Price isn’t an issue with referral business.
More than 10 years ago, a marketing agency told me most sellers cave on price before prospects even ask for a discount. Sadly, that behavior continues in sales negotiations today. We’ve trained our buyers to expect discounts and that everything is negotiable. They know sales reps will make the best offers at the end of the quarter or at the end of our fiscal year, so they wait. That sure messes up our forecasts, commissions, and company profits, and it lengthens our sales process.
Let’s call sales negotiations what it is: a failed sales technique.
The better strategy is to quote a reasonable price in the first place, and you’ll gradually shift buyer behavior. Buyers recognize an inflated price a mile away. If you must reduce your price, take something away. Or give them a choice of what to eliminate. There’s also a difference between price and payment. Most clients value spreading out their payments over a few months. Your client gets a perk they didn’t expect, which makes them even more comfortable signing a deal with you.
Why Your Team Keeps Caving
There are several reasons that reps end up negotiating price. In Shawn Karol Sandy’s excellent post, “Six Ways to Make Sales Negotiations Less Painful and More Profitable,” she puts her finger on the #1 problem: poor lead qualification.
This is no scientific number but I’m willing to guess that 75% of the reason you wind up in a negotiation with a buyer is because they’re not the ideal customer for you or you’re not the perfect solution for them. If you were the exact fit, they are usually more concerned about getting started, transitions, or onboarding than they are with getting the best deal.
Take a look at your best clients, your most successful outcomes, your most profitable sales … and make sure you clearly understand how to prequalify customers for more successful outcomes.
(Read the rest of Sandy’s article.)
Prequalify with Referrals
One frequently overlooked aspect of sales negotiations is the impact of a referral. With referral introductions, you get personally connected to your ideal clients. Referred prospects already trust and respect you—based on the word of the trusted friend or colleague who made the introduction—so there is no negotiation. Yes, they’ll confirm your deliverables and ensure they’re getting the best price, but the deal is yours at the fair price you quoted. Your referral business is sealed.
Want to empower your team with the most effective lead generation strategy for B2B sales? Invite Joanne to speak about referrals at your next sales meeting, conference, or event.