506: Price Negotiating; A masterclass for sellers | Chris Croft
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Leading expert on time management and selling negotiations, Chris Croft from Chris Croft Training and Management joins us again this week to discuss price negotiations. He is one of the most viewed authors on udemy.com and on Linkedin Learning with 36 courses, 24,000 views a day, and 18 million students in total. His Negotiation Skills course on udemy is the most popular negotiating course in the world. Most negotiations are from the buyer’s perspective. We’re flipping the script today. SMBs and agency owners especially need someone rooting for them. Here’s how to become more confident in charging what you’re worth. Actually, it’s more than charging what you’re worth- here’s how to get what you’re worth. Listen to Chris’ Top 10 Price Negotiating Tips for sellers in this week’s episode, and find them listed here:
- Set a walk-away point
- Buyers have weaknesses
- Say ‘no’ the first time
- Instead of ‘yes’ or ‘no’… negotiate!
- Try not to open first
- Don’t open with a round number (sounds made up)
- Open beyond your best hope
- Do the flinch; watch for the flinch
- Justifying opening price after reducing price (what’s the trade?)
- Look out for the nibble
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George: This is the “Conquer Local” podcast, a show about billion dollar sales leaders, marketers leading local economic growth, and entrepreneurs who have created their dream organizations. They wanna share their secrets, giving you the distilled version of their extraordinary feats. Our hope is with the tangible takeaways from each episode, you can rewire, rework and reimagine your business. I’m George Leith, and coming up, a two-part series, we’re very proud to feature, Chris Croft. Chris came from an operations background with an engineering degree from Cambridge, qualifying as a chartered engineer and working as a senior manager in manufacturing for 10 years. He gained an MBA and worked as a university lecturer for four years before starting his own training company 21 years ago called Shift Training. He’s one of the most viewed authors on Udemy and on LinkedIn Learning with 36 course, 24,000 views a day and 18 million students total. His negotiation skills course on Udemy is the most popular negotiating course in the world. Once again, this week on the “Conquer Local” podcast, Chris Croft is coming up next. Welcome back to our guest, Chris Croft. And we are here this week to get those top 10 tips around negotiation. Remember, last episode, we talked about time management. I got a freebie there on the time management, ’cause I need help with that, but we all do, don’t we? It’s just an ongoing battle on managing, but then we heard about how to manage the pipeline and how to test your go-to-market. And we aren’t even at the top 10 tips yet. We were just talking about some tactics that we could use to understand if we had the price for our product or service in the right place, so, Chris, thank you for that. That was great. I loved it. Now I can’t wait to hear about these top 10 tips on negotiations.
Chris: Okay. Yeah. Yeah, thanks for having me back for part two and let’s dive straight in. So these would be my top 10 negotiate tips for sales people. Most of them apply to buyers as well. So if you’re a buyer, this is fine, but I think sales people get a bit neglected when we’re talking about negotiating. Most negotiating stuff’s aimed at buyers. And these are simple things that people don’t do.
Set a Walk-away Point
Chris: So, number one is to set your walk away point and always stick to it. So if somebody said to me, “We want you to do a talk to an audience in Vegas,” or something. “How much would you charges, 500 people, one hour?” I would think of a number. Now, I dunno what that number is actually, offhand, but I would think of a number. And that number is based on how busy I am. How much do I dislike long airplane trips from England, all the way over to Vegas, it’s a long way. But then also what fun it is to talk to a group of people at the far end. So this number is a personal number for me. Now for some people, it would be their worst nightmare to have to talk to a big audience. Other people would love to go to Vegas. I’ve been already. But so that number is a number that I decide. Similarly, if I’m gonna go and buy a car, I decide how much I’m prepared to pay for that car. And I have a walk away point. So if I’m a buyer, I have a walkway point. But if I’m a seller, I decide how much I’ve gotta be paid for a particular job. Now, often sellers, they look at their costs to set a walkway point, but it’s not really to do with costs. It’s to do with, do you want that bit of business? Because there’s always that opportunity cost if you could be doing it for somebody else instead. So however you work it out, is up to you. But the big thing is you need to know that point, and you need to stick to it and walk away. So I suppose I wanted a certain amount. I don’t know, let’s say $5,000. Let’s just have a dream and make up a number, I dunno. If they said to me, “Oh, it’s real shame, Chris. We’ve only got 4,990,” would I say, “Oh, alright, I’ll do it,” or would I walk away over $10? And the answer is I would walk away over $10. I really would. And I would sit here in cold dark rainy England, and I would earn nothing. And part of me would be rather sad that I didn’t get nearly $5,000. But part of me would be really pleased that I walked away because that’s where my power comes from, my strength, because next time I negotiate with that person, they’re thinking, “Oh God, he walked away last time. He means it.” But next time I negotiate with anybody, they don’t know me. They don’t know I walked away last time, but I know I walked away, and that makes me feel stronger. And that comes across. So they’re trying to judge, “Does he really mean this?” And I’m thinking, “Yeah, I do.” And they kind of know that. If I go, “Alright, I’ll do it for 4,9, next time, it’s 4,8, 4,7, 4. I’m gonna slide down into oblivion, aren’t I?
