3-Slow Down
Through his 27 years in the LBM sales industry, Rick Davis has found that one of the easiest ways to prevent a sales negotiation from getting out of hand, and to remain firmly in control, is to slow down the process.
Davis doesn’t mean you should decelerate to the point where no progress occurs. Rather, he wants you to make sure you don’t arrive too early at the price-tag discussion.
“Recognize the entire sales process as organic, so that by the time you are discussing price a whole lot of other issues have been covered,” Davis says. “Speed kills in negotiations.”
For Davis, sales negotiations must include a tally of the entire value of the purchase from the customer’s point of view.
“In our industry, understand the total cost of doing business,” he says. “The mistake that salespeople make is to get caught up in the price as the total cost of doing business, rather than understanding all the implications.”
This philosophy helps when building relationships between sales reps and clients because it provides them with opportunities to get to know and understand one another. Such understanding matters as much for the buyer as for the seller.
“What I’m reading in [sales] meetings is finding out the company’s stability, the type of quality it offers and how it deals with problems,” says Gray, the remodeler from Indianapolis. “Those are all really important things to us as we enter into agreement with a new company.”
Gray also says he likes to take his time during those meetings, hear everything out, and take notes to form his own questions. He says he and the sales rep often have two or three meetings before settling on a price–or even starting negotiations.
4-Sell Time
For many builders and remodelers, time is money. They don’t want to get into prolonged or complex negotiations that take them away from the job site, or worse, prevent products from being delivered and installed in a timely fashion. That desire to avoid wasted time is a sellable commodity.
“Salespeople that get caught up in the price neglect to realize the value of time,” Davis says.
When Carlisle, the Seattle-based remodeler, went looking for a dealer to work with, he had a few specific things in mind. He wanted a dealer who is constantly in the areas where his company operates and who makes returns and deliveries easy. He didn’t want to have to deal with making lots of returns or having to go to a dealer and pick up his supplies so he can get them to a job site on time. He was able to settle on a local lumberyard that catered to his needs and provided him with one point of contact for sales.
“I wanted the ability to accept product and return product in a very easy, low-time-consuming fashion,” says Carlisle. “If I bill a client $50 an hour for my guy in the field and he spends 15 minutes to get [to the dealer], 20 minutes in the store, and 15 minutes to get back, we’ve killed an hour. So, the cost to get that is $50, whereas any delivery [from our dealer] is a phone call and a $15 charge.”
Builders and remodelers may differ on needs and order size, but they tend to agree on service. Just like Carlisle, Mosolino says service, such as easy ordering and quick delivery, are things he is willing to raise his bet on.
“I would rather pay more and have the material [at my job site] because I can’t lose momentum,” the Connecticut-based builder says. “There is no price on momentum.”
5-Knowing When To Walk Away
There may come a point during the sales negotiation at which you’re pressed to agree to a deal that you suspect will cost your company more money, or time, or headaches than it ever can recoup in payments. If that’s the case, why agree to such an offer? Perhaps because you think it’s the only deal available.
Davis believes that not enough salespeople set in their mind prior to the negotiation session a price or condition that cannot be accepted. “And the reason why they don’t know is because they don’t have enough prospecting alternatives in the pipeline,” he says. “If you don’t have alternatives, you are going to be feeling very fearful and beholden” to the client and thus think you have no choice but to remain at the table.
Having enough prospects means essentially that you have a backup plan in case the deal you’re currently negotiating goes awry. Knowing there are potential sales down the road helps alleviate the pressure you feel over potentially losing the customer or deal before you.
The tricky part, however, is that there is no obvious point at which a salesperson should know for certain when to walk. That decision goes beyond questions of margin and profitability, Davis says. He agrees there are times when it’s important to “keep the trucks on the road” and keep making sales, even if that particular deal leads to a loss.
“There is no real standard answer on that,” says Davis.
Lee says that at some point you have to put your foot down when a customer keeps looking to go lower. At that point, however, Lee adds that you have to be confident that you are offering the customer the best deal you possibly can.
