Like any good game of poker, sales negotiations involve strategy and psychology. But there's a big difference: Unlike in poker, when selling building supplies you can't see how many chips the customer has–that is, what he's willing to put on the table to buy your goods–and he doesn't know how many chips you're holding. This can lead to some tense situations.
"Sales people have to realize that customers are going to test them," says Bill Lee, a veteran LBM sales consultant and president of Lee Resources. "It's natural for a customer to want to make sure they are getting the very best possible price and that the salesperson doesn't have an extra discount in his or her hip pocket."
Of course, the customer can't know whether he's getting your best price until you know that number yourself. "A sales negotiation begins when you know the price at which you are going to sell something and at what point you're willing to walk away," says Rick Davis, an LBM sales consultant and ProSales columnist.
It's the dollar difference between both sides' rock-bottom reality and their desired price that provides the room to negotiate a common number–as well as engage in the tactics that make such parleys both fun and nerve-wracking. That brings us back to poker, because while it's a game of probability and chance, success also hinges on tactics and strategy. And those can be learned.
Here are five strategies and tactics that salespeople should be aware of and can use to better their sales negotiation skills. What's great about them is that when you play your cards right, the customer has a good chance of leaving the table as happy as you.
This is a common, and aggressive, tactic in which the customer bluffs by acting surprised after receiving the quote, leaving the salesperson to infer that he or she pitched too dear a price.
"It's the most intimidating reaction, but it's just a tactic," Lee says. "It doesn't mean the price you quoted was too high."
Lee says customers often use this technique as a probe to determine whether the salesperson has the authority to quote a lower price. When executed well, the flinch usually will extract that price.
Just as the core principles of playing poker haven't changed in decades, Lee notes there really aren't any new sales negotiation tactics these days. What matters is how well you execute those tactics.
How should you respond? First, recognize the flinch for the tactic it is, Lee says. You also can try what he dubs the "reverse flinch," in which you act surprised at the customer's reaction. Follow that with a declaration of your confidence in your company's ability to quote correctly and back up the price.
Lee suggests using the reverse flinch to gather more information about the project and what the customer is seeking. This fits into another sales key that Lee preaches: preparation. And it provides an opportunity to sell the price at which you originally quoted the customer.
2-Think Like a Builder
Connecticut custom builder Mark Mosolino says the most important thing a sales rep can do is to think like him. He likes salespeople who aren't afraid to do a walk-through of his site and suggest ways to enhance the project or find better products to use in it. Mosolino favors such communications because often it benefits both parties. For him, dealing with a sales rep goes beyond price and into the realm of service.
"One of my best salesmen calls me when he's going to leave the yard. 'I'm heading your way, do you need anything?' is what he says," notes Mosolino.
He likes it when a sales rep communicates regularly with him and is able to anticipate his needs and wants. As someone who builds in an area where houses range from $300,000 up to $15 million, Mosolino has a lot of needs that vary by jobsite. He likes it when savvy reps make his job easier.
"The smart salespeople will come to your jobsite pretty much every day," he says. "They will remind you of things, like 'Hey, what about the beadboard? I see you're getting ready, what kind of beadboard do you want to do? Do you want me to price that?' And they do."
Steve Gray, a remodeler based in Indianapolis. says he wants someone who knows what he is selling, goes the extra distance to make sure what he is selling is the correct product for the job, and recognizes his needs differ from a builder's.
"I want someone who is super knowledgeable about the business because sometimes I feel I have to direct these guys into what I'm looking for," says Gray. "Selling to a builder and selling to a remodeler is a totally different sell cycle."
For Rob Carlisle, a Seattle-based remodeler, it's simpler. He looks for sales reps who sell to him the way he sells to his customers.
"I just want to deal with people that have integrity and really stand behind what they're going to say and what they're going to sell me," he says.