Many DSRs I have worked with, believe the customer is not happy until the price has been lowered. My experience tells me that it is not true. Naturally, our customers ask about price because they want to control food cost but they also ask because we (DSRs) have taught them to ask for a cheaper price. Price integrity is threatened because once a day it seems there is a new salesperson dropping by claiming to have cheaper prices. The problem is compounded when the customer says a competitor is selling 80/20 ground beef for eleven cents a pound cheaper and the DSR matches the price after some whining and weak excuses.
If I’m the customer I have to be wondering two things, 1) why I wasn’t getting the lower price to begin with? and 2) what other prices should I be challenging? At this point, trust is damaged.
You and I can’t be shocked when the customer tries to negotiate for a lower price. We need to be prepared for the most popular tactics used today.
#1 Negotiation Ploy
The Nibble Tactic
When someone is trying to get “just a little more.”
There are some predictable tactics the buyer will try in order to gain an advantage in our selling situations.
Nibbling is when the buyer makes small additional requests, either just before or after a deal was done. It is the most used negotiation ploy. Think of a loose string on a sweater. You pull it and no big deal. Then there is another loose string. And another. Soon you have a major hole in your sweater, and it is a mess. The same thing happens in negotiating. One small nibble you would hardly notice but then another little concession is asked for. And before you know it, the whole deal is out of balance because the customer nibbled for “just a little more.”
The “Nibble” is a commonly practiced negotiating tactic. It has become so common that we often fail to understand the impact the tactic has on gross profit to the organization.
Examples of the Nibble
The customer wants to run a weekend “special” and the DSR has offered a good and fair price on choice lip-on rib eyes.
#1 Buyer nibble
Buyer “I think I might be able to take the deal if you can sell my fries for .25 less a case.”
DSR “Well, our current price is very fair…but I guess we can do that.”
What is the new everyday price for the fries? If the DSR drops his price for this “special” deal, next week the normal price of fries will appear as a price increase to a customer.
#2Buyer nibble
Buyer “That sounds good, but what price could you give me if we run the special for four weekends in a row?”
DSR “Boy that is a tough one…but I guess we could get another 4% off.”
What is the price if the customer cancels the “special” after the first weekend?
#3Buyer nibble
Buyer“If I agree to start using your rib eyes, can you give me the 7am delivery window?”
DSR “Yeah, I can probably do that.”
The rep has just given away the earlier delivery window. How much “value” do you think the customer attached to the “give away” in this example? When he or she recognizes how easy it is to “nibble” the earlier window, it seems there is little or no “value” attached to a significant upgrade in service. Now try to take it away when their volume drops off. Within the DSRs organization the earlier window IS a significant value.
Why do buyers use the “Nibble?”
Buyers use the “Nibble” because they CAN!
There is no downside to prevent them from asking for the “Nibble.” The worst that can happen is they don’t get anything added to the deal. They can’t loose anything by asking and most of the time they actually get something for asking.
Stopping the “Nibble”
Stopping the “Nibble” with the “Swap.”
Answer the “Nibble” with the “Swap.” Heighten the value of what ever you are asked to “give away” by asking for something in return.
Examples
“Mr. Customer, I understand that is important to you and I respect that. If I faced the same situation, I am sure I would feel the same way. Let me see if I can get that done for you…and if I can, would you be willing to take another shipment of the ham?”
“Mr. Customer, let me go to the powers and see if I can get this through for you. I can’t go in empty handed, if I can get them to agree to this, are you willing to start using the chicken wings we talked about earlier?”
The “swap” in this example was accomplished while the DSR did not “commit” to anything. This tactic is designed to allow the DSR to stop the “nibble” while regaining control of the negotiations
Stopping the “Nibble” with “Drama.” Answer the “Nibble” with “drama.” Make the concession a “BIG DEAL” before offering the Swap. This raises the value of what ever you are asked to “give away.”
Example #1
Customer: “I guess you can send me three cases of the pre-cooked bacon, if you send me a sample case of the Texas Toast.”
Sales Rep: “Ah…I guess I can do that.”
