Clearly Defining Concessions in Sales

By Doug Dvorak

Concessions planning is a part of advanced planning for the sales meeting, and it is a critical element of any preparation. Concessions are the changes you are willing to make in the sales meeting to the sales proposal. Reaching a successful deal often involves altering the proposal to better suit the needs and wants of your prospect. It is a negotiation process that must be studied based on what you are selling and your companies profit margins.

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Think of concessions as developing a bottom line, when you clearly define your bottom line you are giving yourself a great anchor point for your negotiation. Before you enter into this discussion you should know how low you can go in price or how you can alter the proposal and remain within your companies desired profit margin. You need to determine much of a discount can be granted in different situations. These situations differ vastly depending on the service or product you sell. Products may involve different volumes that create price breaks and services might entail how many additional hours can be put into a project.

Offering an avid fisherman or sportsman a weekend at the corporate luxury cabin may be a way to generate a sale if you can’t go lower on price or there are no additional discounts to be offered.

If you haven’t thought these types of scenarios out in advance, the simple concession that could have solidified the deal is never offered.

One of the worst things to do in a concession is to simply throw out a number. Most salespeople have been in a meeting where the buyer asks for a 20% deduction on the cost of the other order, and the sales rep replied that he or she could offer 10%. By automatically complying and, “meeting in the middle”, the sales rep has set the price lower, perhaps lower than where the buyer was aiming to take the deal.

A better option would be to suggest a smaller amount of a discount than half of what was requested. Perhaps offer a discount of an additional 2% over the next five orders or some other creative and compelling alternative. Another method would be to offer additional services/products that you would benefit the customer and your company can produce for a low-cost. This gives the customer something else to consider and also builds in the opportunity for additional sales at a small percentage that is well above your bottom line.

Without having clearly defined concessions in place, any sales rep can get caught up in the excitement of making a big sale and make a serious error in judgment. This can cause serious financial problems for your company that you will be held accountable for. You are the sales rep and this is your opportunity to responsibly develop profitable business for your organization. Your sales team leader will think of you as a go to when big deals come across the board if you can responsibly handle concessions.

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Source:: Business 2 Community

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