I recently had a conversation about backyard landscaping and hot tub placement with a friend and he threw a dollar number of the average hot tub at me and it was too high which I told him and he looked at me with surprise. It turns out he had shopped at a store and was getting a quote with some extra bells and whistles that he thought were essential and he didn't realize that the markup on these tubs is pretty good for the store.
How do I know that you ask in an unbelievable tone of voice. Well, I've owned three different hot tubs over a period of 25 years and I've shopped for them quite a few times. I believe that the worst place to buy the tubs are at the store unless you find a store model that they want to move out and it has what you need. Then you will see a sale price on it and you can get them to go lower than that by showing interest and walking out the door at their price then returning a couple of days later and show interest and then walk again until they get down to a price that is rather unbelievable. After all, you are buying a hot tub that is now not the latest and greatest so they WANT to get it the hell outta there.
They need to move an older model in order to showcase a newer model with more bells and whistles for customers to order and get extra on the model they talk customers into buying. They can SELL those extras real easy if you aren't an experienced hot tub customer. The extras are nice but not really needed to get the benefit of the hot tub.
So, if you have a budget issue and want a standard hot tub here's the plan. Go to home shows, big one day tent sale events, or where there is an event that hot tubs will be sold at and seen on display. Look at all of them and talk to the sales people, they will volunteer a special price just for that day, you can get them lower because they know you are talking to competition at the show or event. If you are with the significant other you need to have your conversation about the pricing and benefits of a different hot tub brand in front of a sales person for the brand you're in front of. They will hear you discussing other options and they don't want to lose a "buyer" to the competition, they will now come down $500. $500 is the absolute lowest amount of discount you will take. If you are doing this on the last day and it's a model on the floor that they don't want to drive back to the warehouse then talk about how little you money you have and go for $1,000 off; you might get $750.
If they aren't playing along then walk to the competition and try again but it must be a standard model that they want to sell and not take back to their warehouse. On the last day they will have already sold some models at a higher price while they were there so their desire is to go back to the warehouse empty handed; help them get to that place. My latest tub started at $4,800 then reduced to $4,200
In my last post, I discussed my supposed negotiation with my old negotiation mentor, Paul Wineman, for him to be a speaker here at work. Well, he didn't call me on the day we agreed he would and then on my last day off from surgery I received a voice mail from him with proposed dates for him to come here. The next day at work he sent me an e-mail asking if the dates are acceptable so I replied yes however I still need to know his fee and I need to get approval for anyone to come in and speak.
I thought that he might call after that however, he sent an e-mail with his fee for the entire two days and the extras that he needed. I couldn't believe it, this was a take it or leave it because he sent an e-mail instead of calling me. This from a guy that negotiates with a taxi cab driver and who negotiates free dessert after a meal at a nice restaurant. So, my only response to take it or leave it is to leave it which was what I did in a nice way. Maybe, he will call in the future but if he stays with the" this is my fee" approach we won't get very far.
Next Monday, May 28, 2012, I face either the end of my negotiations world or I get an atta boy. I face off in negotiations with my mentor, Paul Wineman, over the phone. Here's the story.
Last week I saw that Paul Wineman was listed as a person I might know in LinkedIn so I sent an invite to Paul. He called me at the office a couple of hours later and he engaged me in old times chatter and then asked the question that you expect Paul to ask. "Do you still use outside speakers?" "Nope", I responded but I started thinking while he continued to try and engage me in that thought. So I went through the list of employees in my mind that need that negotiation style training and that we don't get that training from anyone from the outside anymore.
So, I told Paul that we have a need and we discussed who and where and I asked if he can call me back on Monday with a proposal fee. Naturally, he said yes and in keeping with what he preaches he summed it up again at the end of the conversation. So know I wait, but no I don't wait, I plan. I have to or Paul will laugh me out of the industry in front of our people. I will forever be the example that he refers to for failure, oh shit!
Alright, let's think this through; Paul is going to call on Monday from Los Angeles. He gets up early in the morning and likes to use that when calling people for negotiations. He doesn't know that I get up at 4:00am and I'm in the office at 6:00am and I'm wide awake and at my best at that time, my advantage if he calls early like I think he will. He likes to surprise people.
Paul will have this entire meeting planned out on a piece of paper in front of him and ready for anything I do and how he will counter my tactics. He probably expects me to "balk" at his first proposed fee because as he and I know, he will ask for more than he expects to get. Balking means raising your voice in disbelief and making a remark like "How much?" "Wow, I wasn't prepared for it to cost that much!" But, I like silence; I use it when dealing with software proposals from salespeople on the phone...gets them every time. So I'll use silence and see if that catches him off guard.
Then following that, He will probably make some comment to force me to talk. That's a good tactic, you want the other party to talk first and the most, that way you get all of the info you need and they learn nothing. I will respond by referring to my budget expense and how much I've spent already this year and that I didn't budget for him so can he find a time when he's in the area and maybe do it for half price.
I suspect that after that he will change the flow towards what he is bringing to the table and reference past fees for other long time clients and that I'm getting the best deal but he will lower it to? (probably 15% less) and isn't that a great deal and surely with my abilities I can find the money somewhere and convince my boss to do this.
