A customer or client may sing praises for your product and his firm’s relationship with you. At the same time he may insist that you reduce the pricing of your product or services to maintain that relationship. Some sales teams spend time thinking about where to make cuts and how to reduce prices to satisfy the customer’s demand. The best course, however, would focus on how to maintain the relationship and at the same time not compromise pricing integrity. This may require some good old-fashioned research and analysis of the client’s needs and marketplace alternatives. If such research reveals that you are the right fit and best alternative for the client, then scripting may be a useful tool in protecting your pricing and renewing the client’s business.
The script is used to craft the message to the client on the benefits of the product or service you offer and why pricing should remain at its current levels or, perhaps even better, be increased. In some sense this requires ignoring the client’s statements about the need for price reduction – a negotiations approach in which you seek a result that the customer has suggested he will not accept. It can be unsettling for a salesperson or account executive to come back to a client with a proposal that ignores the client’s demand for a price reduction. The scripting process helps overcome such trepidations and builds a comfort level in the position to be expressed. The more confidently the seller states her side’s thoughts or position, the more likely it is that the buyer will recognize that getting a reduction is not achievable. The expression of the seller’s position should not be an “in your face” statement, but rather an attempt to help the client achieve his objectives without losing sight of the importance of the seller maintaining her pricing and margins.
A professional sports team that is a client of my Negotiations Institute had a longstanding relationship with a corporate sponsor – a real estate brokerage firm. The sponsor enjoyed the affiliation with the sports team, but also got substantial exposure in the marketplace with prospective commercial and residential real estate clients. On a number of occasions during the past five years, the sponsor had spoken approvingly of the market position it had been able to achieve through the affiliation with the team.
Nevertheless, with six months remaining on the sponsorship agreement, the real estate company’s president informed the team’s account representatives that it would have to receive more inventory and a 25 percent reduction in pricing in order to continue the relationship. The inventory in the sponsorship package included signage in the stadium, advertising in the team’s programs, promotion on the electronic scoreboards and a suite that the real estate firm could use to entertain clients. The pricing of the package was $500,000 per year. In addition to the requested price reduction, the real estate brokerage suggested that it would also need in-game radio ads as well as more prominent signage included in the deal if it was to go forward with the team.
Although there were other real estate firms in the marketplace that the sales team might call upon as alternatives to this client, the team really desired to hold on to the relationship because of the brokerage’s prominence and long-term connection with the team. Some of the sales team felt that they should provide the client with the additional inventory and try to minimize the reduction to something in the range of 10 to 15 percent.
We advised the team’s corporate sponsorship group that their offer to the real estate firm ought to take some of the inventory off the table while emphasizing to the client the real benefits of the relationship, such as the exclusivity in the client’s business area. We also suggested to the sales team that they present a price increase in order to be consistent with other contracts being executed with sponsors – perhaps in the range of 15 percent.
After some resistance for fear of losing the account, the corporate sponsorship group agreed to pursue our recommendation. The sales executives also agreed that in this case a written proposal would express the team’s position with clarity and a certain level of unambiguous definitiveness. We then asked them to script out how they would make the initial presentation to the client, and after several rounds of devil’s advocacy the following e-mail on team letterhead was developed:
The [sports team’s] brand within the region is strong and is growing. Last year special events and concerts were added and over 80,000 flocked to [our athletic facility] to enjoy them… Attendance is up 36% vs. 2010, TV ratings are up 108% vs. 2010….
You have stated your need to reduce the financial investment in our partnership. At the same time, however, you should know that while we can adjust your investment terms, we are unable to maintain assets or exclusivity on a flat or reduced investment.
Please see the attached spreadsheet that has two options for your review. Option A, with a price increase of 15%, maintains almost all assets from the previous agreement, and also includes several additional assets which you requested. Option B, which uses your current pricing level, includes reduced assets and the elimination of exclusivity for your suggested investment level.
After several more rounds of discussion and scripted face-to-face presentations (which denied the real estate company’s continuous requests for inventory increases and price reductions), a deal was made. Much to our client’s surprise, not only was the team able to actually hold the line on inventory, but it also achieved a 10 percent increase in the pricing of the sponsorship package for the next five years.
Ron Shapiro is the co-founder and chairman of Sales, Negotiation and Influence Training (SNI), and the author of “Perfecting Your Pitch.” This article is an excerpt from that book.
