leverage, and take the good with the bad. But in the end, we need to make business decisions, just like the buyer does. Yesterday’s negotiations are forgotten the second a new problem lands on their desk, or a new bonus initiative is offered to them for getting price reductions. Their training tells them to squeeze the seller with promises that may or may not happen in the future, and don’t worry about not coming through.
Although I am not from Missouri, I have a real soft spot in my heart for the “show me” State. Whatever happened to the simple price / volume curve? Shipments go up to a certain point, and prices can and will go down. Higher volumes actually do mean lower costs in most manufacturing organizations. Lower costs of set up, higher operating efficiencies, more familiarity with the product, all help in contributing to lower costs. With lower costs, and only with them, you may be able to offer lower prices. Why do buyers insist on that price BEFORE the volumes go up?
You need to be aware of this tactic, and have pre-planned responses each and every time your customer requests. You know your customer, and you should know how they can be approached. Some with brute honesty, some with soft selling skills, but you are the one in control. Just build in the “show me” psychology into your rebuttal. The only way lower prices can occur nowadays is with lower costs. Lower costs only come after that higher volume has been met.
Yes Mr. Customer you are absolutely correct. With higher volumes we will have lower operating costs. And when we do reach those costs, you and I can discuss the appropriate discounts that we can afford.
If you are having difficulties with these or other negotiation skills, give us a call at The Kole Performance Group. Our nearly 30 years of experience in industrial sales, marketing, and management can directly benefit you or your organization.
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