Handling price negotiations in a competitive B2B market

The ultimate aim of any business transaction is profit with a high ROI. Negotiations include communication that takes place before an agreement is made and include several bargaining behaviours or negotiations tactics. The negotiation tools are used to change a person’s perception of where the actual power lies.

However B2C commerce is influenced by emotional value B2B transaction is more rational and buying decisions are geared through logic. The b2b buyers purchase restock products due to departmental needs as compared to spur of the moment, here impulse buying is extremely low. Therefore in the b2b market price negotiations have always been the bone of contention. The clamour for negotiations of prices led to the discovery of growing distress in B2B markets. The deal doesn’t close for a few months even after you slash down your proposal and flashy promotion or add-on purchases are not effective.

In a nutshell, B2B sales negotiation is a balance that requires crucial steps by both parties, and especially by the sales folks. The seller needs to provide buyers with relevant information to persuade them to make a purchase while winning the trust in the process.

Provide value-based negotiations:

Buyers have little time to discuss the features and benefits, their interest lies only in the prices or discounts that you offer, thus, they can easily find loopholes in your sale process.

It is in the light that salespeople move to the concession and discount too early without addressing the value-based negotiation or establishing an agreement in principle with the prospect. If you engaged in real money talks at the start of the conversation, you may be the victim rather than a victor in the negotiation bid getting you little or absolutely no lead. Here we bring in a slew of questions to ask your buyer that may support your value-based negotiations

How does your product solution/services solve your customer’s problem ?
Elevate your conversation by demonstrating proofs
Can you quantify the impact of your solutions on their business ?
Can you avoid tech glitch concerning the buyer during usage ?
Are you sealing a deal with the decision maker ?

Once these questions are answered and the deal to buy your product is finalised then the negotiation can be handled. Solve the problem, get the agreement in principle and then open up to negotiation.

Buyer’s intent of purchasing equate to your active listening

Sales people are known to be great communicators. Many sales people in their erstwhile journey claim to be good listeners but they can hardly hold their curiosity until a brief pause. Truly active listening involves asking relevant questions to decipher their perspective and stance on the issue. If need be, take notes while prospect is speaking.

Sales people who have the habit of active listening are the purveyors of understanding their prospects perspective on the issue at hand. Also active listening conveys to the person that you respect them, it fosters trust and confidence between both the parties.

Introducing augmented features during negotiations

Leveraging high discounts can hurt your organization's revenue. It also does not quantify as the value based saleable approach. To get to the crux of the matter, informing buyers about augmented features can help you in handling negotiation equations as a valuable asset. Some examples of non- monetary points of negotiations are:

Full service training program or customer support for 24x7 will help buyers ease their decision process
A concise portfolio as compared to a lengthy contract for new customers
Mentioning their organization on your website or marketing platform gratis
Concession on certain contractual terms like auto renewal.

These easy give away are quick and creative ways that can mean your buyer a lot in the competitive market.

Negotiating with the decision maker

Unlike B2C here, the decision is solely in the hands of few. Also there are less chances of emotional buying. Therefore negotiating with the decision maker can save you lots of time, energy and laying all your cards on the table. If you negotiate with the non decision makers with ‘full steam’ or say using up your ‘last resort’ – then when you begin negotiating with the real decision maker, there's a high chance that he/she will start the conversation based on the discounted price quoted or agreed earlier – which can propel you to insist on a lesser quote, pushing you further into a tough spot.

Salvage your honour...know when to walk away

Sales managers always have an adrenaline rush to clinch the deal which may or may not be in inline with the organisational policies. Despite all the efforts and convincing power when the buyer demand is unrivalled and asks for massive price reduction or radical amendments that are not profitable to the company, then you need to pull out and walk away. It's important to think twice and set boundaries, and not succumb to the pressure.

Over to you..

Pricing is no easy feat. There are pricing challenges that you and your company poses at every step. Also there is no holy grail solution to the pricing strategy that can fix all of your problems in one go.

As B2B sales, it is important to understand a few ground rules which can help you to navigate the complexity of pricing. It can be done by pooling the most successful aspects of tested strategies to build the final strategy that suits your taste ,then revisit that strategy often to fine tune it according to your business and see your customers grow and evolve.

Also, it is important to remember selling the value is the first act- if you can sell that there is absolutely no need to enter into the second act of negotiation.

Handling price negotiations in a competitive B2B market