In this example, the DSR did not attach any value to the give away “sample.” This type of transaction is best stopped immediately with a response like, “Mr. Customer, I can’t do anything like that, but I’ll guarantee the product. If the Texas Toast fails to meet your expectations, I’ll get a credit for the full price.”
Example #2
Customer: “I guess you can send me three cases of the pre-cooked bacon, if you send me a sample case of the Texas Toast.”
Sales Rep: “Oh no… you don’t know what you are asking. That’s going to work… I’d really love to get this bacon in your kitchen but I can’t go around giving away cases of product especially when we have seen how much the bacon is going to save you in waste, not to mention cooler space. No way.”
In this example, the DSR’s reaction with “drama” demonstrates the value of the bacon and will likely stop the nibbling. At this point, the customer has expressed an interest in the Texas Toast and with some probing; the DSR has the opportunity to add the Texas Toast to the order.
Stopping the “Nibble” with the ” Flinch”
The flinch is one of the oldest negotiating tactics used by the buyer and the seller. It’s a visible reaction technique used to gain a shock effect to gain an advantage in the negotiation. The objective of this tactic is to make the other person feel uncomfortable about the offer they presented or the concession they have requested.
You must appear shocked and surprised that they could be bold enough to make their request. Unless the other person is a well-seasoned negotiator, they will usually respond in one of two ways; a) the person attempting the “Nibble,” will become very uncomfortable and begin to try to rationalize their request, b) the salesperson will offer an immediate concession.
Common Seller Examples
Consultant: “Holy Cow! I could never bring that one back to my manager.”
Consultant: “Gee, should I throw in my first son too?”
Either of these examples would qualify as a “flinch.” The DSR’s reaction, which might also be considered “drama,” demonstrates that the customer has gone too far in asking for a concession. Most of the time, he or she will back away from the request if the DSR immediately reminds the customer of the value of the proposition originally offered.
Also, understand that buyers will use the “flinch” as a negotiation tactic. Here’s how that may sound:
Buyer: “There must be something wrong with this phone! Did you say $3.26 a pound?”
Consultant: “Yes, $3.26 a pound.”
Please note that the consultant responds with a direct and succinct answer. The answer is “Yes!” Do not waffle on the response. The buyer is using the “flinch” to test for a concession. If the DSR is offering a “fair” price, he or she should have confidence. If the quoted price is not “fair,” the DSR can defer to the manager by saying something like, “Yes that is the price I’m seeing on my computer. If you really feel like the price is out of line, I’ll check with my boss and get back to you within 30 minutes.”
Why do buyers use the “Flinch?”
Buyers use the “Flinch” because they CAN!
There is no downside to prevent them from using the “Flinch.” The worst that can happen is they don’t get anything added to the deal. They can’t loose anything by using the “Flinch” and most of the time they actually get something for asking.
#2 Negotiation Ploy
“Big Guy” and “Little Guy” Tactics
Shifting authority to a third party
The “Big Guy” and “Little Guy”approach is a negotiating tactic both sides can and do use. Using this tactic the negotiator shifts the “power” or decision-making authority to a party not actively involved in the negotiating process.
Examples from the buyer’s perspective:
Chef: “It looks good to me, but I will have to check with management before making a commitment.”
Manager: “I could not commit to changing our seafood supplier without talking to the chef.”
In these examples of the”Big Guy” / “Little Guy”approach, the buyer avoids making a buying commitment by denying that he or she has final authority. This may be true or the buyer may not want to make the change or may want to avoid the negative confrontation with the DSR.
Common Example from Seller:
Consultant: “I think it will work but to do this, I have to get an ‘OK’ from my boss.”
Consultant: “Our policy guidelines are very clear on how we should handle situations like this.
In these examples of”Big Guy” / “Little Guy”the DSR is claiming a higher authority is in control of the decision. The DSR is claiming that he or she is the “little guy” when in fact in most cases he is actually still in control. This is a very important tactic because by deferring to the boss, it allows the DSR to stop the negotiation process, evaluate the situation and then make a decision on how to proceed. This can be done with or without a consultation with the manager.