George: I wanted to ask about this because I think what you’re saying here, it’s only $100. It is not a lot of money, but it’s more around your mindset in going to market and saying, “This is what I need to get paid. This is my worth. I know I have people paying me this amount. This is where I have to sit.” But it’s that mindset because it’s a slippery slope, isn’t it? The minute you start cutting, it’ll just keep happening.
Chris: Absolutely. And that figure of 5,000 or 1,000 or 20,000, I’ve thought about that really carefully. And that’s what it’s worth to me. So if I agree to sell whatever it is I’m selling for less, I’m making a loss. Why should I sell something that’s costing me 5 for 4.9? I’m losing money on the deal. So logic would say, don’t do it. But you’re right. It’s not really about logic, and it’s not about pride. It’s about strength of mind. It’s about saying, “No, I won’t do it below that.” And next time, I’m stronger because I know I’m prepared to walk away ’cause I have in the past. So you need to walk away every now and then to recharge your strength batteries. And it’s good to walk away, and sales people hate walking away. But you must because that’s where your power comes from. That’s tip number one, okay?
George: Right there, that’s an amazing tip because we.
Chris: It’s so important.
George: We find sales reps that make this error, and sometimes it’s month end or quarter end or year end, and we’ve gotta get the deal. And they start going against their values. Like this really is a value statement. I’m not even talking about the dollar value. It’s like, I’m gonna deliver at this level. And now I’ve cut the deal. Now it’s out there in the market. People know that I’ve done it. Word travels fast. Next thing you know, no one will pay your rate.
Chris: Yeah, even if no one’s gonna know, you’re gonna know you did it. But you’re right. People are gonna know. So walk away point, set it, never go beyond it. That’s rule number one of all, I picked it first, ’cause it’s the most important, I think. But I hope you like my other nine.
George: I’m sure we will.
Buyers Have Weaknesses
Chris: Some of them will be quicker than that one. The second one is buyers have weaknesses. So sales people often feel weak, and they think, “I really need to get this deal. I haven’t sold anything recently. My product or service is not perfect. I kind of know that. I really wanna get this particular customer.” So they have all these weaknesses. Their boss is on their back. But the key to feeling strong is partly a walk away point. But it’s also to realize that the buyer has weaknesses as well. That buyer, if you’ve ever been a buyer, you’ll know that the buyer is thinking, “I’m in a hurry to get this. I really wanna buy it from these people. They’re the only ones who are any good.” I mentioned earlier on getting somebody to repair my roof. I’m really weak. I’ve got water coming in through the top of my house. It’s gonna rain next week. I’ll pay anything. So I’m weak. Now the seller, the roof guy, he may be thinking, “Well, Chris has probably got several quotes. I really want the work. My kids need Christmas presents.” But he mustn’t think that. He must focus on the fact that I have weaknesses. So the key is to think about the weaknesses that the buyer has, and you don’t even need to know for sure what they are, but just say, “I bet they want me. I bet they’re short of time. I bet they’ve got loads of money.” The roofer should be looking at me thinking, “I bet this guy’s loaded. I bet this guy just talks in Vegas for five grand. He can afford,” and to be honest, I can afford whatever he charges me, I’ve got to. So think about the buyer’s weaknesses and that will help you to forget your own. That’s my second tip.
George: And does the investigation of the buyer’s weaknesses, I love the way you’re framing this, by the way, I have not heard this type of framing before around power and weakness.
Chris: Good, good.
George: Does the buyer’s weakness also allow you to put some urgency against the deal? I find when I’m coaching salespeople or working with sales teams, they’re like, “How do I put urgency against this? They could buy it six months from now, and the conditions would be the same.” So identifying that pain point or that weakness allows you to put some urgency against it because we know if you don’t fix your roof in a month, it rains a lot where you live. I’m sorry, I don’t mean to generalize, but I’m pretty sure it drains a lot.
Chris: It does drain a lot.
George: The damage is going to be astronomical. And by being able to put some sort of economic value against the damage that’s gonna occur, you might be able to charge more to get it done quicker.
Chris: Yes. I’ve actually thought about poking a hole in the roof and putting an umbrella through and then opening it, and then hanging bricks from that handle of the umbrella. That’s how desperate I am. But yeah, absolutely. And just so, find out about the buyer’s weaknesses, and it could be time. It may not be time. It may be, they’ve got a big budget, but absolutely. And you do that in the sales process by just asking them, “Why do you want this? And what other options have you looked at?” And they go, “Well, we haven’t gotten any other options really.” And you think, “Oh, okay, right.” And then you sort of say, “So why do you need this?” And they go, “Oh, ’cause it’s giving us a terrible problem.” And you could build the needs, can’t you, by asking them about all that. And so you can find out what the weaknesses are. Amazingly buyers will tell you. They’ll say, “I need this really quickly. I can’t find anybody else. Can you help me?” And you’re just thinking, “Oh, okay.” So it’s amazing how they’ll tell you their weaknesses. I’m always surprised by that, as will salespeople, by the way. And you don’t wanna reveal, don’t say, “We can supply it as soon as you want. And we got loads in stock, and I really need to sell this to you before Christmas.” Don’t say that. So this whole hiding of weaknesses thing is really interesting. So buyers have weaknesses. Think about theirs rather than your own, is tip number two.
