Tag Archives: negotiating

Guerrilla Selling – the BUDGET Step

In the last issue, we discussed how to determine what the customer really needs as the first step of our “NaB & CaPTuRe” roadmap: Need, Budget, Conviction, Presentation, Transaction, Reward.

The Budget Step

The second, and most often skipped step in the selling process  is the BUDGET.  As soon as the customer realizes that they have a NEED, they start worrying on how much the solution will cost.  And yet, they hesitate to breach this topic because people are reluctant to talk about money.

In the Guerrilla Selling Seminar, I ask a volunteer:

Orvel Ray:  “Bob. How much money did you earn last year?”

Bob:  “Well, let’s see, if you mean after taxes, then it would be somewhere in the range of, oh, I don’t know exactly, but,. . . uhmmm … something like. . .”

Orvel Ray:  “That’s OK Bob. What kind of underwear are you wearing right now?  Boxers or briefs?”Men's briefs

Bob: “Briefs.”

Orvel Ray:  “Well Bob, would you agree that we have just effectively demonstrated that you would rather discuss your underwear in public than to talk about money.”

This game ALWAYS produces the same response.

While more pronounced in some cultures, this resistance to discussing money is universal.  And salespeople are not immune.  If you ask, point blank, “What’s the price?” most will stutter, stall, and stumble rather than say it out loud.  Guerrillas inoculate this resistance by bringing up the topic of price, and establishing a budget based on the potential value of investing in their product or service.

Once you’ve identified their NEED, you can ask, “How much would it be worth if we could solve this problem?” and, “How much will it cost if things remain the same?”  It’s important to ask both of these questions, because about half your customers will be motivated Toward some future outcome or reward, while others are motivated Away From the threat of some cost or loss.  (People who are Toward motivated buy lottery tickets.  People who are Away From motivated buy life insurance.)  Guerrillas are adept at selling both ways.

Generally people are more motivated to keep what they have than to acquire something new, so another very useful question to determine their budget is, “What have you used in the past?”

Budget Rangefinder

It may be easier to start out by establishing a range, and then narrowing down the budget.

Guerrilla: “What kind of budget do you have in mind for this project, in round numbers?”

Customer: “Somewhere between $1,000 and $2,000.”

Guerrilla: “Closer to $1,000 or closer to $2,000?”

Customer: “Closer to two.”

Guerrilla: “How close?”

Once you have gotten a specific amount, it will be easy to position your product as a good investment, compared to the alternatives, and then focus on benefits.

It’s also useful to ask, “What alternatives have you considered?”  Don’t be naive.  They are talking to your competitors, and if you know their pricing (and you should) then you will know how competitive your offering may be.  Remember that doing nothing may be an attractive option.

Verify their ability to pay by asking, “How do you plan to finance it?” If they say, “I’ll pay cash,” that’s a very strong buying signal.  If you can accept installments, or arrange financing for them, you’ve gained an advantage.

Be prepared to offer strong rationales for the price you charge.  Is it made from more expensive materials?  Is it built to tighter tolerances?  Does it have a longer useful life-span?  Is it labor-intensive?  Does it require special handling?  Is it more environmentally friendly, organic, or Fair Trade?  Does it require less maintenance, or have a higher salvage or re-sale value?

Cost of the Alternative

Recently, I did some sales training for a bearing services company in Houston, and as part of my research, visited one of their customers, a factory that makes cake mix.  This factory is nearly fully automated.  Tanker trucks loaded with flour pull up at one end of the building. Hoses and blowers move the flour into storage hoppers.  Augers measure and feed it, together with all the other ingredients, into big mixing bins.  Huge mixers churn it into the final product. At the other end of the building, machines fold and glue boxes and send them along a conveyer.  In the middle, the product is measured into a plastic liner, sealed, trimmed, slipped into a box, closed, glued, stacked in cartons and then piled on pallets, ready to ship.

This machinery is made up of dozens of motors and servos and thousands of bearings.  And if just one bearing fails, the whole line grinds to a halt.  It costs this manufacturer $90,000.00 (ninety thousand dollars) an hour to shut down, so Mean Time Between Failures is much more important than price. To buy a cheap replacement, or save a few cents on lubricant, simply isn’t economical.  In fact, they want to buy the most expensive, highest quality bearings and lubricants available, and they want them backed up by a technician who is available 24 hours a day!

By focusing on the value rather than selling on price, the guerrilla changes the arena of competition, and virtually eliminates cheaper vendors from the running.  This actually makes it easier to sell at higher prices.

