Last time we spoke of ways in which the competition can act as a source of power for you in a negotiation. Yep, that’s right, they’re not always a thorn in your side. Sometimes the competition can be doing you a favour. The problem is unless you stick to your guns and follow a smart negotiating strategy, you’ll never know. You can liken it to a card player who always folds – you never force the other players to show their hand. It’s the same in negotiating. If at the first sign of push back from the buyer you fold and discount, or concede, or give up, you’ll never find out what was possible. Sure, you might also lose the deal, but it’s unlikely. Sticking to your guns doesn’t mean throwing out the baby with the bathwater. It just means you’re not a complete pushover.
So when I say that the competition can be a source of power, what am I actually referring to? I mentioned a couple of reasons the client may not want to use the competition in my last article. Here’s a few more…
Results: If the client has used you before and achieved good results this will weigh heavily on their mind and make them reluctant to try the opposition. Likewise, if they’ve used the opposition before and found it underwhelming, they’ll be unlikely to want to go back. Not that the client will tell you any of this… it’s a game remember.
Preferences: For all you know maybe the buyer, or the buyer’s boss, thinks your product/service/brand is better? If this is the case they’ll be reluctant to buy elsewhere.
History: If the buyer has had problems with the competition in the past (ie: personality conflicts/arguments etc) this is a source of power for you. Likewise if they’ve been with you for a long time, this history/experience will make them reluctant to leave (though please don’t take this as an indication that you should mistreat long-term customers).
Finance: Perhaps your companies finance terms are more lenient than the competition? This can be a source of power (ie: they want payment up-front but you offer 30 day accounts?)
Position: If your company is seen as the #1 provider of your product or service, this is a source of power.
Hunger: Just wanting the business more than the competition is a source of power. There is no doubt that many clients respect hard work and want to reward it. If you work harder and want the deal more than the opposition, this can be the difference
Geography: If your office is in a more geographically-friendly location than the opposition, or if your company is stronger in a particular area than the opposition, this can be a source of power.
Errors: If the opposition makes more mistakes than you, this is a source of power. That said, research shows that people exhibit more brand loyalty to companies where they’ve had a problem fixed quickly and painlessly, than they do to companies where they’ve never had a problem at all. So problems are opportunities – if your client has one, move Heaven and Earth to fix it. This goodwill can pay dividends for years.
Service: If you service the account more regularly, or add more value, this can be a source of power.
Whatever the situation, you need to understand that as a seller, you too have power. It’s not all one-way traffic – the client may pretend that they have you over a barrel, but in most cases it’s just not true. That said, if you fail to negotiate in an effective manner, pretty soon the client will have all the power because you gave it to them! The way you act trains the client in how to work with you. If you act like a doormat, don’t be surprised when people walk all over you. You have to start respecting your product, yourself and your company, as well as the client, otherwise it’s all downhill.