Say ‘no’ the First Time
Tip number three is a very simple thing. I’ve only discovered recently, which is, say no the first time. So when I quote people a price, quite often, they just go, “Okay, great.” And then I think, “Oh, no, I should have asked for more. Mental note to self, put price up.” But sometimes they say, “Oh, that’s a bit more than we normally spend for training. Can you reduce it at all?” And the answer is no. Just say, “I wish I could, but I can’t because I’m turning away work at this price.” If I do it for less, I’d be mad. Plus there’s actually more work than you realize in the preparing and all that sort of thing. So I just blame it on the market. I say, “Well, I’ve got lots of people wanting my time, and that is the rate.” And they then go, “Okay, well, nevermind. I just thought I’d ask.” And this is very English, isn’t it? But I guess it’s probably the same in the states and Canada, worth a try. So the first thing I do is I just, the first time I just say, “No, I can’t, I really can’t.” And they go, “Okay, then.” Now 1 time in 20, they go, “Well, that’s a problem then, because we just can’t afford it.” And then I negotiate. Then I go, “Well, okay. Well, what about if we did a longer session for a higher price or kept that price the same, but a shorter session, or what if you book me twice,” or whatever. And I’ll come to all that in a minute. So my first line of defense is just to say, “No, I can’t.” And then I only negotiate if they persist and say, “Well, in that case, it’s a problem.” And it’s amazing how often, I mean, I would say 90% of people don’t even try. Another 9% just say, “Oh, okay then. I just thought I’d ask.” And only 1% actually really squeeze me.
George: Well, in that data that you just gave us, I’m sure that you’ve got a lot of research underneath that, but I want our audience to just think for a moment. On the last five deals that you did, did you do this and say no when they asked for a discount? Are you following these components? I think there’s some experienced sellers that might do some of them, but what happens, I find, is experienced sellers forget this stuff. They forget the basics of negotiation, understanding that the whole world is a bloody negotiation. That’s why I was so excited to have you on the show and to get into this, because this is fundamental things that we need to be reminded of. If we’ve been doing it a long time, we forget it. But if you’re new, if you’re listening to this show, and you’re thinking of getting into the business of sales, or even in any entrepreneur motion, these are table stake tactics that Chris is taking you through. It’s so fascinating.
Chris: Yeah, I mean, I know all this stuff inside-out. I could talk about it all day, but I still don’t do it every time. I would say every negotiation I do, that 1 of these 10 things I don’t do. And afterwards I think, “Oh, I can’t believe I did that, oh!” Because it takes quite a lot of presence of mind to remember to do all of this every time. So you don’t want any more complicated stuff than this. This is plenty to be getting on with. But if you do all of this, you’ll be 99% of the way to a perfect deal. You really will. So you don’t need anything more complicated than this.
Instead of ‘yes’ or ‘no’… Negotiate!
Anyway, so my fourth one, I call this, instead of yes or no. And what I mean by that, instead of saying yes or instead of saying no, you’ve got a third choice, which is to negotiate. Always remember you’ve got negotiating as an option. So if you get asked to do something you don’t really want to do or to sell something that’s difficult, maybe they want a really small quantity delivered really quickly in special packaging or whatever, you could reluctantly say, “Yes, alright, we’ll do that.” And probably make a loss. Or you could say, “No, it’s too hard. We don’t wanna do that.” But you’ve got a third option, which is to say, “We’ll do it, but it’s expensive.” So if I was asked to do a conference in Siberia in January or something, I could just say, “Yeah, alright, I’ll do it.” I’d quite like to see what Siberia is like. And then when I get there, I’m thinking, “Why on Earth did I agree to this? It’s freezing cold.” Or I could say, “No, I’m not doing Siberia,” but surely the best option is to say, “Make it worth my wild. Yeah, I’ll do it, but it’ll cost you,” I don’t know, 20 grand, 50 grand or something. Because they just might say yes. And if they say no, then it’s them that are saying no, not me.
George: And you’re not dropping your value.
Chris: No, exactly.
George: That’s the other thing. The first thing a rep will do is go to just drop the value.
George: Right? And what you’re saying is try the other option. Ask for more.
Chris: Absolutely. So you’ve always got negotiating as an option rather than just to sell something that you know is gonna be a pain. And if it turns out to be a loss-making job, most salespeople don’t really care. They’ve got the commission for the turnover or whatever, and poor old operations have to deliver it. So I think, just always have that as an option, that third option. If you feel reluctant to do something, it should switch on your negotiating light, as it were.