At that time I will refer to my boss as the third party expert in my budget expenses and how that is a problem because I just got told last week that I have to lower my expenses 1% for the year and I was planning on finishing a little out of budget because of all of the travel costs I have.
Now, here is when I get Paul's real fee for me. He has to come back with it at this time because I will stop talking. No matter what he says I will use silence and a couple of hmmms. Those are frustrating to deal with when you're trying to move someone towards your proposal. And if possible I will alert my boss to come into the office and then I will tell Paul that she is with me and I am going to speaker phone if he doesn't mind so she can be a part of the conversation. This will change what Paul had in mind and reinforce my budget concerns.
How Paul handles that will be interesting, I think we can play on our friendship at this time and I will ask him if he's coming into Tucson and Phoenix at some time in the future to speak at his fraternity and then maybe he can swing by and we can afford that lower fee. This will get him talking and I will learn something new that hopefully I can use but knowing Paul this will end with me telling him that I will try and sell this proposal to owners to see if we can do this. In finishing with that I have extended the negotiation and given him an opportunity to come back with a lower fee later.
On Monday we will see how well I did, YIKES!!!!
Before all of the border problems I took our new, young sales people down to Nogales, Mexico to do a negotiation training exercise. On one particular trip, the group consisted of myself and another trainer and two young female sales reps that were very new to the concept of not paying the full price of the sticker. We started with two classes at work and then each sales rep was given $15 and told that the one that bought the highest value of items wins. That meant the first price the Nogales retailer gives you isn't the actual retail price but the second one is the real price and that's the value we used to calculate the amount of value you bought for a lower price.
We started at a shop near the beginning of the shopping district and I did an example in order for them to understand the procedure and what buying tactics to use. I saw a very nice blanket, not like the cheap ones, this one was very heavy and as large as a regular bed with Mayan characters across the blanket, someone later told me it was part of the Mayan calendar. Ya right.
The retailer began with since we are the first customers of the day he would give us a deal for his good luck. Meaning we can't leave without buying something. So I held up the blanket and he quoted $90. I just looked at him and said "what" and it became $75 so that was the actual retail price I told the group afterwards. I told him that it's early and I would look around and come back later. He immediately went down to $60 and told me that we are friends and wouldn't my wife or girlfriend like this blanket or maybe I need two blankets to keep them both happy.
Since, trying to walk got his attention I decided to use "balking" at the price. So, I mentioned that the price is more than what I had in mind to spend so I need to look around. He wondered what I wanted to spend and I told him $30. He responded with $50. Now I'm getting somewhere with him so I decided to add a little juice to negotiation, I told him that we are thirsty and we need to go to the bar and get a drink before I buy anything. With that he pulled out a bottle of Tequila and said $40 and I quickly responded $35 and all four of us get a drink of Tequila. Done he said, so I gave him the money and we passed around the bottle. He had his first sale of the day and we were on our way.
After that we paired up and the sales rep I was with did a pretty good job and won the contest. I couldn't resist while I was with her to to ask the next retailer while she was negotiating to throw in a shot of tequila with the purchase which he gladly did. After returning home I shared with my wife what happened in purchasing the blanket and she told me that I was taking advantage of the poor people. I reminded her that I saw her once negotiate a cheaper blanket from $21 down to $7 and the retailer was pissed when he sold it to her...how easy they forget.
A salesman must expect a no at some point in time when selling to a store retail manager and plan how to proceed after receiving one. What makes the planning easier is having knowledge of the buyer and why he said no. This can be easy in beer sales because we are at the buyer's business. We interact with the buyers employees. They give us information when we become their friends. We can walk around and see what is going on inside the business...there aren't many secrets.
Also playing the role of the buyer in negotiations can open the eyes of a salesman to the power the buyer has and how the buyer uses it. One way to experience that power is to go out to buy something that you really have no intention of getting unless you get a good deal. Such was the case for me while in Chicago for a beer seminar.
On the walk to a nearby brewpub, I strolled though a mall. As I was going through Nordstroms I happened to be going through the men's clothing department so I decided to look at some dress slacks and then see if I could get a deal at Nordstroms of all places. My wife wanted a gift from Chicago so many I can do a package deal.
So I tried on a pair slacks that I liked that were priced at $110 and I thought, well when these slacks are on a rack in the Phoenix Nordstroms they'll probably cost around $80. So, I'll go for that price and then when I'm told no, I'll promise to purchase perfume as part of the deal and of course while I'm purchasing perfume I'll ask for extra sampler gifts. At that point a sales lady in the area come up to me and I told her how much I liked the slacks and what I will pay for them because I live in Arizona, she said no and then I threw the whole deal at her and she said no, this is Nordstroms and we don't do that. Then I asked for the deptarment manager and she said she is so I asked for the floor manager and she called her over and I got another no and I said to her that I won't buy anything at all unless you do this deal and isn't purchasing something better than nothing at all. It wasn't to her, so I asked for the store manager and they called her!! Same routine and same no, so I walked just like I promised.
