Managing Pricing Negotiations in Consultative Selling

Consultative selling has become the norm of the day in almost all industries. Customers are having a field day. Today s customers are well informed, demanding and difficult to please. Their buying criteria have changed along with their perceptions of value. Therefore keeping in line with the customer demands calls for reaching out to the customers in a manner that is effective. Traditional forms of selling can no longer give you the results that you hope for.

Consultative selling is all about engaging with the customer and building relationship with the customer. By engaging with the customer you hope to be able to empathize and understand his needs as well as business better. This knowledge will help you design a solution around your product or service and thereby deliver value to the customer.

The corner stone of consultative selling is the relationship with your customer. As salesman you do not look at one time sales transaction with the customer and walk away. You will always attempt to win the customer, bind him into a long term relationship. Every decision at every phase of your consultative sales process is made keeping this fact in mind.

A consultative sales process follows the same stages or phases as any traditional sales process. However there exists a lot of difference in the way you manage each phase of the sales process.

Pricing is one important factor in every sales process. In a consultative sales process, pricing as the main agenda of discussion usually happens after you have presented the solution to the customer and closed addressing all of his concerns and objections.

Pricing discussions are challenging and demand highest concentration on the part of the sales manager leading the sales process. Pricing in a consultative selling process is a strategic decision than a simple sales decision. Unlike traditional selling process, you do not try to match your customer’s pricing requirement by offering discount or give a chance to the customer to turn you down.

In a consultative selling process, you always adopt a win-win attitude while dealing with your customer. Relationship is always kept in mind while taking any decision. An effective sales man will be able to lead the customer to the pricing phase after obtaining a consensus from the customer with regard to the solution.

The best strategy to open the pricing meeting would be to state the common objectives from both sides and get customer to agree that the meeting will close with a workable solution. This binds both parties to try hard and explore all avenues to come to a mutually agreeable pricing.

In many cases, pricing decisions are not very simple. The client organization and its reputation as well as the volume of business that you are going to win, does have an impact on your decision.

Your Organization’s leadership in the market also plays an important part in your pricing decision. If you are yet to gain market share and are in the early stages of building your business, you might value association with a reputed Organization and thereby agree to price reduction and match customer’s expectation without looking at the profit margins.

In some cases if the prospective future business opportunities with the customer are huge and attractive, you might want to give in to your customer’s expectation in this business deal and thereby strategize to extend the relationship to becoming the most favored vendor and thereby secure additional business opportunities.

Essentially when you are selling using a consultative mode, you are not looking at a one time transaction or profit. You are looking at growing your business exposure of your customer and thereby get to increase your business share automatically.

There are several ways to work out tradeoffs without having to yield to price reduction or in other cases you might trade off with the customer on advances, payment terms, credit period and other options like commitment on business share, financing options etc depending upon the business case and achieve a win-win situation. The objective as we have said is to reach a consensus and make progress and walking away without gaining from the relationship is not an option.