Best Practices in Negotiation – Should We Cut Customer Risks to Zero?
In this economy, customers are so risk-averse that selling is becoming more and more painful.
They're price-shopping like crazy, procrastinating in making decisions, paying later, and ducking out of deals and re-negotiating terms, without shame.
For instance, Larry sells tools. One of his lumberyard customers paid for its order by check, but purposely subtracted the shipping fee, about $180, claiming Larry never mentioned it.
"That's ridiculous!" he exclaimed after hearing how they altered the deal after the fact. "It's written all over our brochures that they pay shipping," he added, as he paced the sales room in disgust.
His commission was reduced by the same amount, $180, as if he had thrown it into the deal.
It can be difficult to distinguish between outright fraud, where customers are lying, and relentless grinding of vendors to achieve better deals. During previous recessions and times of tight money, I've used and have advocated using satisfaction guarantees to bolster sales.
"If you're not happy, you don't pay!" is the most open-ended guarantee you can offer. But if you do, are YOU then accepting too much risk?
I believe you are, because happiness is subjective. Buyers can wake up one day and decide they aren't completely pleased and return your product, or worse, enjoy the benefits of your service without having to pay the tab.
In good economies, this is less of a threat to your peace of mind and profits, because marginally satisfied clients may still choose to pay, because they have the money and they want to avoid a potential confrontation, if only being asked, "Why?"
But in tough times, they don't have many discretionary dollars, and several needs are lobbying for the same scarce money at a given time. If they can try- but-not-buy, this seems to be ideal, from the standpoint of reducing their risks.
If you're selling a Mrs. Fields' cookie in a mall, you can crumble a few of your products and offer free tastings. Or, if you operate a winery, for that matter, a sample is a practical unit to dispense in hopes of generating sufficient business to cover costs.
But what if you're in the advertising or public relations field and you're asked to pitch a prospect on a campaign. Should you develop a theme and a conceptualization of the overall project on spec, trusting the listeners won't rip-off your ideas?
If you're a call center, should you study the prospect's needs, write a presentation, train staff, and make test calls, all for free, hoping your success, if any, will eventuate in a profitable relationship?
In a word, no.
Amateurs, interns, and the desperate work for nothing, hoping that nothing will turn into something. That's like starting with zero, in arithmetic, and multiplying it by 100. The result is still zero.
Let me offer this mantra, which you should repeat over and over:
Clients Must Pay Something!
For example, a school board candidate came to me for two speeches: A stump talk that she could use, repeatedly; and for an acceptance speech. She sent me her rough draft.
I quoted my fee, which she said was beyond her budget, inasmuch as she is not accepting campaign contributions. I gave her an alternative. I said I would edit her talk and make some recommendations for rewriting it.
Well, I ended up rewriting it, because that was easier and more productive for both of us. But I was still paid for my ministrations.
Her risks were moderated, and I took on the risk of doing too much, relative to the compensation.
Still, we fashioned a win + win.
There is no future in giving away the store. In this economy, especially, we have to be extra diligent to avoid customers that prompt us to do so.
Gloss