George: Chris, one question that I have as we’re walking through this, I’m thinking that a few steps ahead, but I think that it’s important to call this out. Are we just talking about new contracts, brand new customers that we haven’t had interaction with before, or do these tactics work on an existing relationship. So I booked you a couple years ago, you came to Canada in the cold. I paid the rate. I already know it’s gonna be more ’cause it’s as cold here as it is in Siberia. And now I phone you again, would you use the same tactics?
Chris: Totally, yes, totally, I would use it again. Things could have changed. I’ve changed a lot in the last two years, the stuff I’m doing. I’m not the world’s expert on negotiating, but I have got, I think, the best selling negotiating course in the world on udemy.com. It it’s just been really, really successful. I think it’s because it’s really simple, but that’s brought in a load of money. So now I’m thinking, “Well, I don’t need to go to Siberia. Canada’s nice though, but I don’t need to go there now.” Two years ago, I would’ve done it, but I won’t. So it’s nobody’s fault, but I’m just more expensive now, because I’ve got this money coming in from this online course of mine. So who knows what’s different? And it might well be that you agreed to do stuff for a customer who’s turned out to be a total pain. And so now if they want repeats, it’s gonna cost more, and you don’t tell ’em they’re a pain, but you just say, you could say we, “We lost money on the last bit of the job because it turned out to be difficult. And if you want that job again, we’re gonna have to charge more.”
George: Or the scope changed. You were doing the analysis.
Chris: There’s always a story.
George: But I think that it’s really important for our audience to understand that when we’re walking through these tactics, and they’re fascinating, this is not just net new logo acquisition, where we’re signing a new deal. It can be used at any time in any negotiation because conditions change.
Chris: Absolutely. I mean, you wanna get it right on the first one really, because putting the price up a lot on repeat work is more difficult, but you can gradually increase it each time you do a deal, or you can just put the price up quite a lot. Recently I put the price up quite a lot on a bunch of customers who, for various reasons, I don’t really like, and half of them said, “No, we’re not paying that.” And they just have left, and that’s great ’cause I don’t like them. And the other half said, “Alright, we’ll pay it.” And so now I do like them. So that was fine, you know? So you can do it even with existing customers. And I probably am making more than I was doing when I had all of them. So I’ve lost a few, but they were ones that were probably not making, they were probably loss-making customers or breakeven customers anyway. So I’ve lost nothing if they go. So yeah, absolutely, this is for repeat customers as well. I’m glad you said that.
George: That’s great.
Try Not to Open First
Chris: Good point. Now point number five is a really easy, important negotiating principle, try not to open first. And this is for buyers and sellers, and even if you’re just talking to colleagues about time scales, “When can IT fix my computer? When can the guy fix my roof?” I’m not saying I have to have it by tomorrow. I’m asking him. Because when you ask somebody else to open first, it might be good news. So let’s go back to that Vegas conference, right? Suppose I’ve decided I’ll do it for two grand, and they say, “How much do you charge?” I could say, “Well, I want two grand.” I could say, “I want five,” even though I’m prepared to do it for two, but they might, if I could get them to open first, they might say, “We normally pay 10. Is 10 okay?” And I’m like, “Yeah.” So I don’t know what they normally pay. And actually it varies hugely. Some conferences pay 1 grand and some conferences pay 20. I mean, you just don’t know. So if I can get them to open first, that’s really important. Now it’s always a bit difficult because really it’s more normal for the salesperson to open first with a price. But there are quite a few situations where you can get the customer to open first. So if somebody said to me, “What would it cost for a training day?” I would say, “It depends.” I love the words, it depends. Because it depends how tailored you want it, how much preparation, how many people. But if you give me a rough idea of what you’re looking for and maybe what you can afford, I’ll see what I can do for that. And you might say, “Well, we can only afford 10 grand,” and then I’ll go, “Well, I think I could do something for that.” And I’ve discovered your budget, and I’ll then get all of your budget.
George: So some tactics to get that information where you’re trying to get them to open first, would one of the tactics might be, in the analogy that we’re using, “Who else has done this for you in the past?” Because you might know what their scale is that they’re. I find that to effective
Chris: That’s a great one.
George: when you’re talking to a customer for the first time. “Who else have you been working with?” But do that way in the beginning, back to your point, when we started talking about negotiations is the whole thing, it’s not just one stage.
Chris: Yeah, before they realize it’s a negotiation. Yeah, yeah, I mean, I had a customer a while back who rang me up and said, “Oh my god, Chris, I’ve got a crisis. We got a course next week. Somebody’s canceled. Can you help us?” I’m already thinking, “Oh, I can charge extra for this.” And I said to them, “Who did you have doing it?” And they told me, and I knew it was somebody really expensive. And I said, “Well, okay, so what were they charging you?” And the guy told me, and it was like five times as much as I was gonna charge him, and I said-
George: That guy has not listened to this podcast then. Because he would’ve got all your tactics.
