„I can’t take this price to my boss.”
In this statement, your opponent has told you they don’t have the authority to accept your price. This person may have the authority to reject, but not have the authority to accept. This is helpful to know and may be new information to SimCo.
Sometimes the opponent takes the boss-tactic to an extreme. He poses as your supporter: Why would you want him to get in trouble with his boss and lose his support?
To respond to this fear tactic, recognize that you can’t take responsibility for the relationship between your supporter and his boss. An effective sequence would be:
- What questions do you expect from your boss?
- How helpful would it be for me to meet with your boss to address their concerns directly?
- What’s the best way to make that introduction?
Eventually, you may have to test his authority by asking,
„Are you officially rejecting our offer on behalf of BigTech?“
“Our current vendor has given us a much better price than what you’re giving us.”
We don’t know from this one statement if this is a bluff, or if it’s real. For that reason, we first try to create some vision around SimCo’s solution versus the competitor with this sequence:
- Given BigTech has an existing vendor, what’s missing from their solution that has you looking for an alternative?
- Knowing SimCo would be more expensive, we’re surprised that you’re still considering us.
- What is it about our offering that still has SimCo in contention?
SimCo can always compromise on price, but what happens to your business if you consistently compromise on price when it’s not necessary?
Getting Clear Decisions
When your customer persists with demands for a lower price, we eventually need to ask them, “Are you officially rejecting our price on behalf of BigTech?”
We ask in this way especially when dealing with procurement, purchasing, or legal departments. Once they can state that they’re clearly rejecting, we do the 3+. That means we want to hear their rejection 3 (or more) times. This can be from different people (purchasing, champion, sponsor) or simply by asking the same person to reconsider or by asking for the decision in writing after hearing it twice. This will make you uncomfortable, for sure. It can be stressful to do something new that’s out of your comfort zone.
This is also the moment when our cognitive bias of loss aversion kicks in. When sales people are faced with the opportunity for higher commission versus the fear of losing the deal, their emotional bias drives them to compromise when the fear only exists in their head. Procurement teams understand loss aversion.
To sum up
Your customer will always prefer a lower price. They may ask for a lower price in different ways, sometimes demanding – even threatening. But what happens if after all their asking and demanding, they are not able to clearly reject your offer?
It’s at this point they will consider accepting.
If you want to learn more about negotiation, have a look at the seminar Systematic decision-based negotiation.