By Jeff Cochran
Partner, Master Facilitator
Shapiro Negotiations Institute
We’ve all been involved in at least one high-pressure sales scenario, whether we’re the buyer or seller. Take the ubiquitous example of purchasing a used car:
“If you are ready to buy it today, I can offer it for as low as $24,999.”
You need a new car, but you also recognize your need to be the one in the driver’s seat, as it were. Maybe you think the price is a little steep, and you want to bring it down. What do you do?
“This was a little more than I was expecting to spend. I need to talk it over with my wife first.”
We rely on a tactic because we don’t like to be pressured and we want a better deal. It’s a common negotiating tool — one that we all encounter regularly, but one not all of us knows how to handle.
As a strategic account manager, you run into these sorts of stall campaigns all the time. Does any of this sound familiar?
Instead of a wife, it’s a boss. Instead of a dealership, it’s a rival company. Clients have an arsenal of tactics they use to try to get the most out of their account manager relationships. Let’s explore some of the most common:
The “Higher Authority” tactic
This is the classic shrug-your-shoulders, “it’s out of my hands” ploy. This tactic says, “I want to do business with you, but what can I do? My hands are tied.” It effectively transfers responsibility to an anonymous third party. It’s also one of the most common tactics strategic account managers encounter in daily business. Often, it’s a ploy to drive the price lower.
The “Should Cost” ploy
This is a common tactic and one of the most frustrating to navigate. Say you go to the store for office supplies and buy a stapler. The stapler rings up for $19. “That’s ridiculous,” you say. “This should only cost $12.”
It’s not something we think to do, is it? But it’s a ploy that strategic account managers run into regularly. This length of tubing “should” cost $12,500. These engine parts “should” cost $125,000. These filters “should” cost 79 cents.
If you have dealt with Procurement, then you have likely also dealt with “Should Cost.” These days, other departments will use this tactic as well. The question is, “What can we, as SAMs, do about it?”
The “Taking Business to the Competition” threat
Ah, yes. The “I would love to continue working with you but your competitor is offering a much lower price” hurdle can be frustrating to navigate. Sometimes this is real and there really are competitors trying to win the business offering a competitive product or solution. But just as often, they actually do want to stay — but this threat is low-risk, high-reward for them.
In this business, you’re only as good as the relationships you forge. Say you have a great working relationship with a decision maker – someone so good at her job that she earned a promotion or took an offer elsewhere. Now, all of a sudden you have a new client contact. This newbie doesn’t know how to justify costs to management and begins to question your product/solution at every turn.
Bringing in “The Big Guns”
Most SAMs’ response to dealing with Procurement is the same as the rest of us waking up on Monday morning: “Ugggghh. ” However, it is important to not see it this way. Working with Procurement has its pros and cons. While it may be harder to develop a relationship, it still can happen. It just needs to be approached differently.
Now you’re probably saying, “Yes! I can relate to all of these, but what do I do?!!?!” What follows is what we recommend, based on all of our years of training strategic account managers.
Generally, we recommend you consider the following three-step approach against any tactic:
1: Recognize the tactic. The first step in remedying a situation is realizing that it’s occurring in the first place. Learn how to recognize stall tactics when you see them. Are they appealing to a “higher authority?” Are they strategically creating more turnover? Whether it is on purpose or not, the first step is to be aware of it.
2: Respond effectively. These tactics only work if you let them. Take steps to defuse the situation. A response should take the form of engagement with the customer. You could try any of these responses:
“What is this ‘should cost’ based on?”
“Could we set up a meeting with you and your director so we can go through it together?”
“Before you transition into your new role, can we grab lunch with your successor?”
3. Redirect the conversation. Finally, take control of the negotiation and redirect your conversation to a safe place. If you get defensive or try to justify the price of your product or solution, you’re putting the client in the driver’s seat. Maintain control and steer the conversation back to your product/solution’s benefits. Alternatively, you could say, e.g., “The cost of the stapler is $19; tell me why it shouldn’t be.” Don’t give the client an opportunity to steer the negotiation for you.
In this case, this works for both “higher authority” and “should cost.”
Here is what we recommend when dealing with critical turnover at your customer:
Maintain consistency. Don’t think about the switch as starting over, but pick up right where you left off. Better yet, prevent this from happening in the first place by forging relationships company-wide, including with supervisors — even the C-Suite. As a SAM, your job is to forge relationships high, wide, and deep. Don’t bank on just one internal champion. It’s far too risky.
Here is what we recommend when dealing with the threat of taking business to the competition:
The “I can find a lower price elsewhere” hurdle can be frustrating to navigate. The solution: plant a seed with a well-placed question. The answer is less important than the other side having to think about it. Try these, for example:
“If you leave, what will happen to the proprietary technology we’ve built together?”
“Are you equipped to handle the burden of startup costs?”
“What would happen if the other company doesn’t deliver on its commitments? The lowest price doesn’t always mean the lowest cost.”
Don’t get defensive, but do let the client know about the dangers of leaving. They spent months, even years, cultivating a relationship with you. They know you can deliver a high-quality product on time. Your support has been put to the test and passed with flying colors. Are they willing to throw it all away to save a few pennies per unit?
Here is what we recommend when faced with “the big guns” (i.e., Procurement):
Don’t view your relationship with a procurement specialist as a hurdle. View him as a potential ally. You should dedicate time and energy to befriending these procurement specialists and communicating your company’s values and account plans. You can use procurement specialists to build a rapport with customers, even if they don’t end up bidding on your project or product.
To sum up:
SAMs regularly face hurdles from strategic customers, whether it’s hard-nosed negotiating tactics or general bureaucratic messiness. Knowing how to approach these challenges will improve your customer relationships, establish rapport and ultimately lead to more business. It takes some practice, but if you enter your engagements with a plan in mind, you’re sure to see significant improvements in your outcomes.
Jeff Cochran is a partner and award-winning Master Facilitator at Shapiro Negotiations Institute. Over the last 15 years Jeff has trained and coached organizations in over 25 countries in the areas of sales, negotiation and influencing. Before SNI, Jeff was an account manager for Tessco Technologies and a Peace Corps volunteer in Nepal. If you enjoyed this post, come see Jeff speak in person at the SAMA Annual Conference May 21-23 in Orlando, Fla.