Chris: Yeah, and I just said to him, “Yeah, well, I could do it for that.” And he was like, “Oh, brilliant. Could you?” And if I’d opened first, I knew he was desperate for it. I would’ve put a bit of a premium on, but I wouldn’t have charged him anything like as much as he told me. So get them to open first, it could be good news. I dunno whether you’ve ever bought a kitchen or a carpet, but when you go into places for things for your house, they always say, “Roughly how much per meter you’re plan to spend,” or “How much are you plan to spend for your kitchen? What sort of budget have you got?” And why should you tell them? You’re the buyer. They’re selling. They’re supposed to open first. So I always say, “It depends. It depends what you can tempt me with. I’m looking for solid oak doors, and I wanna have a marble surface,” or whatever. “How much is that?” And then when they come out with the price, then, of course, it’s game on. And I go, “Oh, that’s too much. I can’t afford that. You’ll have to reduce it.” And off we go. But I don’t come out with a price first. They’re trying to get me to open first. So if you’re the seller, try to get them to open first. The other way to get it, you could sometimes use the, project management has this triangle of cost, quality and time. So if they ask for cost, you could say, “Well, it depends how quickly you want it, and it depends the quality you want. So give me an idea of those.” And then when they’re telling you about that, you can say it, when they say, “What quality can we have?” You can then say, “Well, it depends how much you wanna pay, really. Do you have a budget in mind for this?” And so by moving around the triangle a bit, you can sometimes get ’em to tell you what their budget is.
George: We’ll make sure we put a picture of that triangle in the show notes so that you can utilize that.
Chris: Cost, quality and time.
George: That’s great. Number six.
Don’t Open with a Round Number (sounds made up)
Chris: Yeah, okay, so number six is another easy one really, which is don’t open with a round number. Because if you open with round numbers, it’s just like a made up, it’s an invitation to negotiate. I told this to a builder once who was on one of my training courses, and he went, “Oh, oh!” And I said, “Are you all right?” And he went, “Oh my god.” He said, “For years, I’ve been quoting people 20 grand. And they always haggled me down to 19 grand,” say, for a typical job. And he said, “That’s most of my profit gone.” So he said from now on, “I’m gonna quote them 21,700.” And then I’m gonna reluctantly come down to 21 or whatever.” And what’s actually happened, he emailed me later to say, nobody even negotiates with him now. So he quotes them 21,7, and they go, “Okay,” because they think that’s a real number he’s really worked out. Whereas when he used to just say 20, it’s like an invitation to play a game, isn’t it? So don’t open with round numbers. Your price will sound more credible. People are less likely to attack it. And if they do attack it, they’d expect you to come down a smaller amount. So from 21,7, he should come down to 21,5. You know?
George: Let me ask this then. I’m doing some math, and I’m really bad at it. But I’m thinking if you’re negotiating and all of your deals are coming in at $700 less than the number that you’re quoting, you should put it up $1,400. Because you know you’re always given up 700 bucks, and now you’re actually getting a rate increase.
Chris: Yeah, absolutely. And so this guy, he’s actually charging 21,7 instead of 19 now. So he said to me, he’s doubled his profit because of me. Did he send me a bottle of wine? No. Am I bitter? A little bit. But, you know, I’m just really pleased to had helped him.
George: I think you can get more money though the next time you train him. Because of the value that you’re bringing. No, that’s a great advice, Chris.
Chris: So not a round number. Very easy to say, quite hard to do. By the way, I like sevens and fours. Nines sound made up. You know, 21.99, it’s just made up, isn’t it? And ones aren’t worth bothering with. I like fours and sevens. They’re kind of a spiky number that looks really properly calculated. Anyway, that’s tip number six.
George: I that love it.
Open Beyond your Best Hope
Chris: Not a round number. Don’t open first, and when you do open, not a round number. Let’s zoom through. So number seven is when you do open, obviously, it’s not gonna be a round number, but it also needs to be beyond your best hope, beyond the best. So going back to my Vegas example, right? If I’m thinking the most I’m ever gonna get is 10 grand for a conference, let’s say. I’m just making up numbers here. And I try to get them to open first because they might offer me 10, but if they say, “No, no, you’ve gotta give us a price,” I’ve got to ask for 10, haven’t I? beyond my best. I’ve gotta ask for 11,740 or something. Get some sevens and fours in there. Because if I say 5, I’m never gonna get my best hope of 10. They’re never gonna say, “Go on. No, no, you are a good guy. We wanna pay you 10.” They’re not gonna say that. So every salesperson ever needs to ask for slightly beyond the most they might get. If my roofer’s thinking, “Chris, is probably gonna happily pay 300, he might pay 500,” he’s gotta quote me 670. And then when I go, “Oh, I can’t afford that,” he can come down to 300 if he has to. But, of course, half the time the guy’s gonna go. “Yeah. Alright, I’ll pay 500.” You know, I’ve gotta BMW on my drive. I mean, it’s a bit obvious I’m gonna pay whatever he asked, isn’t it? I’m doomed before I start.
George: The water’s running into the house. The urgency is there.
Chris: Yeah, I’m desperate, you know? Christmas is coming. I gotta do it. So the point is that if he thinks he might get 700, he’s gotta open on 800.
George: I love it.