Most salespeople, when challenged about their price, will simply cave.  And nearly two thirds of salespeople will volunteer to cut their price, without being asked, because they do not believe in the value of their product or service.  That’s just stupid.

A simple way to gain confidence when quoting prices is to double your price, whatever it is, then practice roll-playing with a colleague as you justify why they should pay that much.  Then, when you roll the price back for a real customer, it will feel like a bargain.

Stop Waving a White Flag 

As soon as you say, “Our normal price is . . .”, or “Our list price is . . .” then you have already surrendered to the negotiation.  Quote your price in the same tone as if you were telling the time.

“What time is it?”

Two twenty-five.”

What’s your price?”

Two twenty-five.”  No hesitation.  No qualifiers.  No equivocating.

One exception: if you put the word “only” in front of any amount, it sounds like a better deal.  “I bet you could buy the Nairobi Hilton Hotel for only $300 million.”

The About Face

The customer may balk, and say, “Your price is too high.”  Don’t fall into this trap.

Recognize that you do not know what this customer means.  It could mean that he has a cheaper quote from a competitor, or it could mean he can’t afford it, or perhaps he’s just testing to see if the price is negotiable. You don’t know, so don’t guess.   Before you go any farther, ask, “Too high? (pause) When you say ‘too high’, what do you mean; too high relative to what?”

One of my favorite responses is, “We have no argument with those who sell for less.  They know best what their products and service are worth.”

In future installments of this series, we’ll explore each of the steps of “NaB & CaPTuRe” in more detail, and perhaps double or even quadruple your sales.

(This article is part of a series published by Marketing Africa magazine.)

 

Guerrilla Selling – How is it Different?

The ad in the comic book said, “Win a Bicycle.”  I thought it was a sweepstakes, so I filled in the form and mailed it away.

That was early spring of 1963. We lived in a little stick house in the burbs, between the oil refinery and the stockyards.  I was eldest of three children of a single mother who worked nights in a rubber factory.  And I had long since given up believing that Santa would ever bring a bicycle.

seed packetSoon a box arrived from The American Seed Company, full of little packets of garden seeds.  The instructions said I was to go door-to-door and sell them for 25¢ cents a pack (even though you could by the same seeds at the corner store for 10¢).  But I was 9 years old. What did I know?

There were all these rules:  ALWAYS walk on the sidewalk; NEVER walk on the grass.  ALWAYS step back after you ring the doorbell.  ALWAYS say, “Yes ma’am,” “No ma’am,” “Thank you, ma’am.”  I rang every single doorbell in our neighborhood.  Then I crossed that busy street that mother told me not to cross, and visited every house over there, and by 2:00 in the afternoon it was obvious I had no future in sales.  I hadn’t sold a single pack of seeds.

Of course it’s easy it is to give up when you’re discouraged, tired and hungry.  I was taking a shortcut across a vacant lot, and there was this woman in her back yard working the dirt with a spade, putting in her garden.

I yelled at her across the field, “Hey lady!  You don’t need no seed for that garden, do ya?”

She stopped her work, leaned on her shovel and shouted back, “I don’t know; whadaya got?”

“Everything from asparagus to zucchini; what do you want?”

And her next question, of course, was, “How much?”

“Twenty-five cents.”

“Twenty-five cents!!?  Why should I pay twenty-five cents when I can buy them at the corner store for a dime?”

That’s when I started to cry.

“Because I’m trying to win a bicycle, that’s why!”

She bought $9.00 worth.

And what I learned from that one transaction was,  crying works.

The more important lesson was that people who buy seeds, buy seeds.  People who don’t buy seeds, don’t buy seeds.  That’s just the way it works.

And if you want to sell enough seeds to win a bicycle, you have to find all those people.  You look for that hump of dirt in the back yard where they had LAST year’s garden, and if they don’t answer the door, you go back again and again and again, because there are only so many of those opportunities in the neighborhood.

Not only did I sell enough seeds to win the bicycle, (it was a red Huffy, with 20 inch wheels, a banana seat and high-rise handle bars with streamers) but by the end of Spring Break, I had $100 in the bank.  My mother didn’t have $100 dollars in the bank.  And that, for me, was the beginning of what has been a lifetime career in sales and marketing.

Many of those early lessons have served me well.  One day I was showing my box of seeds to a woman and she asked, “How many for a dollar?”

Well, I was only 9 years old, but I could do the math.  “That would be FOUR for a dollar.”

She said, “Okay, I’ll buy a dollar’s worth.”

So at the next door, instead of 25¢, I said, “four-fer-a-dollar.”  And almost everyone bought at least a dollar’s worth.  That simple change doubled my sales.  And I learned that changing one tiny thing can multiply your success.

