“I like your product, but your price is way out of line. We’re used to paying half that much!”
A version of this article appeared in the November 1988 issue of Harvard Business Review.
Negotiating with a Customer You Can’t Afford to Lose
Eight ways to save a disintegrating sale
From the Magazine (November 1988)
· Long read
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Summary.
When a customer you count on turns combative, your choices are limited. You can’t afford to lose the business, but you can’t afford to lose the profit either. Confrontation will poison the water, but compromise will rob you of your margin.
The solution to the impasse is to dodge the bullets and lure your customer into a search for inventive answers to tough problems. The author has eight suggestions:
- Increase your variables and know your walkaway. Price is not the only flexible factor. Consider every aspect of the deal—R&D, specifications, delivery and payment arrangements. The more options you have, the greater your chances of success.
- When attacked, listen. Keep aggressive customers talking and you will learn valuable things about their business and their needs.
- To reduce frustration and assure customers that you’re hearing what they’re saying, pause often to summarize your progress.
- Assert your own company’s needs. Too much empathy for the customer can reduce the emphasis on problem-solving and lead to concessions.
- Try to make your customer commit to the outcome of the whole negotiation. Make sure the full solution works for both parties.
- Save the hardest issues for last.
- Start high, concede slowly, keep your expectations high, and remember that every concession has a different value for buyer and seller.
- Never give in to emotional blackmail. If customers lose their temper, don’t lose yours. Withdraw, postpone, dodge, sidestep, listen. As a last resort, declare the attack unacceptable, but always refuse to fight.