Chris: So that’s what you do. That’s how you calculate your opening offer, beyond the most you get. And that means that quite a lot of people are gonna be upset by that. Statistically, if you ask for the most you might get, quite a lot of people are gonna go, “What? We can’t afford that.” Then you could say, “Well, okay, maybe there’s a way we can do a deal in some way. And if you buy twice as much or if you pay upfront,” or whatever, and you can do a deal. But it’s worth it for the 10% or the 20% who just say yes to that high number.
George: That’s right.
Chris: If I have to come down to five grand most of the time, if just every now and then somebody agrees to 10 grand, thank goodness I asked for it. You know?
George: Mm-hmm. Well, you never get, if you don’t ask.
Chris: Yeah, if you don’t ask, you don’t get. But also, in their mind, I’m a 10 grand guy, and they’re getting me for five, they think it’s great.
George: Mm-hmm, the built-in value.
Do the Flinch; watch for the flinch
Chris: Yeah. So your opening offer’s got to be scarily, uncomfortably high, beyond your best hope. We’ve only got three more. Number eight is the flinch. The flinch is when you hear their negotiation, you go, “What, what? Ooh, ooh.” And you suck it into your teeth or whatever. And some people, Italian people have a very flamboyant flinch. They throw their pen on the table, and they stand up, and they walk around the room. British people, they just lean back a little bit and fold their arms, or they put the top back on their Biro. But however you wanna. However you wanna do it, you must do.
George: Chris, I’ll tell you how we do it in Canada.
Chris: How’d you do it?
George: We say we’re sorry. And then we negotiate.
Chris: And that’s it. Oh, okay. So not a lot of body language.
George: Well, no, but we say, we’re sorry. We’re really nice. We apologize. And then we start appreciating.
Chris: Yeah. Yeah. But the thing with the flinch, you have to look like you’ve physically been slapped in the face. You have to look and sound really unhappy, “What?” You have to like jerk back, you know? And even if you’re just on the phone, you need to still do that ’cause they’ll hear you do it. Because if you don’t, they will think you’re happy. And similarly, not only must you do it, but you must look and see if they do it. So when you quote them a price, if they don’t react, if they just go, “Oh dear, that’s a little bit expensive,” you know they’re happy really. And you are not gonna move now. You’re not moving. If they jerk back physically, “What? Oh my god! That’s far more than we expected!” It could just be a game. You know, maybe you won’t have to move, but maybe you will. Don’t worry, it’s just a game. It’s nothing personal. They haven’t thrown you out. So look for the flinch. Look ’em in the eye when you open and say the price is this, and see if they flinch or not. Don’t worry if they do, it’s fine. You should be more worried if they don’t. ‘Cause if they don’t flinch, that means that you haven’t really asked for enough. So you’re definitely not gonna move. So that’s tip number eight, do the flinch, but also watch for the flinch. But you must do it. Even if you are really happy, even if they say they’ll pay me 10 grand. I’ve gotta do the flinch. Go, “Only 10? Oh, I normally charge 20.” I might settle for 15. You know? So you’ve always gotta do the flinch if you’re selling and buying. Right, got two more.
Justifying Opening Price After Reducing Price (what’s the trade?)
Number nine is quite important actually. It’s how do you justify the fact that you’ve moved from your opening offer to something else? So I suppose I want 10 grand, and I go, “Alright, I’ll do it for five.” Well, I suppose my roof guy says it’s 500 pounds, and he goes, “Aright, I’ll do it for 300.” I’m thinking, “Well, hang on. What was that 500 that you quoted me just then? Were you just trying it on?” And of course the truth is he was, and I would advise him to, but nevertheless, I don’t wanna be on the receiving end of a guy who’s just trying it on. So he’s gotta have an honest way to move from 500 to 300. How do you do that? And the answer is trading. So he’s gotta say, “Look, if you can pay me cash front, and if you give me plenty of nice cups of tea and maybe a bacon sandwich, I’ll do it for 300.” And I thinking, “Wow, 200 quid just for some tea and a bacon sandwich? He likes his bacon,” but I’m not gonna question it. I’m happy now. He’s got a reason. Or if he says, “If you can make sure that everything’s cleared out the side, that you have your ladder ready, then I’ll do it cheaper.” So he’s gotta have some trade. So your listeners will probably be saying things like, “if you can order a whole year’s worth upfront, and then we just deliver,” like regular gig, Or, “If you make sure we get good payment terms.” Or, “If you buy other services from us, then we can give you a good price on this.” It could be that. Or, “If you can recommend us on your website or give us a video testimonial saying that we were brilliant, then we could give you a better price.” Just get something back for it. Because firstly, it’s nice to have something back, but also you then don’t look dishonest.
George: You’re bringing up something that is a really important point. And I love what you said earlier where there’s 10 things, and even you don’t do all 10 every time because it’s hardly, it’s rigorous. But this one is really important as you said, because if you just give up the $200, now your first rate was a fugazi. The client’s like, “Oh, what the hell?” This whole thing is falling apart. So part of building the trust with the prospect or the customer is there’s gotta be a give or a get as you’re moving through the negotiation. So I’m gonna give this up, but I need this back. And that now balances the scale is what I think you’re saying, is that correct?
