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Tips & Talk 92 – How to Negotiate with Customers
7th December 2022 • Gift Biz Unwrapped • Sue Monhait
00:00:00 00:12:59

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Negotiating is a valuable skill to have. It’s made strongest when you think about and plan for it ahead of time. By having strategies and pre thought through actions in your back pocket, you won’t give away the house or feel taken advantage of. Instead, you can lead the conversation, offer options that fit the situation and stay in control - cool, confident and collected. You’ll find yourself negotiating mostly around 3 things. Price, Freebies or Add-ons and Returns. Let’s talk about options to handle each one.

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Transcripts

Speaker:

Hi there.

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It's Sue and thanks for joining me for Tips and Talk

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Day. These are bite sized topics that I pull from community

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questions and things that I'm observing in the world of handmade

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small business.

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If you'd like to submit a topic DME over on Instagram

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at Gift Biz Unwrapped.

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Negotiating is a valuable skill to have made stronger when you

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think and plan for it ahead of time.

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When you have strategies and pre-thought out actions in your back

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pocket, you won't give away the house or you'll taken advantage

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of. Instead,

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you can lead the conversation,

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offer options that fit the situation and stay in control,

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cool, confident and collected.

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You'll find yourself negotiating mostly around three things,

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price requested freebies or add-ons and returns.

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Of course,

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there are others,

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but these capture 90% of the themes,

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so we'll focus our attention on the most common ones today.

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It's helpful to know that many people consider negotiating a game.

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I know it may sound crazy,

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but they consider it part of the customer seller interaction,

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if you will.

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Here in the states,

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retail negotiating is less common than overseas,

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which is why it feels uncomfortable.

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I mean,

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here you walk into a store and either decide to pay

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the price labeled on the item or you don't.

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Negotiating does happen here at garage sales or at county fairs

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where there are auctions for livestock and such,

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but overall negotiating on a regular basis is not part of

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our sales culture,

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so you may be caught off guard if someone comes up

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to your craft show table and initiates a sale that way.

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When this happens,

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remember it's a game and you can be the driver of

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the result.

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There's no need to get taken advantage of or give in

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to a customer's offer.

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We'll talk about how to manage this here in a minute.

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As I said,

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overseas, you frequently see people bantering back and forth before a

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sale. There can even be theatrics involved.

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One side will get insulted at the offered purchase price offended

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that what they're selling is suggested to be worth so little

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while the other side acts shocked that it would be so

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much people even walk away from a sale only to come

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back later and agree to the final price offered.

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My husband having grown up in Israel is an expert negotiator.

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He learned from his mom observing her purchasing behavior when buying

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vegetables and meat for the evening meal.

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EMA was a pro.

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Michael says the vendors would see her coming and prepare for

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the lively banter to come.

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It was all good natured and they always parted with an

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exchange of goods and smiles.

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So approach any negotiation with this in mind.

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It's a game.

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Another thing,

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your goal is not for one of you to win and

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the other to lose.

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It's for both of you to walk away feeling good about

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the interaction.

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Neither side may have gotten all they wanted,

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but both feel valued and that their needs and input were

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seen at a mutually beneficial agreement was met.

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One caveat here,

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if you're confronted with a belligerent or abusive,

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leave it or take it,

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type intervention,

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choose to leave it from experience.

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I can tell you that if a relationship starts out that

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way, it will be that way forever and that customer will

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become the bane of your business existence.

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There have been several times I've told someone that their demand

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wasn't doable,

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even when I offered solutions to accommodate their needs.

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Guess what happened?

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Most of the time they accepted the solution and became a

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non-combative customer in the future.

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It's like the old saying,

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you teach people how to treat you anyway,

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my point is there are some people where nothing you do

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will please them and you agreeing to something that costs you

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money is never in your best interest long term.

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Let's move into some pre-planning strategies,

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shall we?

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We'll go through responses for the three most common areas where

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negotiating could arise.

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The first being price.

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Of course,

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someone offers to buy your product at a price below what

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is marked.

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Here's where knowing your margins and pricing your product properly will

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be all important.

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As the business owner,

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you can always decide whether you wanna take someone up on

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their offer or not.