Tactics for Handling “Big Guy” vs “Little Guy”
Naturally, the first approach to handle “Big Guy” vs. “Little Guy” from the buyer is to get an up-front agreement that you are talking to the person with the authority to make buying decisions. (“Who else will be involved in a decision like this?”)
Unfortunately, some people are not going to be as candid as we would hope. You will sometimes find yourself dealing with a situation where later the “decision-maker” tells you he or she must get approval from someone else. There are a couple approaches you can use to try to pull the sale out of the trash bin.
Tactic #1 Appeal to the Buyer’s Ego:
In this tactic the DSR “assumes” the buyer has enough authority to make the buying decision. This approach gets the buyer’s ego involved. To refuse the sale, the buyer would have to admit he does not have any authority.
Example 1
Customer: “It looks good to me, but I will have to check….”
Consultant: “Off the record…your recommendation is about all that is really needed, right?”
Example 2
Customer: “Any commitment of this size has to be approved by….”
Consultant: “Just between us, isn’t that just a formality? Don’t they usually just go along with your recommendation?”
Tactic #2 Strike the Deal subject to Rejection:
This tactic enables the DSR to take an order with the stipulation that the customer can cancel before the delivery. Remember, every order you take is an order to fill a “need.” The DSR who walks away without taking the order is likely leaving a customer with an unsolved problem. The buyer then has to take more time to interview more sales reps. He or she would prefer taking care of the “need” and then go on to other problems.
Customer: “Any commitment of this size has to be approved by….”
Consultant: “Just between us, isn’t that just a formality? Don’t they usually just go along with your recommendation?”
Customer: “Well they pretty much go along with whatever I recommend.”
Consultant: “That’s what I figured. To hold the price and reserve the product, why don’t we set up the order to be delivered next Wednesday, subject to your right to cancel within twenty- four hours of delivery.”
#3 Negotiation Ploy “The Squeeze”
The buyer will use the “Squeeze” negotiating ploy to see if there is anything left in the deal. This approach is often used right before a commitment is agreed to, when the seller feels like he or she is done.
Buyer: “You will have to do better than that.”
Consultant: “Ah well actually this is a very good price at $29.30 a case.”
Buyer: Silence
Consultant: ” I guess I could get a little better at $28.90, if you commit a 6 cases.”
Buyer: “I only need four.”
Consultant: “Ah well… Okay but you owe me…”
Please understand, when the seller reduces his or her price at this point in the negotiation process, the buyer must ask the question, “Why didn’t the DSR give me this lower price to begin with?” Now, all of your prices are subject to be questioned. At $1.60 per drop, the “Squeeze” equals over $80.00 net per year. It’s well worth the 15 seconds of negotiating time at the end of the process.
Is $80.00 important? Ask a customer how many people he has to serve to net $80.
Handling “The Squeeze”
Establish the Height of the Bar
Buyer: “It looks to me like you are a little high.”
Consultant: “How high do you think we are?”
Buyer: “If you want this order you will have to go a little deeper.”
Consultant: “Just how much deeper do we have to be?”
With this tactic, the DSR is asking the buyer to get more specific about his or her request. Generally, two things can happen. The buyer can name a price or admit that he was just “fishing.” If the buyer names a price, the DSR can “overcome” the objection with value or use other tactics like “Big guy/Little guy.”
Why does the buyer try to use “The Squeeze?”
Buyers use the “Squeeze” because they CAN!
There is no downside to prevent them from using the “squeeze.” The worst that can happen is they don’t get anything added to the deal. The buyer can’t loose anything by using the “squeeze” and most of the time they actually get something for asking.
Prepare to win or lose to some one who is.
Following these strategies will dramatically improve your negotiation skills and ultimately your job satisfaction and income. Further, your customers will feel much better about you and more comfortable accepting your initial price. You can establish a win-win atmosphere or be faced with a lifetime of stress, haggling over nickels and dimes.
Like any skill, your ability to negotiate well is determined by study, practice, preparation and repetition. Your commitment will make the difference.