Chris: Yeah, totally. Absolutely. I mean, I was asked a price to do five days of training in Bahrain, and I just, I dunno what, how much, they’re quite rich in Bahrain. I think, aren’t they? I dunno. So I quoted a price, and the guy said, “We can’t quite afford that. We can afford a bit less than that though. Just a little bit less.” And I said, “Well, if you pay me that for four days, then that would work. If we’d make it four days instead of five, then I’ll do it for that.” And he went, “Okay, great.” So sometimes you can reduce what you’ve got, what you are offering, but it meant that my initial price never seemed dishonest. He was happy ’cause he still. I said, “We can fit it into four days, I think.” So there’s always a way to do a deal that doesn’t feel dishonest.
George: You know, Chris, you are an honest individual as well. So I think what you’re saying, and I wanna punctuate this, ’cause this is what I’m hearing, is the prospect or the customer is always looking for dishonesty. We’re a little skeptical in any transaction that we go into. So if you just lay down and take the price discount without a give or a get on on the other side, they then start to question the relationship.
Chris: Yeah, typical salesperson, trying to rip me off.
Chris: Yeah. And I think particularly sales people, I think everyone’s suspicious of sales people. They think they’re dishonest. And I think that’s really unfair ’cause I think a good salesperson’s job is to help the customer work out what’s best for the customer and do a deal that’s good for the customer. Still has to be good for the salesperson. We wanna make 10% profit. It’s not asking much, is it? But to diagnose and help the customer find the right thing is what we’re doing. And we want repeat work, that’s the easy work to get. So absolutely, this whole negotiating process, we still gotta stay friends with the customer, but we can do that by trading, and trading is where win/win comes from. Because if in the end, if you say I can do a better price, if you book a whole year’s worth, it’s great for them. Because they’ve got the problem solved for a whole year, and it’s great for you, everybody wins. So trading’s really important. And what I would say is prepare your tradables beforehand. So when you go in there, you’ve already got a list of things you want. You want payment terms, order more products, order a year’s worth, et cetera, et cetera. If you’ve got like 10 tradables, you could just play them like a little pack of cards. Every time you have to concede a little bit, you could say, “Well, if you gave me this, then I could do that.” ‘Cause you don’t wanna have to be creating ideas for tradables on the hoof. That’s really stressful and difficult. But if you’ve got your list ready, you use it every time. So the work you do for your listing of tradables, you do once, you’ve got that for your whole life then, and you use the same tradables every time you go and see a customer. So prepare your tradables.
George: It’s a really good practice to get into, and I love the way that you’re laying that out. Well, this has been unbelievable. I know we got one more. So let’s get number 10 out on the table.
Chris: Yeah, ’cause we’re up to our half an hour, aren’t we? My last one, we’ve done quite well on the timing though, haven’t we really?
George: Not bad at all, no.
Look Out for the Nibble
Chris: Yeah, not bad time management. But the final one is the nibble, just to look out for the nibble at the end. If you are a salesperson, you can do the nibble, and you could save the customer, “Oh, by the way, it costs a bit extra for, delivery is on top.” And you could squeeze a bit more money out, but I don’t really approve of that. I feel the nibble is a little bit dishonest. The reason I’ve put it on my list is to say, don’t let the nibble be done to you.
George: I love it.
Chris: So when you are selling, sometimes customers will say, “Oh, by the way, you don’t mind delivering it on a Sunday, do you?” And, “Oh, by the way, we can have special packaging, can’t we, and certification?” And, “Oh, you don’t mind doing a smaller quantity?” And you go, “Yeah, no problem. No problem.” ‘Cause you’re so excited to have got the deal, and you’re giving away all your profit. All your work is lost in this last little moment. So you’ve gotta be strong, and you’ve gotta say, “No. If you want special packaging, we can do that, but that costs a little bit more, but that’s not included. Because if we do that, then all of our margin is gone. It’s not worth us doing that job for you.” So you have to say no to the nibble at the end. You won’t lose the deal over the nibble. Don’t worry about it. If they go, “Well, in that case, the whole deal’s off,” then, okay, you probably don’t wanna do the deal with them. Anyway.
George: You might have saved yourself a disaster. And that’s the other thing that sales, new sale, I find new sales reps do this all the time. Number one, they wear their heart on their sleeve. You can negotiate with ’em ’cause you just tell by the look on their face. But this one right here, this will bite you every time. I love it, and I love that you call it the nibble, because I called the bite.
Chris: Yeah, well, the thing about the nibbles is often it seems quite small. It’s only a few percent of the job, but that can be half your profit. And I don’t wanna work with nibblers. I’ve got customers who do this, and they keep saying, “Can you just cut the price a bit?” “Can we just have a bit of extra,” and, “Can you include this?” And those people are a pain, and I don’t wanna work with them. So when I say to them, “No, if you want that, it’s gonna cost you extra,” they either pay extra, that’s fine. And by the way, that stops them nibbling because they stop asking when they have to pay. Or they say, “Well, in that case, it’s no good.” And goodbye. So look out for the nibble is my final tip of my 10.
