Dear David: Holding firm on your established pricing

Home Columns Dear David: Holding firm on your established pricing

May 23/30, 2016; Volume 30, Number 24

By David Romano

Dear David:

 

You have been telling me for years to stop allowing my sales associates to negotiate with customers; I heard what you were saying but I didn’t necessarily believe you were right. I recently read something about Lexus and how the company is looking at plans to change the way it sells cars because it finds millennials hate to haggle. If Lexus is thinking this is a good strategy, I guess it is time for me to stop being so stubborn about my own pricing. If I were to entertain your idea of not negotiating with hagglers, how would I get started?

 

 

Dear Delayed Action Owner,

Negotiation is foreign to millennials and Generation Xers because they grew up in the age of shopping malls, fast food restaurants, big box retailers and online shopping where negotiating is just not an option.

The unfortunate thing for most independent retailers is they hold on to a strategy that was passed down from generation to generation—like haggling with customers—that does more to harm the business than help. Major retailers have already stopped negotiating and so should you. Here is what you need to do to make this policy a reality in your store:

  • First, gather up your sales team for a light discussion. Ask them to tell you why they don’t negotiate when they go to Target, Walmart or their local grocery store. Talk to them about other industries that have traditionally been riddled with tense negotiations and how they are running away from this practice as quickly as possible.
  • Tell them the practice of negotiating in your company is no longer allowed. Be ready for the onslaught of questions and let them know you are open to listening to their concerns. When they tell you how this will hurt them, just nod your head and say, “I understand your concerns and I took them all into account before making this decision. Just keep in mind that Home Depot and Lowe’s do not negotiate and they have been growing like weeds over the last decade. If they can get away without negotiating with their limited level of customer service, are you telling me we cannot do the same with the service we offer?”
  • Explain to the customer how discounting is actually a form of discrimination and reiterate how your store does not discriminate on any basis, including race, age, gender or religion and, therefore, won’t discriminate on your gut feeling on someone’s ability to pay full price for the products and services you offer. Put another way: “Every customer gets your special price.”
  • Implement a price-match guarantee so your sales team doesn’t feel as if they are going to be hung out to dry when someone out there offers a lower price for the exact same product in your market. Matching prices or offering volume discounts is not negotiating—it is enforcement of a stated policy.

It’s human nature to want to get the best deal possible, whether you are buying a home, a boat, a new car or flooring. Even if you lower your prices, I’m confident the next buyer would still ask for a better price. Bear this in mind: Customers don’t negotiate because they need to; they negotiate because they enjoy the process and it makes them feel they’re special and have worked to get a good deal. It is the job of a sales associate to make customers feel special without price being the main reason. It is also the job of a sales associate to feel good about what he is selling with an approach that exudes confidence and sincerity. And, most important, it is the job of a sales associate to do everything in his or her power to hold the line on prices so he/she and the company can make the kind of money you all deserve.

 

 

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