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Maybe it's the end of a show and you don't wanna

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take any product back with you,

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or you wanna sell all last season cents to make room

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for the new season specials.

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These would be reasons to accept a lower price situationally dependent,

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of course,

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but in this case,

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make sure you agree to a price that still covers your

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costs and explain why you're willing to drop the price.

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Very important.

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Let me repeat that.

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Explain why you're willing to drop the price.

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You can say things like,

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okay, let's do it that way.

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I don't have to bring them back to the shop or,

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alright, enjoy the last of these fall summer cents and make

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sure to check out the fall cinnamon and pumpkin conversions.

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That'll be available next month.

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Providing justification for a reduced price doesn't cheapen your product and

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also doesn't set their expectation that they'll be able to get

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a lower price next time because they did today.

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Another strategy for you to use when you're asked for a

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lower price is offering a discount on multiples.

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A single bar of soap is seven,

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and when you buy three,

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it's 18.

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That's almost a 20% discount.

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Have these options thought through ahead of time and include them

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on your signage.

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You'll sell more product overall,

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and you have an answer for that customer who wants a

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break in price.

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A third strategy for the price negotiation.

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If you plan to stay firm on your pricing,

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offer them another option to receive your product.

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A raffle is great for this.

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You can say,

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I'm not currently offering lower prices,

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but why don't you enter the raffle and potentially win a

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scarf for free?

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Then of course you ask for their name and email so

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you can reach out to them later and continue the communication,

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whether they're a winner or not,

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that's a win for you and an action for them that

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doesn't feel like a flat out rejection.

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Moving on to freebies or add-ons,

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a second place where you can get into negotiations.

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What I mean here is when people say they'll buy something

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but then want you to include more on top of what

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they paid for the product for free,

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like maybe they'll say,

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I'll take the scarf,

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but can you include a pin at no charge?

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Or, I love this wonderful dog collar,

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I'll get it,

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and will you just include customization or they'll try and switch

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out a more expensive version of your product at a lower

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products price.

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Depending on what you sell.

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Think about these possible scenarios and decide on your response accordingly,

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and don't be afraid to negotiate back.

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Say, I'll do that for you.

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If you take two instead of one,

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you can use the second one as a gift or offer

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them a chance to get into your exclusive club with first

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looks at new designs,

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or give them two punches instead of one on a loyalty

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program depending on what you sell.

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Again, think through these possible scenarios and decide what a good

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response for you would be.

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The third area of negotiation that we'll discuss here is returns.

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Obviously, if there's a return due to an error on your

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part, it's your responsibility to make it right at your cost.

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We're not talking about that here,

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but if someone wants to exchange a product or return it

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because they don't want it anymore,

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have firm rules in place for this.

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When this is an online transaction,

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typically businesses will require the customer to pay for sending a

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product back and pay for shipping again to resend a new

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product. Also,

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remember, in a delivery situation,

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you have other costs like time for preparing the order to

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leave the shop,

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packing materials and things like that.

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That's why you'll sometimes see a shipping and handling fee added

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to a sale at checkout.

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Whatever you decide for returns,

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make sure to explain clearly on your website what the procedures

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are. You may decide you wanna talk to a customer before

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you initiate a return.

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You may send them a return label or request a return

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percentage that is taken off the return credit.

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There are lots of ways of managing this.

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If you're addressing a face-to-face return,

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this is more likely where negotiation could occur.

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The solutions to these will probably fall into the first two

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scenarios we've already covered,

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so once you plan your responses,

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you should be good to go there.

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In conclusion,

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keep in mind that some people want to play the negotiation

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game because they just wanna test the system.

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They wanna ensure that they're getting the best possible deal.

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I found the best emotional approach on your end is to

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stay calm and place no judgment on the event ways of

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interacting. Just like personalities come in all shapes and sizes,

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accept it and join the game.

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You're getting a chance to interact with a current or potential

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customer, and you do have the opportunity and ability to walk

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away from this engagement having left an even better impression than

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if there had been no negotiation at all.

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That's a wrap.

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I'm a get to the point kind of girl,

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and this is what you can expect from these quick midweek

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sessions. Now it's your turn.

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Go out and fulfill that dream of yours.

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Share your handmade products with us.

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