I laughed as I was walking through the mall about what they must be thinking of me but what do I care? I won't be seeing them again. And then a store on the second floor caught my eye. It was some kind of novelty shop with beer advertisement in the window and a big sign that said 33% off everything. I immediately headed there with hope that I can do a deal. It's fun to go in and try and get a deal on somehting you don't care if you have it or not but it's more fun if it's something you like.
As I entered there was a young lady working alone and I was the only customer. I saw a string of Guinness Can lights that would make a good gift for a friend so I picked them up. The I saw a Hoegaarden 33cl beer glass for $2.00. The clerk was standing there so I turned to her and told her that I'm in the beer business and I know that this glass cost only 50 cents (not being truthful) and that I'll buy the lights and the glass if she sells it to me for 50 cents. She remarked that the owners allow her to be flexible in order to make a sale so how about $1.00? I answered ok but it gets the 33% off on top of that and she agreed.
A very penny annie negotiation but fun and eye opening for people that walk around paying marked prices everywhere they shop. There are many times that the seller is wanting to make a sale but the buyer doesn't realize that so the buyer might walk without even going up to bat to get a deal. The same for beer sales reps that are getting no's from the retail store buyer, that buyer is looking for the best deal and that first no is in anticipation that the sales rep will offer something better. Supermarket managers are great at this and love to play games with new sales reps that have no negotiation skills. Be prepared learn the power of being the buyer and the powers of being the seller.
As I wrote in my first post below I needed to buy a new cell phone and my original thought was to stop at the phone store on the way to do a Friday evening beer sampling at an account at 6:00pm. And I was going to get there early enough to get that done and then have a beer and food at a nearby bar and then go to the sampling. Then I realized that I needed a plan to negotiate the best deal that I could get.
I decided to go to the nearby mall around 5:15 and go to one of those phone sales booths in the walkways in the mall instead of a store. Why? Because they have young inexperienced people working there and it's Friday and I'm betting that the day person's shift might be changing around 5:30 or 6:00 o'clock and that person is wanting to go out on Friday night. ( It would have been better to have done the research to know if that was the time). I also planned on drawing out the amount of time to make my purchase by asking about all of the different phones even though I looked on line and found the phone I wanted. Then after taking the salesperson's precious time I would make a decision and then right when the bill was totaled I would explain that I have never paid for a connection fee and I'm not going to now.
After I started talking to the salesperson it took about 15 minutes to see all of the phones and a line of interested shoppers were forming around so the salesperson was feeling pressured to finish with me. Then the relief person entered the booth and I decided to announce which phone I wanted to buy. He started working on my bill and I brought up that I work for a business that uses their service can I get a discount and he called his boss to confirm that I can.
So he finished the bill and showed it to me and that's when I announced that I'm not paying the connection fee, why would I pay a fee to connect something you just sold me, you should just connect the phone otherwise I have no need of it. He told me that he can't waive that fee and everyone has to pay it. I asked him to call his boss back and ask him to waive it if he wants to sell me a phone. He called and the boss agreed. I wonder if the boss was leaving at 6:00pm also on a Friday night and wanting to get ready to go out...could be.
Planning is an important part of any negotiation even when making the simpliest of purchases but to make your plan work you can't be afraid of getting a no. Expect to get a no and plan for the next step after getting one. Learn to ask for the manager or someone higher up. I had a lot of fun with that at a Nordstrom store in a mall outside of Chicago in Shaumberg, Illinois.
There was an important negotiation tactic that I employed when putting together my plan...any thoughts of what it was?
Everything I know about negotiations I learned from Paul Wineman during his years as an instructor to distributors in the Anheuser-Busch system. I was fortunate to have him visit us in Tucson a couple of times and I spent a few hours on the phone with him discussing negotiation scenarios, particularly the power of the buyer. He has 5 tips on his website that you can use to your advantage immediately, they are:
1. Ask for more than you expect to get
2. Put yourself in the other party's shoes
3. Negotiate the entire "package" not just the price
4. Never give without asking for something in return
5. Say "NO" one more time
Paul showed me the power the seller has by practicing using the techniques of the buyer. And as a result of that I would take young sales reps across the border into Mexico (before all of the security issues) and give them money and play a game to see who could purchase the most things. The result was that these people felt an increase in self-confidence and an awareness of a new ability. This then led to the ability to sell and have a better understanding or the buyers techniques with them and thus be prepared to handle objections better.
Now, there was a reason to plan, a reason to prepare for the sales call, plus an awareness of why they failed when they did fail. Some professionals believe that negotiation isn't an important part of selling beer, however I will always assert that knowledge of the art of negotiation by knowing the power of the buyer and the power of the seller is vital to becoming a good salesperson.
As I continue to write about these basic points I will pepper the blog with stories of some of my efforts. I started when I needed a new cell phone and I was going to stop at a store on the way to a beer sampling I had to do. I changed everything I was planning on doing when I stopped and realized that this was a perfect opportunity to practice what Paul was teaching. The next blog post will have the details.