The next big lesson came when an elderly neighbor asked, “Well, son, what’s this for?”

“They’re seeds for your garden?”

“No, no. I mean, are you raising money for Boy Scouts, or maybe summer camp, or. . .”

“I’m trying to win a bicycle.”

“Okay. Here’s $5.00.”

“But I didn’t get to tell you about the seeds.”

“Oh, that’s alright. I’m too old to keep a garden.  But I’m happy to help an enterprising young man like you.”  (WOW! She called me a “young MAN!”)

So, at the next door I said, “Hi, my name is Orvel Ray Wilson and I need your help.  I’m trying to win a bicycle.”  And sales doubled again.  What that taught me was it wasn’t about the product, or even the price.  It’s all about the customer.

In 1989, I was a touring speaker for CareerTrack, one of the world’s most successful seminar companies, teaching Sales and Customer Service in the US and Europe.  I was approached by Michael Larsen, a literary agent representing Jay Conrad Levinson.  He explained that, in 1984, Jay had written a book called Guerrilla Marketing, and the publisher wanted to do a sequel and call it Guerrilla Selling.  Michael asked if I would be interested in ghost-writing this book.

“Sorry,” I said, “I don’t want to be anyone’s ghost. I want my name on the cover.”

“Jay will never agree to that.”

“How do you know?”

“I’m his agent.  It’s my job to know.”

One of the principles I taught was to never take “no” for an answer unless you’re talking to the real decision-maker.  That’s not always the person who can say “yes.”  It’s the person who can say “no” and make it stick. I said, “Give me Mr.  Levinson’s number and let me hear it from him.”

Guerrilla Selling Ebook - Unconventional Weapons & Tactics for Increasing Your SalesOf course Jay agreed immediately, and Guerrilla Selling became an instant best-seller, and one of the most successful books in the series.  Jay and I went on to collaborate on six more books, and many other projects.  I’ve made a career of making Guerrilla Marketing the most successful marketing series of all time.

 

Marketing and Selling are often confused, but Sales is really a subset of Marketing.  We define Guerrilla Marketing as everything that represents you in the market:  your name, your logo, your reputation, even how you answer your phone.  It’s ALL part of your marketing.

Guerrilla Selling maps the steps customers take when making a purchase decision.  By understanding the psychology of this process, then matching your strategy to your customer, you can make your offering irresistible.

People always go through a six-step process whenever they buy:

  1. Need
  2. Budget
  3. Commitment
  4. Presentation
  5. Transaction
  6. Reward

First, they recognize a Need.  For example, there might be several reasons for buying a new car.  The old car is broken down and not worth fixing. Or they have a baby and need more room. Or they need to transport clients and need something posh. Or they have to travel long distances on rough roads and need a reliable car that won’t leave them stranded.

Many salespeople make the mistake of focusing on the product (the car) while ignoring what the underlying need (basic transportation, more space, more comfort, more reliability). Guerrilla Selling teaches you how to ask just the right questions to reveal their real motivation.

Next, the customer considers the Budget.  How much can they afford?  What’s the payback?  Many salespeople make the mistake of delaying the discussion  about price to the end, while their prospect is worrying on, “How much is this going to cost?”  Guerrilla Selling shows how to deal with prices right up front, then build value for the investment.

Eventually the customer makes a Commitment.   They decide to definitely buy a car from someoneGuerrilla Selling shows you how to discover the commitments that your customers have already made, and align your offering so that you win the sale.

Next, the Presentation step. The customer makes comparisons, reads ads, visits dealers, takes test drives.  This is often the first time they interact with a salesperson.  Guerrilla Selling teaches you how to recognize where your prospect is at in their decision-making process, and give them just the information they need to move forward.

The Transaction is usually thought of as “closing the sale,” but Guerrilla Selling recognizes that this is only the beginning. Guerrillas follow up meticulously to build a long-term relationship with a customer who will buy from them again and again.

Finally, the customer experiences the Reward (more space, more comfort, more safety).  Guerrilla Selling recognizes that this is the real reason people buy, and it’s different for every prospect.  Guerrillas constantly ask, “How did you benefit from this purchase?”  The answers may surprise you, just as I was surprised by my elderly neighbor, who just wanted the satisfaction of seeing “an enterprising young man” achieve his goal.

You can achieve YOUR goal by remembering NaB & CaPTuRe.  The consonants in these two words will help you remember: Need, Budget, Conviction, Presentation, Transaction, Reward.

In future installments of this series, we’ll explore each of these steps in detail, and perhaps double or even quadruple your sales.