George: Well, Chris, it’s been an incredible two episodes. And in our first episode we learned about time management. You did a great job of setting the table around how important these top 10 tips are. And then today, we went through the top 10 tips. I wanna give you one opportunity to close on this because I know that you are way more of a scientist than I’ll ever dream of being. In your analysis of utilizing these 10 tips, what sort of upside are organizations able to achieve from it, like what happens? Are we talking about a 5% increase, a 10? Like what are the metrics that occur when you deploy these? And we all know it’s tough to do all 10 all the time.
Chris: Yeah, that’s a big question.
George: If you follow the methodology, what sort of opportunity could there be?
Chris: Yeah, I think you can save a bit on your buying, maybe only 2% or 3%. I think you can gain a lot more on your selling. You can gain +5% or +10% on your selling. Selling’s much softer than buying. It’s really hard to get a bit more money when you’re buying, but selling, sales people could easily put 10% on their prices. Customers would not even notice. So I absolutely think you could enlarge that margin by 10%. I’d be gutted if you didn’t increase it by 10%, and that will double your profit. And that’s a hell of a lot easier than delivering twice as much, employing twice as many people. Maybe the market’s not even big enough for you to deliver twice as much. So I would say negotiating, you should be able to increase your margin by 10%, and that will double your profit. I also think you can sell more, because you can say to them, “I you buy a year’s worth or if you buy upfront,” or whatever, “then we can do that price.” And quite often, you can get more volume as well at a better price.
George: Well, that was what I was gonna say. We’re we’re not talking just about an increase in margin or an increase in overall top line revenue. We’re also talking about, you may be able to move more of whatever widget, whether it be roofing or speeches or software or whatever it is, you may be able to move more by building them into the deals to structure it better. Chris has been absolutely incredible. I know you’ve got curry coming in a few minutes and family coming over.
Chris: Curry is arriving. My favorite food, yeah, yeah.
George: And I see a Norwegian flag over your shoulder. I know that the team can’t see it because we’re on audio here, but I have Norwegian roots as well.
Chris: Have you?
George: So I think that might be part of how we get along so well, but it’s been incredible.
Chris: Yeah, my mother was 100% Norwegian. She passed away this year, but she was 100% Norwegian, and you didn’t, you know it. I mean, ooh, you don’t wanna argue with a Norwegian. I’ve still got 50% Viking. I’m proud of that. But yeah, yeah.
George: That’s my grandmother, my paternal grandmother was 100% Norwegian as well. So that’s why we’re feisty.
Chris: Epic, yeah. ‘Cause the Norwegian say it like it is, and that sometimes people are upset by that, but there’s a sort of honesty there, isn’t there? And I wanna keep in touch with that side of things, yeah.
George: And I like to think that that’s where I get the conquer spirit from. So it’s great meeting somebody that also has a conquer spirit. And Chris, thank you very much. We’ll let you get back to your curry with your family and thanks for joining us.
Chris: Thank you for having me, George. It’s been a total pleasure. Thanks.
George: Well, we can’t thank Chris Croft enough for sharing his stories last week and this week, two great episodes. Here are our team’s top 10 takeaways from this episode. You knew I was gonna go there. Number one, set your walk away point, set your deal floor, and always stick to it. Buyers have weaknesses. Figure out what they are, and always relate to how you are solving their pain points. Make sure you say no the first time when there’s a request. Again, it gives you the power in the negotiation. Instead of yes or no, negotiate. Try not to be the first to open. Don’t use round numbers. They sound like they’re made up. Use an actual number. He likes fours and sevens. Pitch a price that’s beyond your best hope. This is good, better, best. So always shoot for best. And then you can always defer down to good or better, and a little different scope on the project as you start to figure out what the budget might be from the prospect. The flinch, pay attention. Did you flinch or did they flinch? It tells you a lot about where you are in the negotiation. How were you going to justify that you moved? What was the value of moving from the original number to where you are today? This is the gives and gets. If they need something, you’re going to give them something, but then you get something in return. It’s all about that trading that he speaks about, and it justifies the number so that the client doesn’t go, “Well, that was a BS number from the beginning.” It gives some weight to the number, and it shows why you’re able to move the price point. And then number 10, beware of the nibble. So you’ve got the deal, it’s done, it’s agreed to, it’s signed, and then they want something else. And the answer is always, “Yes, with a fee,” or, “No, that’s not part of the scope.” Some great takeaways. I could talk to Chris for hours. He’s brilliant. That’s why we two episodes because we had some great takeaways from our first episode. And that’s the top 10 list with a little bit of editorial comments mixed in. If you found value in this episode, please leave us a review wherever you listen to your podcast. This feedback helps us grow and better adapt to what you want to hear in future episodes. Be sure to subscribe to the Finnie award-winning and “Conquer Local” podcast, as we continue to welcome extraordinary sales leaders, marketers and entrepreneurs. My name is George Leith. I’ll see you when I see you.