“When is your year-end?”
This was the question a customer asked me on the last selling day of the month, in the late stages of a price negotiation. It was forecasted to be one of the largest deals in my territory and we really needed it. “January 31st”, I responded. “Ok then!”, quipped the customer with an undue sense of satisfaction. “I think I’ll just give you a call back then and see if we can do better on the price!”. What did I do? Read until the end to find out!
In sales, month-end anxiety is a fact of life. You’re trying to make your number and nail your forecast, all while your ego, reputation, career, and personal sanity hang in the balance.
The good news is you’re [hopefully] working with customers who have quantifiable business challenges that your solution addresses. The bad news is these customers rarely have the same time pressures as you, damn it!
So what happens? All too often you cave in the name of quota pressure and offer a discount (or another significant concession) in consideration of signing by your deadline.
Don’t worry. We’ve all been there!
But if you’re looking to maximize your revenue, sanity, and integrity during these critical quota crushing periods, here are four tips to help you on your way.
1. Stay calm and believe in your value!
Does your awesome product or service become less valuable just because it’s month-end? No? Then don’t act like it does!
The worst thing you can do is panic and throw your sales playbook out the window. Just because your quota’s on the line doesn’t mean that every deal has to be a discount free-for-all.
For example, a customer might say, “I believe your solution is the best option for my company and I might be able to sign today…but the price would need to be X“. We tend to fixate on the deadline and the budget instead of the fact that the customer’s belief system (and the powerful concept of confirmation bias) points to our solution being the best option for them and X probably isn’t their budget anyway! When you consider the customer’s next best alternative, you’ll often find your solution is extremely well-positioned. Don’t be afraid to remind your customer (and yourself for that matter) of that value when the request for discounts and concessions start to fly.
2. Learn to expand the pie and think beyond price discounts
I get it. You want your deal to close before the final buzzer while giving away as few concessions as possible. But when it comes to concessions, the things that are most valuable to you may not be what your customer values the most. In his bestselling book Getting More, author and Wharton School of business. professor, Stuart Diamond, discusses the concept of trading items of unequal value. He states:
“Find out what each party cares and doesn’t care about, big and small, tangible and intangible, in the deal or outside the deal, rational and emotional. Then trade-off items that one party values but the other party doesn’t.”
Your customer may value price, but perhaps flexible payment terms, a different contract length, free delivery, an extended warranty, or even additional services or support would be equally (or more) valuable to them and far easier for you to give. By considering concessions in a broader context you can maximize the value to your customer and make them feel like they’re getting a great month-end deal, all while protecting your key deal metrics.
3. Don’t psych yourself out! Ask if it’s a deal-breaker.
In an effort to secure revenue before the stroke of midnight, we can sometimes allow customers to inundate us with request after request for concessions (which we sheepishly run back to our managers for approval). Keep in mind that in a negotiation, the terms a customer throws at you (typically in the form of price) is usually their minimum position. If you’ve done a good job of positioning the value of your solution until this point, don’t be afraid to push back.
If you’re concerned about coming off as too defensive, you can respond to a request for a concession with something like:
“Oh, I don’t know if I’ll be able to get approval for something like that. Is it a deal breaker?”
It’s an easy but highly effective way of knowing if it matters. Often times it won’t and the simple question will save you from granting many unnecessary concessions. In a study at Cornell University, participants were asked to estimate how many strangers they would need to approach before they found someone willing to fill out a questionnaire, make a donation to a charity, or let the participant borrow a cell phone. The result: when the experiment was carried out, strangers turned out to be twice as likely to say “yes” as initially guessed.
Unfortunately, all too often we psych ourselves out and think that everything a customer asks for in the heat of a negotiation is critical. Trust me, just ask if it’s a deal-breaker and see for yourself!
4. Confirm ability to execute before discussing concessions
The customer finally agreed to get the deal done by your deadline in exchange for the concession you offered. Awesome! You prepare the paperwork and send it over for signature. You’re about to ring the closer bell and high-five the rep next to you when the customer calls to let you know they won’t be able to sign by your deadline after all. Whether the blocker takes a few days or weeks to clear, your concession is now out there and you better believe your customer will expect it whenever they’re ready to sign!
The solution here is simple. Confirm the deal can get done before you discuss (never mind commit) any concessions. Luckily, you don’t need any fancy tactics here. For example, you might say something like:
“I might be able to sweeten the deal if you’re able to sign by the end of the month. The thing is, I know both you and my management team will be upset if we get the terms in place and for some reason the deal doesn’t happen by the deadline. Before we go down that road, can you help me understand the steps on your end to get the deal done this month?”
If your customer hasn’t executed a deal like yours before, this might be a good time to share some of the things you’ve seen hold up other deals. It’s also a good time to ask them about the questions, concerns, or roadblocks their internal approvers are likely to raise as they escalate your deal internally (I call this, preparing for the “Puppy Conversation“).
Bonus Tip: Forget what you know and aim higher
Have you ever tried to negotiate anything with a child? What is it about kids that makes them killer negotiators? It’s simple. They have little to no awareness of what a good deal is and are relentless in pursuing their desired outcome. What does that mean for you when it comes to striking the best deal at the end of your fiscal period? Don’t be encumbered by your previous success or failure in the negotiating arena.
The sales rep who sits beside you may have just given away a 20% discount and you may have done ten deals yesterday with the same terms…but guess what? The customer you’re speaking to this afternoon doesn’t know that! On your next call, see what happens if you wipe the slate clean, forget what you know, and act with conviction as if a 5% discount is an incredible month-end deal. My bet is that you’ll do better than you think!
Negotiating a deal at the end of your quota period can be challenging and stressful. The key is staying focused, selling value, asking the right questions, knowing when to push back, and approaching each situation with a beginner’s mindset.
So how did I respond to the buyer in the first example? I didn’t take the bait and instead appealed to his sense of satisfaction by saying:
“Hey, I totally understand where you’re coming from. You want the best price and believe me when I say, the offer on the table is the best we can do. If you want to take it now, awesome! We’d love to do business with you. If you’d rather come back at the end of our fiscal year, that’s fine too. The price will be the same“.
They signed that day.
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