Psychology

Here’s a much more powerful approach, based upon a conversation with Bob Nicols,
CEO of Axiom Sales Force Development. Take these steps, one by one.

1. Uncover the Real Objection

When you encounter a price objection, find out whether it’s a smokescreen
for objections to your product or service. To do this, ask the following question:  

That’s powerful stuff, because it smokes out reality.  Here’s how.

If the customer’s response is “no” or “maybe,” price is not your only problem
and may not even be the problem.   In this case, you’ll need to ask further questions
to determine what concerns the buyer has with your product and/or support.
Handle those objections first–because negotiating price is meaningless
if the customer does not want to buy what you are selling.

For example, if a customer has a global operation and you don’t have service centers
outside the United States, that prospect might question whether your firm
can adequately provide service after your product has been purchased.
Your challenge now is to describe why remote service from the U.S. is a viable option.

On the other hand, if the customer’s answer is “yes,”
it’s entirely appropriate to focus on price.

Your job is now to figure out how the customer is assessing your price.
Is it “too high” compared to a competitor?  Is it “too high” to fit into a budget?
Is it “too high” relative to the perceived economic benefit of having the product?

These are all quite different situations and demand a different response.
For example, if a competitor’s product is cheaper, you need to explain
why your product is still the better value.  Contrariwise, if the price doesn’t fit into the budget,
you may need to introduce payment terms.

Once you understand what’s going on, you need to determine
whether you’re dealing with it’s  whether the objection is actually a condition.
This is absolutely critical: Objections are negotiable, but conditions are non-negotiable.

To discover whether an objection is actually a condition, ask the following question:

Is this a big enough concern that it will keep you from getting
what you want to buy?

You will get one of three answers: no, maybe, or yes.
If the answer to the question is “maybe” or “no,” you’re dealing with an objection.

If the answer is “yes,” you’re dealing with a condition.

For example, if a “price is too high” objection is based upon a comparison
with a competitive product, it is possible to negotiate the objection away
by differentiating your product so that it seems to be the better value.

However, if the “price is too high” because the prospect literally
does not have any money (say, it just filed bankruptcy), that’s a condition.
It’s pointless to attempt to negotiate it away, because the money just isn’t there to spend.

Similarly, if a “you don’t have feature X” objection is based upon a preconceived notion
of how to solve a particular problem, you can negotiate the objection away by changing
the prospect’s notion of how to solve that problem.

3. Show Empathy to the Customer

Once you’ve confirmed that the objection is an objection–rather than a condition
–you can begin to position the discussion so that you and customer become
partners in the process of coming up with a solution.

Start by stating that you understand and empathize with the customer’s concerns.
For example, if the objection is price relative to a competitive product,
you would say something like:

“I completely understand.  Price is extremely important to you,
and you are looking to choose the vendor that will provide
the best value for your company.” 

This kind of statement puts you and the customer on the same side of the issue,
and helps prevents the customer from assuming that you think the objection is foolish.

4. Identify the Problem to Be Solved

Negotiations become difficult when one or both parties view an objection
as a conflict between two positions, where the person who abandons his position
is the “loser” and the person who sticks to his position is the “winner.”

To avoid this kind of impasse, say something like:

“Let’s put that objection on the table and see if, between the two of us,
we can’t figure out a creative way to get you what you want to buy.”

5. Brainstorm Possible Solutions

Ask the customer to participate, then try to come up with every
possible combination of ideas and events that would allow
the objection to become overcome.  Even ideas that might seem ridiculous
can be entertained at this point, because the determination about
what approach makes sense will be made after all the ideas have surfaced.

Between virtually any buyer and seller, there is always some series of events
that can take a buying decision from “no” to “yes.” Once those avenues
have been laid out, you can then guide the discussion to the ones that are practical.

For example, an objection about the lack of global service might be overcome
by a guarantee of Internet support from a central location.
Similarly, a budget objection might be overcome by scaling down
the purchase or coming up with payment terms over time.

Note: Bob Nicols is a true genius when it comes to sales strategy and tactics.
I doubt whether I’ve done more than scratch the surface of his ideas,
so if you’re interested in this kind of advanced sales training,
go ahead and contact him directly.