Faced with the rise of buyer techniques and the opening of markets, negotiations on prices, conditions, benefits and services offered are now part of the daily lives of exporters.
It is always difficult when it is necessary to bring back a business against an aggressive competitor.
Is it an intimidation ? Will I lose the order by refusing all customer requests ?
But lowering prices in an international context will have specific consequences on the profitability and sustainability of a company. Below some ways to reprogram your mind, try to reverse the balance of power and win orders by defending your margins.
Key principles
When exporting, never grant customer credit unless you are 100% sure of the possibility of covering your risk. If you grant a credit, you have to calculate the cost on your profit margin. You should also know that a customer debt deteriorates your balance sheet and profitability.
A common technique used by buyers is to downgrade your offer. Know how to remain calm, patient but reframe your interlocutors courteously.
Another technique is the ultimatum posed as a threat. “It’s -20% discount or leave it…”. Same, stay calm, patient but courteously encourage your interlocutors to discuss your offer by asking open minded questions.
Additional technique, the very urgent order, they want to buy straight away in exchange of a consequent price drop. It is often wrong. Don’t get fooled. This technique aims to push you in a state of emergency, conditioning the closing of the negotiation. Their goal is to make you believe that by accepting this generous offer, you will walk away with the purchase order. Same, stay calm, patient and discuss the time frame to negotiate its extension.
Be 100% sure you are fully prepared.
Information is power ! Define well in advance the critical areas and borders not to cross ; Price, deadlines, volume, services…
You shall consider that when you immediately give a discount at first request, this one has no value (a little one) for your customer because everyone gives it.
Know how to say no.
Before reconsidering your position, bring your client back to his initial request, needs, his technical or logistical fears. Offer additional service or options that would not cost you too much to bolster your offer, but only go back on the price later as a last resort. By defending your offer and immediately refusing a discount, you increase your trust capital and increase your power over the customer.
Never be the first
As a general rule, don’t be the first to make concessions. Above all, don’t seem happy with the agreement, you give your client the impression that he could have gotten more out of it !
Likewise, the buyer will maybe show dissatisfaction after the meeting. It’s a buyer technique. Don’t expect him to jump into your arms.
The golden rule of negotiation
The counter offer. Only grant something in exchange of a consideration from the client. Immediately after the request (discount, options, extra-service…), answer with a question “Would you be willing in exchange to… ?”
Larger volume, shorter payment period, lower quality, exclusivity, option ordered in addition…
This requires you to prepare a list of possible options in advance. “If you accept, I’m ready to lower my price…”
Above all, make sure to ask consideration at each concession you may accept or replace your client’s conditions with others, conditions that are more advantageous to you.
Keep in mind that ego play a central cognitive role in negotiation. Power, pride and domination are at stake !
Knowing this, never try to submit or impose your will on your clients. With buyers, always offer, suggest, encourage them to accept your conditions and save face. After all, a customer is still a customer and must be satisfied at the end.
If you maintain a regular order flow with an overseas customer, never offer the same benefits. Delete past offers and find new gifts. So your customers accept any discount much more easily afterwards instead of negotiating and accumulating the services offered.
It is absolutely necessary for you to find on which element of the order the balance of power with your customer will be played (deadline, price, quality…) and anticipate your arguments to reverse the balance of power and frustrate the plans of your interlocutor.
Get away from price
Prioritize your customer’s priorities and shift the arguments in your favor away from “price”. Be sure to validate all the points of negotiation with the customer before your last quotation and make him accept your conditions “immediately” by signing the order form.
Always keep some extra consideration on hand. You will necessarily be entitled to the well-known technique of requiring “a final gift” before signing.
“Price is what you pay. Value is what you get”. Warren Buffet
Happy CEO 